Assignment 1

A. Order fulfillment

Order fulfillment, in general speaking, it is the complete process form of sales inquiry to delivery of a product to the customers. In logistic function, in a border sense it refers to the way that firms respond to customs orders.

Real Life Example

There are several possible steps of order fulfillment. I am going to take Dell computer as an example to lists the steps below.

1. Product Inquiry - Initial inquiry about offerings, visit to the web-site, catalog request

For Dell, buyers can visit their web page for the inquiry about the products. The products are dividing into different categories and with its spot light and introduction. Customers can choose the product they want and they can have some changes with t the hardware or modification of the computer.

2. Sales Quote- Budgetary or availability quote

For Dell, there mainly two ways for quotation, the first one is direct quote from the system, after the customers choose the product and selecting the package, the price is show in the shopping cart. Another one is that call their sales hot lines and ask for the quotation.

3. Order Configuration - Where ordered items need selection of options or order lines need to be compatible with each other

For Dell, it is a very good example of order configuration, as when the buyer click on the product on the page, there are many order configuration. For example, it would ask for the selection of the hardware, the outfit modification of the product, the necessity of the complements, special package of other related products etc

4. Order Booking - The formal order placement or closing of the deal
(issuing by the customer of a Purchase Order)

Order booking, Dell can have online order booking and it require the customers to fill in some information for the order booking and the delivery address etc.

5. Order Acknowledgment / Confirmation - Confirmation that the order is booked and/or received

For Dell , the confirmation of the booking mainly have two steps, one is email confirmation , which an confirmation email is sent to buyer. Also the sales officer may call for the receiver of the order.

6. Invoicing/ Billing - The presentment of the commercial invoice / bill to the customer

For Dell, the invoice is automatically form when the buyer filling in the delivery details.

7. Order Sourcing / Planning - Determining the source / location of item(s) to be shipped

For the order sourcing, Dell asks the buyer to fill in the delivery address, contact number etc during ordering.

8. Order Changes- Changes to orders, if needed

When the order is confirmed and the order is in processing, there can be change by calling the sales officer.

9. Order Processing- Process step where the distribution center or warehouse is responsible to fill order (receive and stock inventory, pick, pack and ship orders).

After the order confirms, and the payment is received, Dell starts to configure the product and delivery the product directly to the buyer.

10. Shipment- The shipment and transportation of the goods. 

11. Delivery- The delivery of the goods to the consignee / customer

Dell‘s order is directly deliver to the customer

12. Settlement - The payment of the charges for goods / services / delivery

For the payment, Dell allows several payment methods, such as, credit card payment, bank cash payment, bank transfer payment etc.

13. Returns - In case the goods are unacceptable / not required

Dell allow returns of the products, within the 14 days of delivery, if defeats or any other problems are found.

B. Push and Pull system

Push vs. pull system is widely used by supply chain operations.

Push System

For the push system which required the company to keep certain level of stock. The company may use different method to calculate the optimal level of stock. This method is to fulfill the customers’ need since the company have certain level of stock, they can fulfill the customer order immediately when they receive the order. The push system have many advantages, first, the company can reduce the risk of the customer switch to another homogenous products due to stockless, since the customer can choose homogenous products if there is out-of-stock. Second, the company can obtain economics of scales, because the company can easily reduce the cost when they produce since they can choose the production size. Lastly, the inventories are easier to control since the company has calculated the optimal stock level, the company just need to meet the optimal stock level. However, the push system have different disadvantage too, first, the company may have overstocking or under-stocking, since there are different unpredictable factors that make the product become more popular or unpopular. Second, the company have high inventory cost, since, the product are make-to-stock, the company need to find a warehouse to store the products. The example company of using push system is Shell Oil Company, the oil is save underground, and the company waits until a car to come in to refuel. The oil companies are used push system.

Pull System

Pull system is the production method which started production when the order is occurred. The company starts to produce when the customer had ordered. The main advantage of this system is to minimize the inventory level which can lower the holding cost. Since the company start produce when the order is place, and they may send the products to the customer when the company finished the production, which can significantly reduce the holding cost for the company. However, this system has a disadvantage too, due to make-to-order; the company may have high risk on out-of-stock. The example company using push system is Toyota, this company produce when they receive the order. Toyota use Just-in-time system to produce, when they receive the order, they may asked the raw materials suppliers to send them the raw materials. This method can significantly reduce the holding cost of raw materials since the raw materials are ordered when the production order is place.

Actually, many companies combined these two systems for their production, for example, Dell computer produce the different components for different models of the computer, and this involved push system. When they received the customer order, they will have the customer to customize their request and this involved pull system. The other example is the motor car company, Rolls Royce, Rolls Royce used the same method of Dell computer, Rolls Royce will produce different component of the car, when they have order, they can let the customer to customize the inside component of the car, for example, the customer can order for a television inside their car. These two companies involved both push and push system.

C. Reverse logistic

Reverse logistic is the process of moving products or goods from customers to distributor or manufacturer. It involved in reducing, managing and disposing of hazardous or non-hazardous waste from packaging and products. Manufacturer can reuse or recycle the products and use it to create value or disposal. The manufacturer can remanufacture the product or refurbish the recycled products and transfer the non-usable products into a usable product.

The goal of reverse logistic is to optimize the aftermarket activity, therefore saving cost and saving environment resource. In addition, reverse logistic can also improve the customer’s satisfaction.The process starts from the customer return a defected product, and the retailer ship the defected product to manufacturer and then manufacturer may perform a detective work and repair work. And finally, the repaired product would be either resale or return.

Real Life Example

Many battery manufacturers started to collect used batteries. The consumers dispose defected batteries at designated retailer or location. Subsequently, the retailers shipped these defected batteries to battery manufacturers. The battery manufacturers would extract reusable metal from these defected batteries and use the extracted metal in manufacturing process of their new lithium batteries. By recycling the defected lithium battery, battery manufacturers can use less environmental resource.

D. Disintermediation 

Disintermediation is the removal of intermediaries in a supply chain.High market transparency allows the companies to maintain the consumers, in that buyers are aware of supply prices direct from the manufacturer.Buyers bypass the middlemen (wholesalers and retailers) in order to buy directly from the manufacturer and pay less. Buyers can alternatively elect to purchase from wholesalers. A business-to-consumer company may use electronic commerce functions as the connection between buyer and manufacturer.The advantage of disintermediation is obviously the greater efficiency and lower cost achieved by reducing the number of transactions and processes involved. It may not easy to achieve because wholesalers who sell the products of many manufacturers may achieve economies of scale that a single manufacturer's distribution system can not replicate.

At the start of the Internet revolution, electronic commerce was seen as a tool of disintermediation for cutting operating costs. It allows consumers to purchase products directly from producers via the Internet, the product delivery chain would be shortened.

Real Life Example

Company – Dell, sells many of its systems direct to the consumer. It removes the intermediaries in the supply chain. Dell directs sell its products to their customers. Dell is successful in creating the value of e-commerce. The customers can purchase the products directly in Dell’s website.