UNIT 5
Collaborative supply chain system
/ E-Logistics Processes Integration
E-procurement - Meaning
E-procurement is “the centralised management of a company's procurement and supply chain
using an electronic platform”. It is also sometimes known as supplier exchange.
It is important to keep in mind that e-procurement is only suitable for business purchases, meaning
the Business to Business (B2B) sector. It is not used in the Business to Customer (B2C) sector,
which concerns only personal purchases.
The software and information systems that e-procurement uses enable the purchases to become
paperless for all or part of the Procure-to-Pay process (P2P), which has three main phases:
• Selection of goods;
• Sending the order;
• Invoicing and payment.
How does e-procurement work
How does e-procurement work
E-procurement can be broken down into three main steps that are specific to the Procure-to-Pay process.
Selection of goods: Companies visit a specific platform, which may be an online catalogue, a
Punch-Out or a B2B vendor website. This gives them access to the supplier's entire offer, including data
about the contractual conditions (products selected, cost, savings, etc.).They select their products and
send their purchase request with just a click. This request then enters their procurement system and
follows the predetermined approval process.
2. Sending the order: Once it has been approved, the purchase request becomes an order. It is
automatically sent to the supplier in the form of an electronic document or through a marketplace. The
supplier then instantly begins to prepare the products for delivery.
3. Receipt of the invoice: Invoicing can also be paperless: companies receive the invoice that has been
certified by a trusted third party in the form of a PDF file or an electronic document, which is
automatically reconciled with the order and triggers the payment.
Objectives of e-procurement
1. Savings: The cost of a standard transaction is estimated at an average of £80 and that of a 100% digital transaction (from product
selection to payment) at less than £16. One reason for this is the reduction in the cost of labour resources, since the process is fully
automated. Relative to the number of orders, especially for indirect purchases, the savings are considerable.
2. Eliminate low value-added processes:Getting rid of administrative and manual tasks is a strategic way to increase teams’ speed
and efficiency, while reducing the rate of error by an average of 30-50%[3]. With e-procurement, sending the purchase order,
requesting approval, reconciling the order and the invoice... They’re all automated. This allows teams to focus their energy on tasks
with higher added value.
3. Shortening the overall timeframe:Whether placing orders or approving them, the process is streamlined and gives companies
more transparency: there is no more down time, reminders, or handling and filing of administrative documents. This saves
considerable time in the procurement process.Furthermore, since the order is converted directly into a preparation slip for the
supplier, companies ultimately receive their goods more quickly.
4. Controlled spending: E-procurement provides better visibility, with a clear, real-time view of spending (principals, procurement
process, etc.) through reporting features. This means they can:
• Better manage their spending;
• Manage costs and budgets more accurately;
• Adjust their strategy by identifying areas for improvement.
Transportation Management System
A transportation management system (TMS) is a logistics platform that uses technology
to help businesses plan, execute, and optimize the physical movement of goods, both
incoming and outgoing, and making sure the shipment is compliant, proper documentation
is available. This kind of system is often part of a larger supply chain management (SCM)
system.
Sometimes known as a transportation management solution or transportation
management software, a TMS provides visibility into day-to-day transportation
operations, trade compliance information and documentation, and ensuring the timely
delivery of freight and goods. Transportation management systems also streamline the
shipping process and make it easier for businesses to manage and optimize their
transportation operations, whether they are by land, air, or sea.
Who Uses a TMS
Transportation management systems are primarily used by businesses that need to ship, move, and
receive goods on a regular basis, including:
• Manufacturers
• Distributors
• Ecommerce companies
• Retail businesses
• Companies that provide logistics services, such as third-party and fourth-party logistics (3PL and
4PL) companies and logistics service providers (LSPs)
Businesses in nearly every industry, from construction to life sciences, use a transportation
management system. The primary users are businesses that spend $100 million or more annually on
freight, but the availability of cloud-based TMS solutions has made it more affordable for smaller
businesses to take advantage of the benefits of incorporating a transportation management system
into their supply chain.
Delivery management
Delivery management is the action of deploying efficient logistics processes, powered by
digital tools, to ensure that goods are effectively and efficiently moved from one place to
another until it reaches the end-customer.
