The process of receiving orders and shipping and tracking goods sold through direct marketing is called fulfillment. Common sense suggests that every company cannot produce or market products to suit every person, purpose and purse in the market place. People may differ in their buying motives, in the features and benefits they seek from a product and in their buying habits. People living in different places may vary in their buying of the same product. In pricing too, consumers differ in what they can afford and what they would like to spend on specific product categories.

A mental listing of the various 'popular' or lower priced brands versus the 'premium' or high priced brands of the same product category would speak volumes about differing price expectations of consumers. Hence, to fulfill the need of a customer, companies have to take a decision that whether to make a product, which suits everybody, or to make various products to suit various customer groups or to make a unique product for every customer. While it is possible to follow any of the three approaches, the cost and the other marketing implications make it a difficult decision for the companies. Company has to also decide whether he will market his product to all users of the product category or concentrate on a group of users who exhibit similar characteristics. In other words, a company has to decide whether he will serve the entire market or a market segment.

A market segment is a large, identifiable group of customers within a market, showing a predictable pattern of behavior in buying situations, and able to be profitably reached by means of distribution and communication. In some product categories, every customer could become a segment- interior decoration, jewelry, designer wear, and industrial equipment. In these cases, it is both possible and viable to serve each customer with a unique product and a unique marketing mix.

Fulfillment & Distribution

The process of delivering the product to the customer is termed as distribution. Distribution management consists of two major tasks: physical distribution and management of distribution channels. Physical distribution can be defined as the process of reaching the product to the consumers. It encompasses all the activities involved in the physical flow of products from producers to consumers.

It is physical distribution that provides place-utility and time-utility to a product. In other words, it is physical distribution that makes the product available at the right place and at the right time, thereby maximizing the company's chance to sell the product and strengthen its competitive position. If a product could be consumed at the place and time of production, there would be no need for distribution. Such products are rare.

Almost every product gets consumed far away - both in time and space - from its point of manufacture. They have to be carried, stored and distributed. In the case of some products, the location of the production points is totally dictated by production considerations, like proximity to a port or to the source of raw material. In such cases, the production point may be far away from the market.

Distribution aids the process of demand generation. It is distribution that largely determines the customer service level. Through this, distribution serves as an effective tool for building up of clientele/ market. And conversely, inefficient distribution leads to loss of customers and markets.

Distribution is very important area for cost savings. Over the years, in most businesses, distribution costs have grown into a sizeable chunk of the total costs and now rank second among all cost elements, next only to the material costs.

Fulfillment Services

The service industry in the United States is providing an increasingly important portion of the gross national product. This means that the concepts and principles of "production" have been advantageously adapted to non-manufacturing activities as banking, health care and tourism.

The production function will become increasingly a global challenge. Car engines produced in Japan and Germany are now installed in American cars. Moreover, major car manufacturers in the United States have made arrangements to produce cars in Japan and market them under their own names in the United States and elsewhere. In short, then, productivity, and the concern for measuring it, will continue to be a challenge for managers operating in an increasingly competitive global market.

Operations management systems playing a pivotal part in the fulfillment services are expected to become more productive through the application of operations research, a variety of other tools and information technology. Productivity is a major concern of managers. It implies measurement, an essential step in the control process. The productivity measurement of skill workers is generally easier than that of knowledge workers such as managers.

Yet managerial productivity is very important, especially for service industry operating in a competitive environment. Production management refers to those activities necessary to manufacture products; it may also include purchasing, warehousing, transportation and other operations. Operations management has a similar meaning, referring to activities necessary to produce and deliver a service as well as a physical product.

The operations management systems model indicates inputs, the transformation process, outputs and the feedback system. Various tools and techniques make operations more productive. In order to operate the system, the managing of organizing, staffing and leading must be effectively carried out. Controlling requires an information system that is often supported by computers. Operations research is the application of the scientific method to the study of alternatives in a problem situation, to obtain a quantitative basis for arriving at the best solution.

Order Fulfillment

Channels of distribution are the most powerful element when talking about order fulfillment. The main function of this element is to find out appropriate ways through which goods are made available to the market. It is a managerial function and hence proper decisions are to be taken in this matter before commercial production begins.

When the product is finally ready for the market, it has to be determined what methods and routes will be used to bring the product to the market i.e., to ultimate consumers and industrial users. This process involves establishing distribution and providing for physical handling and distribution. Distribution is concerned with various activities, such as the movement and storage of goods, the legal, promotional and financial activities involved in the transfer of ownership from the producer to the consumer.

A channel of distribution for a product is the route taken by the goods as they move from the organization to the user. According to American marketing association, "A channel of distribution, is the structure of intra-company organization units and extra-company agents and dealers wholesale and retail, through which a commodity, product or order is marketed".

It may be noted that every marketing channel contains one or more of the transfer points at each of which there is either an institution or a final buyer of the product. From the view point of the producer, such a network of institutions used for reaching a market is known as a marketing channel. A channel always includes both the producer and the final customer of the product, as well as all agents and middlemen involved in the transfer of title. However, the channel does not include firms such as bank and other institutions, which render a marketing service, but play no major role in purchase and sales.

Outsourcing Fulfillment

Take a good look at the society around you. You would find the existence of several organizations. For example, there are business organizations that produce goods or services. All these organizations exist to achieve pre-determined objectives. Though there are vast differences in their functioning and approaches, they all strive to achieve certain objectives. It must also be noted that organizations cannot achieve the objectives effortlessly. They are achieved through systematic effort. Several activities have to be performed in a cohesive way. In the absence of systematic and cohesive performance of the activities to achieve the objectives, it is no wonder that the resources of organizations would simply remain as resources.

