Design and Control of e-fulfillment processes at a full service provider

Design and Control of e-fulfillment processes at a full service provider An explanatory study between consumer requirements and e-fulfillment process design and control at the WeCommerce collaboration June 2013 Ron van Loon Tilburg University

Design and Control of e-fulfillment processes at a full service provider An explanatory study between consumer requirements and e-fulfillment process design and control at the WeCommerce collaboration Master thesis Supply Chain Management Department of Organization & Strategy Tilburg School of Economics and Management Tilburg University Date: June 21 st, 2013 Author: Ron van Loon ANR: 594621 Word count: 14.040 University Supervisor: Second Reader: Company Supervisors: M.A. Overboom J.A.C. de Haan A. Schins, M. Ruiter and J. Grandjean 2

Management Summary Retailing via internet, also known as e-tailing, is a fast rising concept with an even larger potential for the future. The success of these e-tailers is for a large part dependent upon their e-fulfillment process. This process is described as the process from customer s purchase until the product is delivered and the customer is fully satisfied with its quality and functionality. For e-fulfillment e-tailers can turn to full service providers, which can support them by providing webshops, data connections and logistic services. Since e-fulfillment differs from traditional logistics and the consumer requirements play an important role in the fulfillment model, a full service provider with its history in traditional logistics should adapt processes specifically to this segment. To investigate how these processes should be adapted the problem statement is formulated as follows: How can processes be designed and controlled at a full service provider to successfully fulfill the requirements of internet consumers? The different processes within e-fulfillment consist of supply management, order fulfillment and ICT support. Supply management is related to managing supplies within the e-tailer its supply chain. Order fulfillment is on the other hand the process from the online shopping cart to efficient and effective consumer delivery, and in some cases return. ICT support is aimed on accurate information exchange between the involved parties in the e-fulfillment process. Due to the fact that this study is based on a full service provider, with an e-tailer outsourcing its e-fulfillment, the full service provider also manages the process of new client adoption. This thesis explores e-fulfillment issues based on a literature study and through interviews. Six interviews are conducted at WeCommerce, who is developing a full service concept for starting e-tailers. Another interview is held with an e-tailer, to provide insights on this side of the collaboration. It turned out that starting e-tailers often do not have the required knowledge about webshops, e- fulfillment and consumer requirements. For this reason, the service provider needs to offer an extensive advising role in new client adoption. The full service provider needs to advise e-tailers on how they can optimally serve their consumers within e-fulfillment. Insights are provided on consumer requirements which can be used to inform the e-tailer, and trade of schemes (Appendix V) to create a fit between e-tailer and fulfillment design. Within current processes of WeCommerce, services needs to be extended based on the consumer requirements within order capture (payment), delivery (time and method) and returns (options and registration). Furthermore the e-tailer requirements need to be adapted within supply management and the warehouse layout should be aimed on internet orders using small locations and distinguishing fast- and slowmovers. If in the future a larger scale of internet clients is achieved, the LSP can turn to mechanical or semi-mechanical picking. The suggestion of adapted processes is shown in Appendix IV. 3

Preface This thesis is written in the context of the Supply Chain Management program at Tilburg University. This research is used to provide insights to WeCommerce, a collaboration between Indicia and Versteijnen Logistics who together act as a full service provider for starting e-tailers. Through this way I would like to thank Arthur Schins, Michel Ruiter and Jacques Grandjean, who guided the research from the perspective of the full service provider. Furthermore I would like to thank Mark Overboom for supervision along the process of writing the thesis. Finally, I would like to thank all the respondents of the interviews and the people involved in the processes who provided very interesting insights within this topic. 21 st of June 2013, Tilburg Ron van Loon 4

