e-Commerce Meets the Material World

Once Upon a Time, there was an arcane discipline known throughout the land as Logistics. It resided in the realm of military supply lines and gradually seeped into the private sector morphing from ìShippingî to ìTrafficî to ìTransportationî and ìInventory Managementî to ìPhysical Distribution Managementî and now ìSupply Chain Management.î Logistics (still the tidiest way to describe it all) was a sleepy, little noticed set of activities that was allowed to stumble along its way.

Most business royalty thought that their kingdoms would function regardless of what happened in the backwater world of logistics. Once Purchasing bought the supplierís parts or Sales signed the customer contract, you could throw the deal over the wall and ìShippingî would take care of it--somehow. The ìprocurement,î as we say today, was independent of the ìfulfillment.î

Now logistics can be a competitive weapon and, heightened by the Web, some argue that fulfillment is the ultimate hurdle between winners and losers. In fact, customers using the Web indicate that fulfillment issues such as inventory availability and on-time delivery are the most important aspects of their e-commerce experience.

ìPeople donít buy products, they buy delivered products,î says Kevin Lynch, president and CEO, Nistevo, a b2b (business-to-business) source for logistics services. Thatís why it is essential to tie e-commerce to a logistics network.î

This point of view seems to be gaining credibility throughout the business world, from retail to manufacturing, from brick-and-mortar to dotcom, and from horizontal to vertical markets.

ìNew Economyî Logistics Is Different from ìOld Economyî Logistics

A smile probably comes across the lips of many experienced logistics professionals who are reading about the elevated stature suddenly accorded their discipline. For the past several years, the rise of Supply Chain Management to a top corporate priority has boosted logistics up the organization charts, to rate at least a passing nod by executives at the C level . . . CFO, CIO, COO, CPO, CLO and even CEO. With its newfound respect, though, logistics still has had to struggle for attention in many companies.

E-commerce has brought a heightened level of focus to customer satisfaction and delivery fulfillment. And the new technology has business moving nearly at the speed of light. But all that flash and glamour is tarnished if the basic fundamentals arenít properly designed and managed. In that respect, the day-to-day job of superior supply chain logistics execution is just as important as ever. The key difference today is that visibility across the supply chain, for the first time, can and must become crystal clear if the desired level of customer enthusiasm is to be achieved.

ìWithout question,î says Don Liedtke, chief information officer, APL Limited and The NOL Group, ìthe biggest trend in the logistics industry is the movement of information in tandem with goods and services. In todayís e-business environment moving products is only 50 percent of our job. We must also be able to move information and provide customers with real-time, 24-hour access to the status of their shipments. In essence we must offer customers complete visibility to their supply chain from the factory through ocean transportation to delivery. For example, APL provides wireless tracking via Web-enabled cell phones and hand held, palm-type devices. This allows our customers to track their shipments while walking through their warehouse, loading dock or from home.î

Reality Is Many ìBuyî Buttons, But Few ìShip Itî Buttons

While Dell and other high-tech companies have made fulfillment a centerpiece of their e-commerce strategies, many companies have not. You can push the ìbuy itî button successfully for nearly everything -- books and CDs on Amazon.com as well as tons of coal on freemarkets.com -- but the ìship itî button is often missing or dysfunctional. This past holiday season, many dotcom firms discovered that when your customer clicks with an online sale, you had better be able to deliver the goods or risk the wrath of consumers in the form of screaming media headlines and -- even worse -- silence. In the b2c (business-to-consumer) world there are many new fulfillment challenges -- quick ramp-up creates growing pains, customers want instant gratification, returns are a potentially lethal headache, inventory must be potentially lethal headache, inventory must be maintained at a high level, products are increasingly customized, new sales and distribution channels are emerging, companies wrestle with whether logistics functions should be outsourced, and all this puts a premium on order and pipeline visibility. Think b2c fulfillment sounds hard? The complexities of e-logistics for b2b sales are even more daunting. When one of the leaders tells you itís hard, you know itís hard:

ìGraingerís digital businesses are expanding rapidly, but one of the challenges of e-commerce is integrating smoothly with the back-end fulfillment system. Getting the product out the back door to a customer at the right place and right time is critical, no matter what business you are in,î says Jim Ryan, President, Grainger.com, the online version of Grainger Corporationís catalog, offering more than 220,000 maintenance, repair and operations products.