Online Store Logistic Management - Case Study Example

Online Store Report Name Course Institution table of contents Title page.................................................................................................................................1 Table of contents......................................................................................................................2 Executive summary.................................................................................................................3 Introduction............................................................................................................................4 Procurement logistics.............................................................................................................6 Distribution logistics...............................................................................................................7 Order management system......................................................................................................7 Customer service...................................................................................................................10 Australian distribution centre packaging and materials handling.........................................12 Physical distribution within Australia..................................................................................13 Conclusion ….......................................................................................................................14 References..............................................................................................................................15 Executive summary Since the invention of the internet, many people are joining the global village for financial, social and economical purpose. As such over the recent years, e commerce has been of exceptional value to every individual. This is for both businesses and individuals who either want to sell or consume goods and services. With a population estimate of over twenty two million seven hundred thousand people, Australia has a sizeable market for online retailing services. This is for the simple fact that online retailing has more advantages to both the seller and buyer. E-commerce offers lower commodity prices gives the clients a wider range of goods to choose from than those available from in-store retailers and is also convenient. This paper therefore, looks into the best possible model through which an online retailing company can organize its logistics model to be highly efficient and effective. Since the reduction in Australia’s manufacturing to about ten percent of the Gross Domestic Product (GDP), there has been an increase in imported consumer goods from Asia (Commonwealth 2007) due to low cost manufacturing capability in Asian countries. As such, this paper will give a detailed structure of the best logistics model for the importation, repackaging and distribution of the retail goods among the clients. These products include car accessories and tools, leisure products for boating, camping and fishing and also electrical household appliances. These products are already in the Australian market and competition will be expected from companies such as super cheap Auto retail stores, Motoquipe Online Boating- Camping-Fishing retail stores (BCF) and Harvey Norman retail stores and Appliances Online Introduction Australia as a country has had its share in the Ecommerce market development. For this reason, the sales of many goods and services has been taken to the online level. There a4re various companies in Australia which are offering their goods and services from the online platform. However, most of these e-commerce companies are offering services of a specific genre. For instance, there are electronic e-commerce businesses which will sale only electronics. For this new online store business, the ecommerce levels in Australia will be taken to a new level. The online retail business will provide services and goods to clients all over Australia. These goods and services will include all forms not just a specific genre. As such the clients will be able to get all the products they need ‘under one roof’ or on the same platform. As such, they will have a variety of quality goods to choose from to satisfy their wants needs and demands. However, since the reduction of Australia’s production capacity to only about ten percent of the gross domestic product, there is no adequate production of consumer goods in the country. Therefore, most of the goods that will be sold on this online retail store will be in the country as a result of importation from Asian countries. This is for the sole reason that the production cost of these goods is considerably lower in the Asian countries compared to the cost that will be incurred in Australia. Unlike many large retail chains, which have established region based sourcing offices in Asia in for example, China or Singapore this online retail business will have its sourcing and distribution offices based in Sydney Australia. This to make the work of sourcing, repackaging and distribution easier and more efficient. The inadequacy for sufficient logistics networks for direct distribution from Asia to Australia will result to the outsourcing of a logistics management company from within Australia. The other reason for the location of the distribution centers in Australia is due to the transport costs that will be incurred during the distribution from Asia directly to clients. This is evident by the fact that it is cheaper to transport goods in bulk to Australia then distributing g them to clients who are addressed within Australia. The first distribution center will be based in Sydney the capital of Australia. However, this is bound to change as the on-line retail company is bound to opening other branches for distribution in Melbourne and Brisbane as this is the ultimate intention. As per the oxford English dictionary, Logistics is the management of the flow of resources, between the point of origin and the point of destination in order to meet some requirements, i.e. of customers or corporations. Therefore, there is a great need for properly planned and managed logistics network for the on-line business retail to work. The forms of logistics that will be involved will include procurement logistics and distribution logistics. Procurement Logistics Procurement logistics involves activities like doing the market research, planning of all the necessary requirements, making of the buying decisions, management of suppliers, ordering of the goods, and order controlling. The main aim in procurement logistics is to maximize the efficiency of the business by putting a lot of concentration on the core competences of the business. It involves outsourcing from other companies and businesses while still maintaining the autonomy and development of the company. Minimization of procurement costs while as the same instance maximizing security (which is core) in the supply process. In this case study, the supply from Asian companies based in areas like Hong Kong and Singapore will cut the procurement