Table of Contents 1. INTRODUCTION 6 1.1. PROBLEM IDENTIFICATION 6 1.2. CONCEPTUAL MODEL 7 1.3. PROBLEM STATEMENT AND RESEARCH QUESTIONS 8 1.4. STRUCTURE OF THE THESIS 8 2. THEORETICAL FRAMEWORK 9 2.1. E-BUSINESS AND OUTSOURCING 9 2.2. SUPPLY MANAGEMENT 13 2.3. ORDER FULFILLMENT 16 2.4. ICT SUPPORT 23 2.5. CODING SCHEME 24 3. RESEARCH DESIGN AND DATA COLLECTION 26 3.1. LITERATURE STUDY 26 3.2. EMPIRICAL STUDY 26 3.3. DATA ANALYSIS 28 3.4. RIGOR IN RESEARCH 28 4. WECOMMERCE CURRENT PROCESSES 29 4.1. WECOMMERCE 29 4.2. NEW CLIENT ADOPTION 29 4.3. SUPPLY MANAGEMENT 29 4.4. ORDER FULFILLMENT 30 4.5. ICT SUPPORT 31 5. RESULTS 32 5.1. E-BUSINESS AND OUTSOURCING 32 5.2. SUPPLY MANAGEMENT 34 5.3. ORDER FULFILLMENT 36 5.4. ICT SUPPORT 41 6. DISCUSSION, CONCLUSION, LIMITATIONS AND FUTURE RESEARCH 43 6.1. DISCUSSION 43 6.2. CONCLUSION 43 6.3. LIMITATIONS 44 6.4. FUTURE RESEARCH 44 REFERENCES 45 APPENDICES 51 APPENDIX I: LITERATURE PER SUBCATEGORY 51 APPENDIX II: COMPANY DESCRIPTION 52 APPENDIX III: INTERVIEWEES, DATA PIECES AND MISFITS 53 APPENDIX IV: CURRENT PROCESSES INCLUDING MISFITS AND RECOMMENDATIONS 54 APPENDIX V: FULFILLMENT DESIGN TRADE-OFFS 69 APPENDIX VI: EXAMPLE OF EXTENSIVE PAYMENT MODULES 76 APPENDIX VII: EXAMPLE OF PARTIAL SHIPMENT ALLOWANCE AND STRUCTURED DELIVERY FEE 77 APPENDIX VIII: EXAMPLES OF DELIVERY OPTIONS IN ORDER CAPTURE 78 APPENDIX IX: EXAMPLE OF RETURN OPTIONS 79 APPENDIX X: CD ROM: INTERVIEW TRANSCRIPTS AND CODING 80 5

1. Introduction Electronic Commerce is a rapidly emerged way of doing business. Electronic Commerce is defined by Wingand (1997) as any form of economic activity conducted via electronic connections. A new form of e-commerce which has risen in short time is the concept of retailing via the internet, often referred to as e-tailing (Gunasekaran, Marri, McGaughey and Nebhwani, 2002). The rise of this concept in the Netherlands is shown in the fact that over 40.000 webshops arose within the last 20 years (Intomart Gfk, 2013) and the revenue of online shopping grew from 2,5 billion in 2005 to an astonishing 7,7 billion in 2010 (Kindt and van der Meulen, 2011). Tarn, Razi, Wen and Perez (2003) argued that internet is likely to in the future become the primary channel for order placement. The penetration rate of e-commerce of 7% within Europe (Ghezzi, Mangiarancina and Perego, 2012), reveals the promising future of this market. The success of an e-tailer is dependent on the ability to fulfill and deliver orders on time, a process also known as fulfillment (Lee and Whang, 2001). Pyke, Johnson and Desmond (2001) described order fulfillment as the process which includes all of the activities from the point of a customer s purchase decision until the product is delivered to the customer and he or she is fully satisfied with its quality and functionality. Tarn et al. (2003) described that the order fulfillment from a distribution centre is where the limits of the physical world meet the promise of the virtual world. The fulfillment process physically connects the customer to the online ordered goods and therefore represents a large part of the image of an e-tailer. A good fulfillment process plays an important role in repetitive buying behaviour of final internet consumers (de Koster, 2002). In many cases, e-tailers try to deal with the process of fulfillment by outsourcing this to a Logistics Service Provider (LSP) (Bowersox, Closs, Cooper and Bowersox, 2013). The importance of fulfillment, along with the rising volume of these markets and the high degree of outsourcing opens opportunities for parties to perform these activities. 1.1. Problem identification Consumer requirements play an important role within e-fulfillment. Gil-Saura and Ruiz-Molina (2011) underpinned the importance of Logistic Service Quality (LSQ) for consumers commitment and subsequently loyalty. Furthermore they described that companies whose technology is assessed as advanced and aligned by consumers get better assessments on LSQ, commitment and loyalty. Tarn et al. (2003) described that within e-fulfillment, it is key to adapt to internet consumer requirements using a flexible, mostly automated and efficient fulfillment system combined with a prompt and costeffective delivery. It is critical to understand how consumer requirements affect fulfillment processes and what special considerations a full service provider must make when designing and controlling these processes compared to traditional offline supply chains. The appropriate design of e- fulfillment processes must be adapted to consumer requirements, since it is the final consumer who decides whether a business model in e-commerce is successful (Madlberger and Sester, 2005). 6