Why Delivery management is important
Disruptive technologies and the growing popularity of e-commerce have drastically
changed the way customers behave and this directly impacts demand patterns, consumer
expectations, delivery turnaround-time and the way brands execute order fulfillment.
Automated core delivery processes are the key to improving customer retention and
boosting profitability.
6 Key Delivery Management KPIs
Key performance indicators (KPIs) help assess the quality of delivery services. KPIs are essential for any
business improvement strategy.
1. Route efficiency: Route efficiency is the process of determining the most cost-efficient and productive
route. It is not as simple as just finding the shortest path between two points. It needs to include all relevant
factors like the number of stops possible in the delivery route, delivery windows, vehicle capacity, driver
schedules and even traffic patterns to suggest the optimal route for delivery. Route efficiency helps in timely
deliveries and improves revenue generation.
2. Fleet productivity: Fleet productivity is used to measure the performance of the fleet. It involves metrics
like driver behavior, vehicle maintenance, compliance, fuel usage, measure service hours, total usage and idle
hours of fleets. It helps to improve the efficiency of the fleet, maintenance, and control costs.
3. SLA and on-time in-full adherence: A service-level agreement (SLA) is a contract between a delivery
service provider and a customer that specifies, in measurable terms, the objective and KPI a delivery service
provider will achieve. Digital delivery administration tools ensure SLAs are efficiently followed and alerts are
triggered in case of any unprecedented inefficiencies. On time-in-full (OTIF) adherence is a critical aspect of
SLAs that businesses need to keep an eye on as it directly impacts customer survival quality.
6 Key Delivery Management KPIs
4. Identifying delayed deliveries: Accurately identifying delivery delays help delivery stakeholders to evaluate
the reasons and narrow-down on areas that are extending delivery timelines. It offers insights into the
effectiveness and efficiency of the planned delivery routes. Mechanical or hardware faults and errors during
inventory pickup and packing are some of the most common reasons why on-time deliveries falter. This metric
may be expanded to indicate the percentage of what types of items were delayed, the value and how late the
delivery was.
5. 3PL performance: When companies outsource delivery service to third-party logistics providers (3PLs), the
efficiency gains come with a loss of direct involvement. Monitoring the performance of chosen 3PL based on
metrics like on-time shipping percentage, shipping accuracy, order accuracy, order time-to-fill and cost per unit
shipped can help to check their efficiency.
6. Estimated Time of Arrivals (ETAs): Route optimization tools can accurately generate estimated arrival times
(ETAs) that can be used for internal and customer communication purposes. Dependable ETA takes multiple
parameters into account to predict arrival time. ETA is calculated based on data histories, which are far more
detailed in terms of vehicle characteristics, road network variables, traffic conditions, accidents, and unforeseen
events.
Packing Management
Packaging and packing are two words that are often confused with each other. To put it in
simple words, packaging is the covering of the individual units of an item that is available
to the final customer while packing is the protecting covering or support for such products
when they are transported or handled in bulk quantities. Though both these words sound
similar and are closely related, they are quite different.
Packing Materials
When several small packages are placed together to form a larger unit for handling or transport, it is said
to be packed. Packing also makes use of materials similar to packaging. The main purpose of packing is
to protect the smaller packages from damage or theft and for ease of handling and transport.
Packing holds the smaller units together as larger units, which makes it more convenient to handle.
Besides, attractive packing is also a form of marketing and communication.
Examples of packing range from modern shipping containers to cartons packed with smaller units
inside, pallet loads, shrink wraps to wrap oddly shaped items, etc.
While packing goods, packers must ensure that the packages are secured properly and the load is evenly
distributed within the packing. Since Material Handling Equipment (MHE) such as forklifts, cranes,
hoists, lifts, conveyor belts, etc. may be used to handle such loads, packing should be in such a way that
they can be handled easily by such equipment. They must also be compatible for storage in racks or
other standard storage facilities.
Trends in Packaging and Packing
Environmental concerns and the need for cost reduction have had an impact on packaging
and packing. Organizations are laying more emphasis on the usage of packaging and
packing materials keeping these two points in mind.