costs by a considerable amount of money. The autonomy of the company will be maintained through the repackaging of the materials to maintain the reputation of the company. The procurement logistics will be handled high highly qualified and competent staff to ensure the aims, goals and intention of the on-line retail company are achieved and maintained. These goals and aims are to provide clients with quality product at affordable prices via e-commerce. Distribution Logistics The distribution logistics will mainly deal with the delivery of the imported, repackaged and processed (finished) products to clients. The processes that will be involved in distribution logistics will include processing of orders, warehousing and storage, and finally transportation to the client. The distribution logistics should be clear and precise because the on-line retail store does not manufacture these products. Therefore, the place, time and quantity of production of the products being sold differs a great deal with place, time and quantity of the client consumption. In this case study, the on-line retail company will be receiving all the orders on-line or via phone calls. The list of orders can then be used in the procurement procedures. The quantity and quality of goods needed can therefore be made. The goods will then be warehoused in Sydney where they will be repackaged and distributed to customers in time as per the agreement with the customers. With the well developed infrastructure system in Australia, there will be no problem with the distribution of these products to customers in adequate time. Order management Orders received by the company will form the basis of operations of the on-line retain company. The quantity and type of order will dictate the number of employees to work for the company, the mode and model of transport that will be used for transport and distribution of the goods, the quality that will be ordered from the manufacturer and the pricing of the commodities. Therefore, the order management should be given priority, adequate workmanship and the attention it deserves for the success of the business. Order management can either be done manually or through a computer software system. Order management will also be integrated with the procurement logistics system for the smooth sailing of operations in the company. These orders will be received in three ways. First is orders from businesses and other established institutions such as schools, corporations and government institutions. Such orders usually come in bulk are easier to handle, transport and deliver to the clients. Secondly are orders from individual consumers. This will form the majority of the orders. They are however harder to handle as in involves many people who need a single item or few items. Third, the orders can come as a mix of both company and individual consumer. All in all the type of orders received will be dependent on products needed by the consumers. Offers and pricing are an essential element of on-line retailing. This is for the main reason that most people in favor of on-line retaining need to have a wider variety of goods and services to choose from. They also want to compare prices and get the best bargain possible from the retail co0mpanies. As such, product pricing and offers must be given priority. Proper product pricing will also help the company to get a fair share in the already competitive market. Adequate promotional offers will also help in the market penetration strategy that the company has put in place to be able to be profitable. Product pricing and offers can be in many forms. These forms include websites, catalogs, and broadcast network advertisements. The target group for these advertisements and offers should be specific, and the marketing team should create enough product awareness and company presence in the whole country. The order management system will therefore have to encompass several modules. These modules are product information, inventory availability, vendors, marketing, customers and prospects, order entry, customer services, financial processing, order processing, data analysis, reporting and the financials. Order Management will therefore have multiple steps integrated into a sequential process. These processes will capture the needed data from the customer, validate the obtained data, check for any fraud in the data obtained and authorize payments from the customer and from the company. These processes will also help in product sourcing, doing the back order management, receiving the products, repackaging of the products, shipping and other forms of transportation. Finally, any customer associated communications will also be recognized and done through these processes. The order management systems that will be adopted by the on-line retail company must have work flow capabilities that will manage all these processes. Parts or the order management system Product information This will contain all the necessary details about each and every product. The descriptions (size, color, weight e.t.c), attributes of the product that make it superior, locations of the product, quantities that are available versus the needed. Inventory availability and sourcing This will help in stock management. The data collected from the consumers will help enable the company know how many products they have, how many they need and therefore make the necessary orders to sustain the demand. The company will also be able to source for the adequate man power and resources to ensure growth development and sustainability. Vendors The vendors will also be part of the order management. This is because they help distribute the products to clients. The list of vendors and the number of products that they need and that they have acquired will help manage the order book and general management of the company. The details of the vendors will go into their purchasing and receiving Marketing The marketing section of the order management will include items such as catalogs, promotional materials and product pricing information to help attract people to the company and the products being offered. Since the on-line retail business will not focus on only one genre of products, the market bit of the order management process should be given enough emphasis. Customers and prospects All the necessary data on the current customers and prospective customers should be in the order management system. This will help know how to deal with the demands and also aid in the study of current and developing trends on the market. Thus, the company will be able to make an informed decision while handling the procurement logistics. Order entry This section will enable the customer make their orders. They will also be able to get information on the faulty product returns and refunds in case of any. Financial processing This is one of the essential elements of the order management. It will entail payments through credit cards, the billing methods and payment on account. The security of this part of the system must be assured to avoid fraud and compromise. Order processing After an order is made and the customer has paid as per