Besides consumer requirements, the special fulfillment characteristics also affect the business model. Cho, Ozment and Sink (2008) state that e-commerce shipments require an entirely new distribution infrastructure due to the small order sizes, increased daily order volumes, small parcel deliveries and same-day shipments. Delfmann, Albers and Gehring (2002) described that the small orders and direct consumer delivery affect not only transport, but warehousing, labelling, payment etc. as well. Furthermore Bowersox et al. (2013) added that the e-tailing environment will continue to place increasing demands on more timely, responsive, and integrated warehouse and materials handling operations. Since the characteristics of the processes connected to e-commerce differ from that in a traditional offline supply chain, a full service provider with its history in traditional logistics must adapt processes specifically to this segment. WeCommerce is a collaboration between Indicia and Versteijnen Logistics, developing a new full service concept for players that want to enter the online market. WeCommerce is going to act as a full service provider who controls and executes processes within ICT and logistics for e-tailers. The fulfillment characteristics and consumer requirements are two important aspects that WeCommerce must consider when entering the fulfillment business. 1.2. Conceptual Model In this research, theory is combined with empirical research to understand the concepts involved and to define the fulfillment processes at the WeCommerce collaboration. The main concepts on which the literature study takes place are specific e-fulfillment characteristics and internet consumer requirements and the subsequent design and control of processes. The main goal of this research to investigate the process and to define which issues are important to consider as a full service provider. The empirical part of this research is done at WeCommerce, which enters the business segment of e- fulfillment wherefore adapting and redesigning certain processes is required. Theory Internet consumer requirements and e-fulfillment characteristics Fulfillment process design and control Empirical reality Delivering new type of customers in e-fulfillment Adapting and redesigning processes at WeCommerce Figure 1.1 Conceptual model of the research 7

1.3. Problem Statement and research questions In order to determine what WeCommerce must consider when designing and controlling fulfillment processes the problem statement is formulated as follows: How can processes be designed and controlled at a full service provider to successfully fulfill the requirements of internet consumers? The scope of this research is based on the fulfillment processes related to the internet consumers at one specific party, namely WeCommerce. To investigate this problem statement, the following research questions need to be answered: 1. How do e-fulfillment characteristics differ from offline retailing and supply chains? 2. What are the general e-fulfillment processes and the consumer requirements on fulfillment processes? 3. What are the current processes at WeCommerce? 4. What processes should be adapted or redesigned for WeCommerce to successfully enter the e- fulfillment business segment? 1.4. Structure of the thesis In the second chapter the concept of e-fulfillment, its characteristics, and how this differ from traditional offline supply chains is explained based on scientific and grey literature. Furthermore the processes and consumer requirements are extensively described in this theoretical framework. In chapter 3 an elaboration on the research methods and design is given and in the subsequent chapter WeCommerce and its current processes involved are described. In Chapter 5, it is explained how processes should be adapted and designed to the customer requirements and e-fulfillment characteristics. This thesis will end in Chapter 6 with a detailed discussion and conclusion of all the findings in the research. In the same chapter also the limitations of the research are reviewed and the suggestions for further research are given. 8