Innovations in the field of packaging and packing have helped organizations meet these
goals. Reduction in the materials used, the use of smart packaging, usage of reusable or
recyclable materials, and space-saving designs are some of the other methods employed
by them to bring down costs while at the same time reducing the negative impact on the
environment.
Order Management
Order management refers to the process of receiving, tracking, and fulfilling customer
orders. The order management process begins when an order is placed, and ends when the
customer receives their package.
Order Management Cycle
Order Placed
Order Received
Order Picked
Order Packaged
Order Ships
Item Delivered
How’d we do?
Measure what could have been improved
Order Management Cycle
Order placed: Orders are placed by customers from different places, at different times, across every available channel. To streamline this process on the
backend, you need a multichannel order management or omnichannel fulfillment tool that can automatically push the relevant information (order details,
shipping details, delivery address, etc.) from your ecommerce store to your order management system.
Order received: Once the order is placed, the information is passed to the fulfillment center where the processing of the order begins. Logistics company
has fulfillment centers in Chicago, Los Angeles, Dallas, and Pennsylvania, allowing merchants to split inventory across the country. When a new order is
placed Logistics company’s order management software determines where to send it based on factors like available inventory, customer delivery address,
etc. This helps keep transit times and delivery costs low.
Order is picked: Picking generally refers to following a picking list by retrieving product(s) from the available inventory and delivering it to a packing
station. 3PLs often have warehouse picking teams, or pickers, dedicated to this task. This is where warehouse management plays an important role: The
way inventory is arranged impacts the time it takes to fulfill each order.
Order is packaged: Once the order is delivered to the packaging area, it’s packaged in a way that minimizes the dimensional weight while still providing
sufficient protection. Some 3PLs allow clients to provide their own custom packaging to provide customers with a unique unboxing experience.
Order Management Cycle
Order ships: Once the item is packaged, it’s shipped to the customer. Some 3PLs partner with specific preferred carriers, while others rate shop to
ensure that their customers receive the best shipping prices. Carriers usually pick the orders up straight from the 3PL’s warehouse. Each order is assigned
a tracking number which is then shared (either manually or automatically, depending on the software) with the customer, allowing them to see the status
of their order every step of the way.
Item delivered: Finally, items are delivered to the end customer. But were they the right items? And were they delivered on time? If order management
has been on point this entire time, your odds are significantly higher.
How’d we do?: Following up with customers post-delivery isn’t just for lip service. Staying in constant contact with loyal customers can help you
figure out why people keep coming back to your online store and how you can increase the lifetime value of each customer. Meanwhile, spotting
recurring problems can create a feedback loop that helps your business improve.
Measure what could have been improved: Should you always accept returns and provide refunds? On the one hand, returns are an inevitable part of
ecommerce, and it’s important to handle them well: Customers who are unhappy with the return process are 3x more likely to never buy from that store
ever again. But on the other, understanding the root issue of customer dissatisfaction and addressing it can help you prevent future returns and
reduce logistics costs. Order management should offer a holistic way of analyzing the entire ecommerce logistics process. By tracking strategic KPIs like
lead times or return rates along with qualitative feedback, you can improve the process to increase customer satisfaction and cut costs at the same time.
Warehouse Management
Warehouse management comprises the principles and methods involved in running a
warehouse’s day-to-day operations. This includes obtaining and organising warehouse
space, scheduling personnel, managing inventory, and fulfilling orders at a high level.
Closer inspection reveals that good warehouse management entails optimising and
integrating each of those operations to guarantee that all components of a warehouse
operation work together to boost productivity while keeping costs low.
Inventory Management
Inventory management is the complete computerised documentation of all inventory
movements and intralogistics modifications. It essentially refers to the tasks of
anticipating and replacing products in warehouses, distribution centres, and storage
facilities.
Inventory management supplemented with e-logistics allows for accurate reporting on the
number, quality, and location of all articles. A warehouse management system that knows
the exact inventory levels associated with each shipment and storage location is required
for this purpose.