the terms and conditions agreed upon, the order is processed. Order processing will involve printing of the selected items. Picking of the products and shipping of all products to the customer. Data analysis and reporting After the business is done, the data is analyzed, and a report generated. From this report, the on-line retail company will be able to know its actual position in the market and be able to handle the needs and demands of the consumer appropriately. Customer service Customer service involves the service the on-line retail company will offer to the customer before, during and after the purchase of the item they need. This will include customer support, automated customer service, instant feedback and standardization. Customer support Customer support refers different services extended to customers to assist them in making cost effective purchases and to be able to use a product correctly. Depending with the product, customer support may include assistance in the planning for the product, installation of the product, training on product use, trouble shooting, maintenance in case of product failure, upgrading of the product, and disposal of the product at the end of its lifespan. Automated customer service Customer service and support can also be automated. This will ensure twenty four hour support for the clients thus improving on services delivery. This will also increase convenience on both the customer and the online retail company. Instant feedback For the effective running of the business, instant feedback to customers in case of any request or complains is unavoidable. Instant feedback ensures reliability of the company and the customer will feel appreciated and served with importance. Standardization The confinement of the online retail companies products and services to the international standards set assures the customers of the quality. These standards include: ISO 9004:2000, on performance improvement ISO 10001:2007 for customer service conduct, ISO 10002:2004 for quality management in handling customer complaints, ISO 10003:2007 for dispute resolution and The International Customer Service Standard (TICSS) Australian distribution center packaging and materials handling. After the goods have arrived in Sydney Australia from the various centers in Asia. There have to be stored and repackaged. This is because the products will come in bulk and will have to be repacked to suite the new mode of transport for distribution and also the clients’ needs. There is therefore need for warehousing and repackaging equipment. The distribution center at Sydney is strategically located. This is for the reason that it is the capita and the population concentration is high in the city. The proper infrastructure and availability of amenities to facilitate storage and distribution is also a factor promoting the location of the distribution center. After the reception of the products, they will be counter checked and verified to be the right quality, quantity and condition they were ordered in. Warehouse management A ware house can be management through warehouse management system software. This system will plan a weekly activity and forecast based on statistics and trends previously experienced. As such the quality of the product will be maintained. The quality of the products is also assured as the warehouse has all the necessary equipment and facilities to ensure that their quality is not interfered with. The product will also be handled with the utmost care as it belongs to the clients. Repackaging modes will depend on the quality of the goods and products, the mode through which they are to be transported, and the marketing team. The marketing teams should come up with the right product packaging forms that will impress the customers while at the same time create a brand with the company. The repackaging should also be cost effective to avoid wastage of resources and enhance productivity. After the reception of the products, they will be counter checked and verified to be the right quality, quantity and condition they were ordered in. Physical distribution within Australia. Physical distribution of the goods with n Australia will involve the following: Forecasting and Planning These logistics constitute the transport of products from the distribution center to all members of the supply chain created. There will be coordination activities throughout the network by planners at the sites. The planning will include coding where necessary, staging, routing and validating. The planning will bring about a network for the most cost effective route. Fulfillment Fulfillment as a component of logistics will ensure that the product reaches the customer in the demanded time and in the right condition. Cost Containment The products should reach the clients at the earliest time possible. However, this should also be through the most cost effective route to save on the company’s cost of distribution. Quality Quality in the distribution logistics will be determined by the condition of the product as it gets to the customer, the official safety record the carrier bears, and the percentage of destinations completed on-time. If the quality is at its best no cancellations will be made, and customers will be maintained. Conclusion As outlined in the paper, the on-line retail business requires a lot of logistics from procurement, storage, repackaging and distribution to the consumer. This report gives the best possible ways through which the company can achieve this while still giving customers the best. There is a lot of competition in this already established market but armed with the necessary information and skills all can be achieved easily. The paper gives the optimal design for the necessary logistics activities. References ATMonitor, (2010) In Search of True Multi-Asset Order Management Systems. atmonitor.co.uk Australian Bureau of Statistics, (2004). Australia, (2012). International Monetary Fund. Baziotopoulos (2008). An Investigation of Logistics Outsourcing Practices In the Greek Manufacturing Sector. PhD thesis. http://www.ehow.com/info_8260596_theories-logistics-management.html#ixzz25oPyzEz0 Lunch Lesson Four - Customer service (2003).BBC News. Oxford University Press, (2002) Business & Economics. Paul H. Selden (1998). "Sales Process Engineering: An Emerging Quality Application". Quality Progress (p59–63). Population clock (2009) Australian Bureau of Statistics. Solomon, Micah (2010). Seven keys to Building Customer Loyalty and Company Profits. Fast Company. Van Leeuwen, Matthys (2009). Managing Multi-Channel Orders with OrderCore - Enabling a Customer Focus in Order Fulfillment. Lulu. (p.34–41). Vrtanoski, Jordan (2011). Order Handling in Convergent Environments. 2011 2nd International Conference on e-Education, e-Business, e-Management and E-Learning (IC4E 2011). (pp. 378-382.) Wallenburg, C., Cahill, D., Michael Knemeyer, A., and Goldsby, T. (2011): Commitment and Trust as Drivers of Loyalty in Logistics Outsourcing Relationships: Cultural Differences Between the United States and Germany. Journal of Business Logistics, Vol. 32, No. 1, pp. 83-98. www.australia.gov.au/ Read More