2. Theoretical Framework In this chapter theory about fulfillment processes and the requirements of internet consumers are combined to form a framework which provides insights to the WeCommerce collaboration. This chapter starts with a broad introduction e-business and outsourcing. Subsequent the different fulfillment processes with the different issues and consumer requirements are described. The different processes in e-fulfillment consist of Supply Management, Order Fulfillment and ICT support. This chapter ends with a conclusion of the specific issues within e-fulfillment summarized in a coding scheme. These specific issues of interest are displayed in bold within this chapter. 2.1. E-Business and outsourcing E-business is a general term for sale transactions conducted via electronic channels, such as over the internet (Dissanayake and Singh, 2007). E-tailing with direct linkages to consumers has rapidly emerged over the last years. Two types of players arose in the e-commerce Business-to-Consumer (B2C) segment, the bricks-and-clicks and the pure-play internet retailers (Agatz, Fleischmann and van Nunen, 2008). The pure-play internet retailers only use the internet as their marketplace and the bricks-and-clicks use internet as well as the traditional distribution channel. Internet shopping has several advantages over traditional shopping. The internet provides detailed information to the customer and therefore provides a reduction of the buyer s search cost (Agatz et al., 2008). A Belgian research performed by Sannen and Bonneux (2011) with a questionnaire involving 1275 consumers showed that the largest part of the consumers (25%) finds a lower price than in physical shops the largest advantage of internet shopping. This price decrease is due to market competition and economies of scale on the one hand (Doherty, Ellis-Chadwick and Hart, 1999; Morganosky and Cude, 2000) and skipping services of intermediaries on the other (Benjamin and Wingand, 1995; Grover and Segars, 1999). Furthermore 24hours availability of the internet is seen as a big advantage of internet shopping over traditional shopping (Sannen and Bonneux, 2011). In the research of Intomart Gfk (2013) involving 500 consumers and 1111 entrepreneurs it is argued that the largest advantages of internet shopping can be found in ease, speed, a broad offer and competitive prices. The advantages of internet shopping can both help consumers in the B2C segment, as well as companies in the B2B internet segment. Gunasekaran et al. (2002) state that the opportunities and capabilities brought forward by the internet improves the productivity and competitiveness of all participating companies. The biggest disadvantages of internet shopping are that consumers cannot try the products, that they have more difficulties in case of complaints, that returning the product is more difficult and the fact that they have to wait for the product to be delivered (Sannen and Bonneux, 2011). 9

2.1.1. E-fulfillment The process of the actual delivery of the online order to the consumer is called e-fulfillment (Kindt and van der Meulen, 2011). E-fulfillment can in a broader sense involve all the back-office activities of a webshop (e.g. inventory management, administration). The activities are divided into supply management (managing supply and inventory) and order fulfillment (customer order delivery) (Pyke et al., 2001). E-fulfillment differs from traditional logistics, which requires another approach for this business segment. E-fulfillment is characterized by Kindt and van der Meulen (2011) with small orders, fast changing assortments, high product return rates, unambiguous customer information and delivery on customer desired times. Sannen and Bonneux (2011), Overboom and de Haan (2013) and Hultkranz and Lumsden (2001) also compared traditional logistic characteristics with e-fulfillment characteristics (Table 2.1). Kindt and van der Meulen (2011) propose that the fulfillment model should be adapted to these characteristics of online sales. Traditional Logistics E-fulfillment Orders Predictable Variable, small lot sizes Order cycle time Weekly, fixed terms Daily/Hourly, deliver on short term Customers Known, limited amount, partnerships Broader customer base, unknown, one-off Customer service Reactive, Rigid Responsive, flexible Competition Mostly known Unlimited competition Replenishment By planning By real-time demand Distribution Supply driven, Push Demand driven, Pull Demand Stable, consistent Cyclic, difficult to forecast Shipment Bulk Small lot sizes, individual items Destinations Concentrated Spread Warehouse Focused on volume Focused on small quantities After Sales service Second priority Key to survival Table 2.1 Characteristics of Traditional Logistics versus E-fulfillment characteristics (based on Sannen and Bonneux, 2011; Overboom and de Haan, 2013; Hultkrantz and Lumsden, 2001) Ricker and Kalakota (1999) argued that the epic battles of the e-commerce market place are ultimately won in the fulfillment part of the e-tailer and that despite the importance of the fulfillment process, e- tailers give little attention to how this is done. Although this statement of Ricker and Kalakota was 14 years ago, some e-tailers still cannot provide the required services. Okholm and Möller (2013) explained that 40% of the e-shoppers do not have access to delivery services they find important. Furthermore one third of the internet consumers has experienced problems with an e-fulfillment delivery in the past (Sannen and Bonneux, 2011). The most cited problem was that the order arrived later than promised (42%), followed by the problem that the products were damaged (34%). Furthermore a significant part of the consumers who experienced problems (29%) already had an 10