CRM Architecture
A CRM architecture is essential for a successful customer relationship
management system. It outlines the strategy, structure, and processes necessary
for developing lasting relationships with clients by controlling all information
about them.
A good CRM architecture clearly outlines the strategy for using the software by
defining the processes and making the CRM easy for you and your team to use.
Applications of a CRM
Application 1: Tracking Customers
A good CRM helps you understand your market and the needs of your customers. As you attract more customers, a CRM
makes two things clear: who is interested in what you have to offer, and what is most important to them.
When it comes to winning more customers, a CRM helps you make smarter decisions than your competition and offer people what
they truly want. And if customers leave or your sales stagnate, you can see common threads and change the process accordingly, to
better meet their needs and retain them.
Application 2: Collecting Data for Marketing
When you’re working in spreadsheets and scrolling through email chains, it’s hard to get a big picture of all the important data
about current and future customers. A CRM saves important data in extensive customer and contact lists.
This makes it easy and efficient to market directly to them based on particular criteria.
Application 3: Improving Interactions and Communications
When your list of customers is short, it’s easy to keep up with everyone. However, as your business grows and that list becomes
longer, it’s more likely that sales opportunities and current customers may fall through the cracks.
A good CRM helps you maintain great customer relationships with all your clients and let them know what your products and
services can do for them.
As you make updates and enhance your offerings over time, customer relationship management software allows you to keep them
in the loop and include them in important news.
Applications of a CRM
Application 4: Streamlining Internal Sales Processes
Because every salesperson operates differently, things can get inefficient quickly!
A good CRM helps you streamline your internal sales processes so that there is consistency and quality across your sales team.
This is the secret to how companies can promise, and consistently deliver, great customer service – having one place where all the customer
information lives, and the processes to back it up.
A streamlined internal process also makes it easier to hire, train, and share customer information with new salespeople when there is a turnover in
your sales team. With less time spent in CRM systems and more time interacting with customers and building their customer experience, your sales
reps can thrive.
Application 5: Planning Your Operations.
A good customer relationship management tool will help you understand your current capacity and the demand customers are likely to have
for your products and services.
This means you will see trends and be informed faster as things grow and change. A CRM helps you know when it’s time to hire more people, alter
internal processes, or invest resources into more production, before growing pains and panic sets in.
Implementing an operational CRM platform means choosing to break through the ceiling of your sales potential.
By accessing valuable insights that help you make better decisions, using customer insights to gain an upper hand on your competition, and
developing processes that allow you to provide the same high quality of service even as your customer base grows, consider CRM solutions at the
beginning of the next chapter for your business.
E Business logistics
E-commerce logistics, sometimes referred to as e-logistics, is the process an e-commerce brand uses to
get an order out the door and into the hands of the customer. After shoppers make an online purchase,
the order is packed, shipped, delivered, and sometimes returned. Although this process differs for every
company, the e-commerce logistics of an online store includes several components.
Ecommerce logistics is defined as the supply chain of a company’s online customer orders being
fulfilled. It is the process of getting a product from the point of manufacturing to the point at which it is
delivered to consumers. It involves managing inventory, shipping, warehousing, and distribution.
An eCommerce company has an effective management system when it comes to logistics. They need
to manage their inventories, plan and forecast so that they do not run out of products during peak sales
periods. They are required to have a system in place for shipping products both domestically and
internationally, and also for warehousing them when necessary. Finally, it is for them to ensure that
distribution channels continues to run efficiently and are reliable,that ascertaining timely delivery of
goods to customers.
The components of an ecommerce logistics
supply chain
Ecommerce logistics is a complex multi-step process. Each component is reliant on the
others and ecommerce brands must ensure that each of them is running smoothly to get online
orders to customers quickly and efficiently.
The components of an ecommerce logistics
supply chain
Ecommerce order fulfillment: Ecommerce fulfillment involves all the steps in the ecommerce logistics
process that occur within a warehouse up to the shipping stage. These can include warehousing, storage,
packing, and handing off the order to the carrier. This also includes inventory management across other
warehouses within the ecommerce supply chain. The ecommerce fulfillment process is also the part of the
supply chain that has the greatest impact on the customer’s unboxing experience. During the fulfillment
process, an ecommerce brand can dictate what packaging and packing materials get used, what free samples
get included, and which carrier will ship the order. The fulfillment process allows a brand to connect with
the customer through the online transaction and can impact how a customer perceives the brand.
