Early in the dot-com era, a lot of companies set-up their online presence for failure because they did not think through all the processes involved in fulfillment. Most companies that were successful were the ones that already had a catalog business. The reason for their success was because of a well-established fulfillment system. You have to understand that when dealing with fulfillment systems, you also deal with the logistics of shipping, maintaining inventory, procuring, etc. The companies that failed did not realize this importance.
Let’s look at the different parts of a warehouse/fulfillment system. You now have a well maintained eCommerce site. This site is accepting orders from customers. Now that you have the orders in the system it is important to ship it to them (fulfill). Only after fulfilling an order can we collect the funds from our customers. This presents the first problem that needs to be solved. The solution of this problem is the first piece of the fulfillment system, i.e. the communication channel between the eCommerce site and the warehouse/fulfillment center. Once the channel has been established the second thing that you need to think about is the protocol of communication between the eCommerce site and the warehouse. The third piece of the puzzle is the warehouse itself. For managing a successful and profitable warehouse is to manage not only the space but also the flow of products once they have been picked to where they have been packed and loaded to be shipped. To do all of these aforementioned tasks there are systems designed by companies like Manhattan Associates, Sterling Commerce, RedPrairie, etc. To complete the fulfillment system is the final piece of the puzzle, the backend accounting processes.
For communicating between the eCommerce site and warehouse there are many solutions. You can set up the communications using a simple socket communication, different JMS solutions like MQSeries and Web services. In simple socket communication, the eCommerce site can open a socket on the warehouse management system and transfer the order for anyone off the text, XML formats. In a JMS solution like MQSeries the order will be serialized and sent across to a remote queue that is connected through a communication channel. In a Web services-based communication, the order is sent to a remote site, probably residing in the warehouse environment.
Communication protocol is the agreement between the eCommerce site as the warehouse and to how each will respond when a message is received. There are a few simple sites that are basically post orders to a fulfillment site and will not expect to receive any acknowledgment of the message that was just sent to them. There are also sites that required having every communication logged and acknowledged by the warehouse. As seen in the two cases here, the communication protocol could range from very simple to detailed and complex. It is imperative that a protocol is chosen. Once the protocol is chosen it is up to the implementation team to make the protocol work.
Warehouse Management Systems
The warehouse management system (WMS) is in and of itself a huge topic. A warehouse management system deals with the following systems
- Logistics of procurement, distribution and shipping: this deals with when to buy the inventory, where and how to ship the inventory.
- Inventory management: this deals with maintaining information about the units of items present in the warehouse or at an off site.
- Slot management: this deals with managing where an SKU needs to be placed, in order to make the picking and packing process more efficient.
Receive and Respond to the orders that are being sent from the eCommerce site.
Some of the big players in this area of the market are Manhattan Associates with the PkMS system and Accretive with their DmMS system.
Like mentioned before, Backend Processes are the final piece of the warehouse processing System. This is a generic term that is used for any and every process that is involved in the reconciliation of information between the eCommerce site and the warehouse/fulfillment system. These could involve nightly updates from corporate systems to warehouse and eCommerce sites. These could also involve inventory reconciliation between the different sites etc.
- The $3 trillion Challenge
- The Importance of Going Mobile for Local Businesses in 2014
- Online Customer Spend Stats
- Online Sales on the Surge – 10.3% up in Q4
- How Pinterest Drives Ecommerce Sales
- Fraud Prevention Framework for Ecommerce Website
- Growth of Affiliate Marketing in E-Commerce
- How to Implement a Successful Order Management System
- Difference Between Gift Card and Gift Certificate
- Effective Strategies to Build Customer Relations Using Gift Services