incident where the ordered product was not delivered at all. Holloway and Beatty (2008) identified order fulfillment/reliability as the greatest cause of dissatisfaction within e-service quality. This implies that a large part of the consumers has already been dissatisfied by the service of an e-tailer, which caused it unlikely for them to return to the shop. Kodushi (stated in Rabinovich and Bailey, 2004) explained that if an e-tailer does not meet or exceed an acceptable level of fulfillment service, they are unlikely to retain customers or attract new ones. Furthermore these problems can harm the reputation of the webshop by bad reviews. Product and service reviews, referred to as digital word of mouth, are becoming a popular information source for consumers (Hu, Pavlou and Zhang, 2006). In order to build up a good reputation as an e-tailer, it is critical to have a good fulfillment service and prevent customer dissatisfaction. 2.1.2. Outsourcing The fulfillment activities are often outsourced to LSPs (Bowersox et al., 2013), which then need to provide flawless fulfillment services from where the e-tailer can run a competitive business. The reason for companies to turn to 3 rd party fulfillment centres is fact that these parties offer flexibility (Ricker and Kalakota, 1999). Furthermore companies use logistic outsourcing for specialized expertise, information technology, cost reduction, quality of service and asset use (Cho et al., 2008; Kneymeyer, Coris and Murphy, 2003; Maltz, 1994; La Londe and Maltz, 1992; Bardi and Tracey, 1991). Three important issues within outsourcing are service triads, modular service design and new client adoption. For these 3 rd parties it is critical to understand the need of the internet consumers. The structure of the relationship between the internet consumer, the e-tailer and the fulfillment service provider can be referred to as a service triad (Figure 2.1) (Li and Choi, 2009). After outsourcing, the fulfillment service provider will act as a bridge between the e-tailer and the internet consumer (Li and Choi, 2009). Delfmann et al. (2002) also underpinned that the role of a LSP has become more prominent since the increase of direct shipments. It is key for a LSP to understand the requirements of the internet consumer to design an efficient and effective fulfillment system which responds to these specific requirements. Cho et al. (2008) explained that firms need strong logistics capability (e.g. delivery speed, delivery reliability, low total cost distribution) to perform well, in traditional as well as e-commerce markets. The reasons for firms to outsource logistics based on expertise and quality of service, implies that these 3 rd parties have stronger logistics capability and perform better in the market. 11