Inventory management: No matter if you have a single warehouse or several, things can get very
messy without proper ecommerce inventory management. By properly tracking what merchandise is
situated in which warehouse, employees can keep supply levels in check based on current and predicted
demand. With proper inventory management, online orders can get shipped faster and online shoppers can
avoid waiting for their items. Inventory management becomes especially important if an
ecommerce brand sells shoes, apparel, or any item that is available in multiple sizes and colors. They’ll
need to ensure that they have the right inventory management software and warehouse management
software in place to find and track merchandise across their entire supply chain network. Ecommerce brands
can also outsource their inventory management process to a trustworthy 3PL partner who can handle these
activities on their behalf.
The components of an ecommerce logistics
supply chain
Ecommerce warehousing: An ecommerce brand needs additional space to keep inventory in stock when sales are growing.
When selecting a warehouse, they’ll need to consider how much inventory to keep in stock, and where in the world they want
inventory stored. An ecommerce brand needs to ensure that it can communicate with the other parts of the supply chain. This
ensures that the right levels of inventory are maintained and that customers are not left waiting for their orders. Another
important factor that an ecommerce brand needs to consider is warehouse location. When merchandise needs to travel from a
fulfillment center to a transportation hub, it can add time to tight delivery windows. Where a warehouse is located can be a big
factor when it comes to calculating shipping times and delivering orders to customers on time.
Order packing and shipping: Order packing goes beyond just ensuring the right products are in the box. Once the order has
been processed, a shipping carrier will be selected. Sometimes the customer can select a specific shipping option (if offered), but
in most cases, the warehouse management system will decide. The order will then be gathered and packed by an employee who
will apply the shipping label afterwards. The packer preparing the box needs to know how to protect fragile items, which
packing materials to use for specific items, and what free samples to include when required. If the package requires kitting,
they’ll need to know which items go into the box together.
When an ecommerce brand is using a 3PL warehouse, they’ll need to ensure that their logistics partner can accommodate any
personalized packaging the company wishes to use.
Ecommerce returns and reverse logistics: With so many shoppers returning items they bought and expecting a speedy refund,
the ecommerce returns process is becoming a very important part of the post-purchase experience. Online companies need to
ensure their reverse logistics are just as well-oiled as their fulfillment process. Lost packages can lead to delayed refunds, which
BENEFITS OF E BUSINESS LOGISTICS
Expanded Delivery Options: Today, it is essential to give clients a variety of delivery options. While home delivery
continues to be the most popular option, pick-up point delivery is becoming more and more common. An e-merchant will
almost certainly need to offer express delivery in 2022 as consumers’ expectations for delivery time are growing. In addition
to these traditional transit options, more and more online retailers are exploring more environmentally friendly deliveries.
Companies are doing this through route optimization and the use of drones.
Ability to Accommodate Fast/Free Shipping: Offering free shipping is a huge advantage for online businesses since it
draws in clients. Most customers (90%)prefer to shop at sites that offer free delivery. Additionally, studies have shown that
the majority of shopping carts are unavailable for free delivery. Often, the buyer is more willing to pay a premium for a
product with free shipment than they would for a product that costs less but requires a delivery fee. Access to a global
distribution and fulfillment center network can drastically cut down on your fulfillment costs since you can bring your
products closer to your customers.
Accurate Cargo Tracking : Compared to buying something from a physical store, an online client must wait until the order
arrives at its intended location. Customers will feel more comfortable purchasing if your online store offers cargo
monitoring. There is always some hesitation because they are paying before receiving the merchandise. Customers may
verify the progress of the merchandise and keep a close eye on its whereabouts, thanks to this. Nowadays, most carriers offer
this service, which benefits your company and the customer by making the transaction or purchase more transparent and
reliable. Additionally, this fosters trust and consumer loyalty for your online store.
