I believe it’s fair to say that up until about halfway through this decade most DCs did not include much, if any, planning for Business-to-Consumer (B2C) internet e-fulfillment. That has left many traditional consumer goods retailers and catalogers playing catch-up. And, as the Web and e-commerce gather critical mass, the very power of their possibilities has accelerated change. It has happened across both the B2B and the B2C supply chains.

We all know that in both B2B and B2C, e-fulfillment matters. It's a core competency. If you can't fill an internet order promptly, accurately, and completely, don't bother to promise it in the first place. But that's easier said than done most of the time.

Incorporating a Business within a Business

While traditional B2B DCs are designed to handle medium to large order volumes, with processing small orders as a small part of the overall design, the internet consumer typically orders one to two SKUs in small quantities. Combined with hundreds of millions of internet subscribers worldwide (and rapidly growing), the frequency of these smaller B2C orders can potentially be astronomical. So, in order to stay current, companies are being pushed to adapt their DC operations to efficiently and productively satisfy this important market segment demand.

The three main fulfillment areas impacted by internet orders include Order Picking, Packaging, and Returns. If your original business plans didn’t include B2C ecommerce, your order processing system design may lack the required functionality to successfully support a B2C e-fulfillment operation. If that’s the case, there are a few logical options that you will need to consider to integrate an internet fulfillment operation into your current distribution operation:

• Modify your existing fulfillment operating procedures
• Re-arrange and/or expand your existing facility to include an e-fulfillment area
• Design/Build a new facility with integrated e-fulfillment capability
• Utilize a 3rd Party e-fulfillment center
• Set-up suppliers to ship direct to your internet customers

In general, establishing best practice operations for a successful e-fulfillment operation involves:

• Modifications to order entry software and control systems
• Operating a high-frequency, open-case (split-case) picking area
• Maintaining 100% inventory accuracy
• Utilizing advance picking technologies (PTL, Voice, RF Terminals, and more automated methods)
• Achieving a one day or same day order shipping cycle time
• Handling a high number of small shipping packages
• Providing special packaging services (i.e. gift wrapping, monogramming)
• Supporting increased system transactions
• Running an efficient Reverse Logistics (Returns) Process

Pick and Pack Efficiency is Key

Many traditional B2B companies, like totes>>Isotoner for example, have integrated their B2C business into the picking and packing process. This method is traditionally called “pick and pack” and involves picking products directly into the shipping container. Employing this method can save time and money during the fulfillment process. The alternative is to pick into totes or carts and deliver the items using conveyor or people to a packing area.

Two critical components of pick and pack operations include storing shipping containers and providing the shipping labels in the picking area. Options for supplying the shipping containers include an overhead powered monorail conveyor delivery system, or building container racks into the picking equipment in strategic locations. To supply the shipping labels, either on-line printing equipment can be located in the picking area or labels can be printed in a central location and delivered to pickers.

Processing E-Returns – Key Lessons Learned

A few years ago I helped design and implement a reverse logistics process for QVC. At QVC managing and accurately processing returns is a high priority. They know that managing Internet consumer returns is a significant factor in whether or not an Internet consumer continues to buy from you or surfs the web for someone else.

Approximately, 10% of traditional B2B purchases are returned, compared to nearly 30%, or more, of on-line B2C purchases returned. To support this volume, many companies outsource the management of returns to a third party operator. This option however should first be compared to processing returns in-house. The following are some of the key components of an efficient returns operation:

• Customer-Crediting Process: Crediting the e-consumers account after a return is made is critical to maintaining a strong customer relationship. Failure to quickly process returns is the largest risk to e-retailers, according to a leading survey conducted on internet consumers. Achieving a crediting period of 48 to 72 hours from the point of mailing the return to crediting the customer’s account is an achievable goal. Advanced systems must be put in place to support this short cycle time. Streamlining the crediting process and making it easy to use will separate the on-line successes and failures.

• Quality and Control: Efficiently handling the products returned is essential for controlling costs and product quality. The goal is to maximize the value of the goods that are returned. Properly identifying the quality of goods returned, repairing damaged items, and repackaging destroyed packages are all examples of controlling the quality of returned goods. Establishing a network of aftermarket dealers and recycling services are also critical components of maximizing the value of returned goods.

• Applying Technology: The material handling and storage equipment utilized in the returns area should support the anticipated peak volumes. The use of conveyors, sorters, racks and modular workstations should be considered in the concept design of the returns area. In addition, advanced systems must support the transaction volumes and quick crediting requirements. Integrating radio frequency terminals and bar coding should be considered in efficiently processing returns.
  
  

Final Thoughts

When developing your B2C e-fulfillment plans it is important to remember that selling products in cyberspace still comes down to the physical movement of product through your DC to your final customers. Implementing an effective B2C e-fulfillment process is not optional – it is essential in remaining competitive in today’s increasingly demanding internet world and in establishing a good final impression.

Agree or disgree with Holste's perspective? What would you add? Let us know your thoughts for publication in the SCDigest newsletter Feedback section, and on the website. Upon request, comments will be posted with the respondent's name or company withheld.

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