Services Buyer E-tailer Supplier Customer Fulfillment Service Provider Internet Consumer Figure 2.1 Service triads in e-fulfillment (based on Li and Choi, 2009) Due to the fact that a LSP can provide its service to several e-tailers with different products, it might prove that the service provided for each e-tailer should differ. Thirumalai and Sinha (2005) state that the expectations of customers raise as the product type moves among convenience, shopping and specialty goods. This implies that a service provider that delivers different types of e-tailers with different kinds of products should be able to provide a modular service design to an e-tailer based on its customers expectations. Modularity is present if a large variety of configurations can be created, by separating and recombining components of a system (Schilling, 2000). Pekkarinen and Ulkuniemi (2008) explained that modular services are combined from one or several modules, under which several service elements exist. An example in logistic services is that transport is a service module, and the specific transport type is a service element. By creating a modular service design the full service provider can create standardization of processes, and offer variety of services by combining the different modules and elements of these processes. In new client adoption the service provider needs to inform the e-tailer of how to deliver e-service quality by a good fulfillment and webshop design. The required knowledge about e-commerce is called as a large setback in setting up a webshop by 22% of the pure-play internet retailers and by 21% of the bricks-and-clicks (Intomart Gfk, 2013). Other hiccups in setting up a webshop related to e-fulfillment are supply management, shipping, packing and purchasing (Figure 2.2). A full service provider has experience in these issues and can use this to design a good fulfillment model. Packing Purchasing Hiccups in e-fulfillment Figure 2.2 Hiccups in e- fulfillment when setting up a webshop (adapted from Intomart Gfk, 2013) Shipping Bricks-and-Clicks Supply Management Pure-play Knowledge of e-commerce 0% 5% 10% 15% 20% 25% 12

2.1.3. Service quality To be successful in the e-fulfillment environment, it is critical to understand the needs of the consumers and the service aspects involved. E-service quality can be defined as: the extent to which a web site facilitates efficient and effective shopping, purchasing, and delivery of products and services (Zeithaml, Parasuraman and Malhotra cited in Collier and Bienstock, 2006). This research is focused on the e-fulfillment process, and therefore will exclude the extent to which a web site facilitates efficient and effective shopping for consumers in its theoretical framework. Posselt and Gerstner (2005) distinguished pre-sale activities (e.g. the offered assortment) and post-sale activities (e.g. ontime delivery) and investigated their impact on repurchase intentions and satisfaction. They found that post-sale service has a much stronger impact on customer repurchase intention and overall service rating. In the next section the important factors within pre- and post-sale activities will be described per section. 2.2. Supply Management Supply Management is concerned managing the supplies within the e-tailer its supply chain. This involves different issues to design an efficient and effective fulfillment system. This management can be done by the e-tailer, or by the service provider that provides Vendor Managed Inventory (VMI). With VMI, the vendor or in this case service providers defines inventory levels and inventory policies to maintain the stock levels (Yu, Chu and Chen, 2009). Factors influencing the supply management are assortment, the distribution network design and the required stock levels. 2.2.1. Assortment The offered assortment is found as a pre-purchase variable that affects customer satisfaction and repurchase intention (Posselt and Gerstner, 2005). Furthermore the large assortment of internet retailers is one of the arguments for consumers to shop online (Intomart Gfk, 2013). De Koster (2002) explained that both assortment type and assortment width are of considerable impact on the fulfillment system. The assortment type is divided into simple and complex products. In principle simple products can be distributed to any part of the world without any problems, while complex assortments (e.g. fresh and frozen food, heavy and large washing machines with required installation) immediately impact the distribution structure(de Koster, 2002). These products need special equipment and storage. The impact of product specific needs on equipment and storage is pointed out in the example of temperature and humidity control in the grocery industry (Hannu, 2001). A full service provider must take into account whether an e-tailer has certain complex products in its assortment to fully provide the e-tailer with the needed fulfillment operations. E-tailers are furthermore known for carrying fast changing assortments (Kindt and van der Meulen, 2011). This requires a good coordination between e- tailer and service provider to provide the required service levels without getting stuck with obsolete 13