Outsourcing is one such process, which can not only help in attaining the objective of the organization but can also help immensely in utilizing your resources. Thus, outsourcing can be defined as a business decision that can be made for quality or financial reasons. It is evident that the emphasis is on achieving the objectives by using the inputs like material, machinery, money and the services of men. These inputs are drawn from the environment in which the organization exists. Whether an organization is engaged in business or non-business, the various inputs are judiciously used in outsourcing to produce the outputs. This process which involves the conversion of inputs into outputs is common to all organizations.

Depending on the nature of business or activity that a firm is engaged in, the output of the firm may be a physical product or service. Since a business organization is an economic entity, the justification for its existence lies in producing goods and services that satisfy the need of the people. The organization draws several inputs from the environment, converts them into products or services and sends them back to the environment. Environment here means the larger system, i.e., the society in which the firm exists. Therefore, it goes without saying that how effectively the goods and services are produced is a matter of concern for any society, given the scarcity of resources.

E-Commerce Fulfillment

E-commerce or electronic commerce can be defined as the buying and selling of goods and services on the Internet, especially the World Wide Web. For proper implementation of e-commerce it is of immense importance to have an e-commerce site where one can get involve with the buying and selling of goods and services. To be successful, E-commerce site should contain a shopping cart system and a payment processing system.

Timely delivery is one aspect that requires careful attention. In fact, timely delivery is one of the three main dimensions of competitiveness, the others being quality and cost. Timely delivery is also dependent, like quality and cost, on productivity, managerial effectiveness and infrastructural support. Delays have been part and parcel of the economic system for the ages, hindering the progress of an organization. Delays in delivery occur due to a variety of reasons. Delays in manufacturing, shipping delays and delays in transporting the manufactured products to the ports upset the delivery schedules. E-commerce is the one way which can minimize these delays.

For e-commerce fulfillment, the use of high-class communication technologies is vital. If companies have to achieve global industrial competitiveness, in the first place it is essential for them to bridge the technology gap in industrial production. The companies should produce what the overseas markets need and produce them to their technological specifications and standards. Upgrading technology is also the durable route for price competitiveness and quality improvement. The companies have to do their bit by opting for the latest technology, adapting it, working out technology tie-ups and by committing higher investment for technology upgradation. Even in the post-liberalization era, technology upgradation has been the missing ingredient. But thanks to its all-time availability, global reach, and interaction and information delivery capabilities, the Internet is rapidly becoming a multi-billion dollar source of revenue for business across the globe.

Fulfillment Software

Product design and manufacturing have been changing greatly in recent years, largely because of the application of computer technology. Computer Aided Design (CAD), Computer Aided Manufacturing (CAM) and the Manufacturing Automation Protocol (MAP) are some of the cornerstones of the factory of the fulfillment software.

CAD/ CAMs help engineers design products much more quickly than they could with the traditional paper- and-pencil approach. This will become increasingly important, since product life cycles are getting shorter. Capturing the market quickly is crucial in the very competitive environment. Moreover, firms can respond more rapidly to the requests of customers with specific requirements. The ultimate aim of many companies is "computer- integrated manufacturing."

Automobile companies, as well as firms such as Boeing and East man Kodak, developed what is called manufacturing automation protocol, which is a network of machines and various office devices hooked together. MAP is a sophisticated extension of Local Area Networks (LANs).

MAP is used to link robots with numerically controlled machine tools. Automobile companies like General Motors has achieved considerable savings by using the new method to change the production line when introducing a different kind of front axle for an automobile. What previously took 3 days now takes only 10 minutes. With the new fulfillment software, General Motors and other US manufactures hope to overtake Japanese firms, which now are quite advanced in automation.

What factors show signs of influencing future developments in the fulfillment software? Several major trends can be expected in operations management. The increased complexity of technology will be reflected in the product themselves as well as in the processes used to produce them. New machine tools, microprocessors, sensory technology and computer controls now make it possible to reduce machine setup time and costs. This means a greater variety of products at lower cost.

Fulfillment Companies

Although companies have much in common with one another, they also differ in many ways. Some companies are large, some are small and some operate in only one product area, others operate in many diversified areas. Some operate in a small geographic area whereas others do business in many countries of the world. To cope with these varied objectives, strategies and situations, companies adopt different structures.

Departmentation is the process of dividing the company into manageable subunits. The subunits are often referred to as departments, divisions or sections. So many flexible structures are adopted these days to meet the specific needs of the companies. When low cost and efficiency are the keys to successful goal achievement, fulfillment companies should use functional departmentation. It involves grouping employees according to broad tasks they perform. Normally, separate departments are created for all the key activities of the business.

For example, in a manufacturing company, the activities essential to the existence of the company are production, marketing and finance. However, in non- manufacturing concerns these functions differ. In a transport company, the key areas may be operations, sales and finance. If the company is large, or in other words, as the company grows major departments can be subdivided. The essential idea is to take advantage of specialization.

If the company is big and operates in a stable environment, it can afford to formalize the structure. The greater the intensity of competition, the greater will be the degree of decentralization. The greater the volatility of the environment, the more decentralized and flexible company has to be and companies that implement the organizational style appropriate to their strategy will be more effective than those that use an in-appropriate style.

The question that what kind of structure is best has no single right answer. It depends on the situation. Some company need stable systems while some other needed flexible systems. The nature of the task, technology, environment and the needs of the company members are some of the factors that influence the design of the structure.

About the Author

Fulfillment provides detailed information on fulfillment, e-commerce fulfillment, fulfillment and distribution, fulfillment companies and more. Fulfillment is affiliated with Logistics Solutions.


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Fulfillment by Elizabeth Morgan