inventory. Also the fast changing assortments need to be inserted in the systems involved in the processes, without too many manual proceedings. The second issue in assortment is the assortment width of the e-tailer. E-tailers can provide a vast variety easier than traditional retailers, due to the fact that they are not constrained by the physical showroom floor (Pyke et al., 2001). The products however need to be stored centrally in a warehouse or at the supplier. The vast variety of assortment increases the inventory cost because the product assortment is directly related to inventory investments (Agatz et al., 2008). Ghezzi et al. (2012) explain that product range impacts inventory management and inventory carrying cost, with a vast variety making it more complex. One of the options to control the large assortment is to use a hybrid structure within the distribution network design. 2.2.2. Distribution Network Design Chopra (2003) described 6 different network designs which each has different has different customer service and supply chain cost. The main issue in distribution network design is whether to place inventories more upstream or more downstream in the supply chain. The further the supplies are located downstream in the supply chain, the better this network suits high demanded products with quick desired response times. The further the supplies are located upstream in the supply chain, the better this network suits products with low demand and low demanded response time. The different network designs and suitability with product and customer characteristics is displayed in Table 2.2. When a full service supplier is used, he can propose the right hybrid model for the assortment of the e- tailer and operate as a 4PL to control the fulfillment processes. A 4PL can be defined as a supply chain service provider that participates rather in supply chain co-ordination than operational services. It is highly information based and co-ordinates multiple asset-based players on behalf of its clients (van Hoek and Chong, 2001). By splintering supply chains for products with different characteristics (Malik, Niemeyer and Ruwadi, 2011), a better distribution structure can be accomplished. If a service provider operates as a 4PL, and splinters the supply chains based on product type, it can offer the most suitable network design for each product within the assortment of the e-tailer. For some of the distribution structures, alignment with the manufacturer concerning batch sizes is required. 14

Retail storage with customer pickup Table 2.2 Suitability of distribution networks, ranging from very suitable (++) to very unsuitable (--) (adapted from Chopra, 2003) 2.2.3. Stock Levels The stock levels that the e-tailers or service providers retain, affect the availability of the products. In the setting of e-fulfillment, the inventories are decoupled from customer display (Agatz et al., 2008). Just like within traditional supply chains, appropriate stocking levels must be determined for each storage location based on demand forecast (Agatz et al., 2008). Supply Management is called a hiccup in setting up a webshop by 7% of the pure-play e-tailers and 11% of the bricks-and-clicks (Intomart Gfk, 2013). Due to the large range of competition providing products on the internet, it is important to have sufficient stock at any moment. Tarn et al. (2003) described that the large competition and the ease of switching caused a highly sensitive consumer, which might turn to competitors if the product is not available at the right moment. De Koster (2002) explained that if order fill rates must be high, it is critical to have sufficient stock and to frequently replenish them. For a service provider these stock levels must be discussed with the e-tailer, and the impact on fulfillment strategy and cost must be determined. Due to the large return volume in e-fulfillment, the service provider must take product returns into account when placing replenishment orders at suppliers (Agatz et al., 2008). The desired stock level can be partly retained by taking back returned products in inventory, which is further explained in the section of returns. Distributor storage with last mile delivery Distributor storage with package carrier delivery Manufacturer storage with in-transit merge Manufacturer storage with direct shipping Manufacturer storage with pickup High demand ++ + +/- + -- - Medium Demand + +/- + +/- - +/- Low demand - - + +/- + + Very low demand -- -- +/- + ++ + Many product sources + + ++ - - +/- High product value - +/- + + ++ ++ Quick response desired ++ + - -- -- -- High product variety - +/- + +/- ++ ++ Low customer effort -- ++ ++ ++ + - 15

2.3. Order fulfillment The order fulfillment process is concerned with the order and delivery process. The different processes involved are used as a format to discuss the issues involved in order fulfillment. Order fulfillment consists of order capture, order processing, pick and pack, delivery and returns. 2.3.1. Order capture The process of order capturing is present form the point of the buy decision through successful data capture and checkout (Pyke et al., 2001). The order capture is done by the online shopping cart, where user selections and the checkout operation are controlled (Fontoura, Pree and Rumpe, 2001). Okholm and Möller (2013) show that almost 50% of the abandoned shopping carts are caused by too high delivery costs, which will be further explained in the delivery fee section. The part of the order capture connected to consumer information is referred to as information requirements, and is discussed paragraph 2.4.2. In the part of the order capture, also the payment of the product takes place. Almost all the consumers (96%) pay the full amount at once, and 66% even pays the full amount while ordering (Sannen and Bonneux, 2011). Currence (2013) stated that in 2012 the majority of the consumers in the Netherlands (55%) preferred ideal over other payment methods (Figure 2.3). Sannen and Bonneux (2011) state that 34% of the consumers doubt the safety of online payment, and 13% of the consumers noted this as the most important disadvantage of e-commerce. Wolfinbarger and Gilly (2003) highlighted the importance of a safe online payment process, by finding a significant impact of privacy/security on overall quality. Kim, Tao, Shin and Kim (2010) showed that security statements such as securitypolicy, contact information under emergency and technical descriptions of the electronic payment system improve the consumers perceived trust. This also implies for the concerns and security issues which can be found in the Frequently Asked Questions (FAQ). The website can be improved by offering detailed explanations to consumers on how to review, cancel or modify a payment (Kim et al., 2010). Preferred payment method Figure 2.3 Preferred payment methods over 2012 in the Netherlands (Currence, 2013) 6% 5% 5% 22% 2% 5% 55% ideal Giro card Bank transfer credit card Paypal Authorization Other 16

2.3.2. Order processing Order processing is the preparation for pick and pack operations, connecting the order capture to the customer delivery (Pyke et al., 2001). An important aspect within order processing is the information transfer between the different systems involved in the fulfillment process. Due to the fact that this is part of ICT support, this is represented in that part of the theoretical framework. 2.3.3. Pick and Pack The physical collection of the orders starts at the pick and pack process. It is the process of physically selecting the right items, inspecting them and preparing them for shipment (Pyke et al., 2001). The critical issues within these warehouse operations are picking operations, capacity management and damaged products. The picking operations of e-fulfillment differ from the traditional picking operations in terms of small order sizes, which render more labour intensive order picking. Due to the long travel distances per product within order picking, batch picking (multiple order) seems more appropriate than order picking (Kindt and van der Meulen, 2011). This however decreases the packaging efficiency, due to the required sorting operation after picking (Agatz et al., 2008). Kindt and van der Meulen (2011) suggest automating the picking process as much as possible. This however requires a sufficient and stable amount of orders before any large investments can be made. Another important issue in picking and packing is capacity management. It is noted by Kindt and van der Meulen (2011) that the order peak shifts to Mondays when involving in e-fulfillment. This is caused by a lot of consumers who place internet orders during weekends. Agatz et al. (2008) also identified seasonal demand fluctuations as a critical aspect in capacity management. Full service providers must respond to this by using flexible capacity. Also a customer indicated delivery date can help to overcome these inequalities in demand, which is further discussed in the delivery section. The e-fulfillment segment also suffers from damaged products, guessed at a value of about 24 million each year in the Netherlands (Kindt and van der Meulen, 2011). Kindt and van der Meulen (2011) furthermore explained that 20% of the webshops frequently receive complaints about damaged products. This gives a chance to LSPs to decrease damage by using the right packaging before the product is transported to the consumer (Sannen and Bonneux, 2011). The complexity and differences in the assortment affects the picking and packaging operation in the warehouse. For some e-tailers specific picking and packing operations should be adapted to the complexity of their assortment. 17

2.3.4. Delivery Within an online channel, delivery is a key service element (Agatz et al., 2008). The critical aspects based on literature within delivery are defined as delivery method, delivery time and the charged delivery fee by the e-tailer. The widely spread and broader customer base accounts for higher cost in delivery of the last mile. There are several delivery methods within e-commerce logistics. On average 1.6 stops are needed to deliver 1 package which heavily increases transport cost (Kindt and van der Meulen, 2011). Kindt and van der Meulen (2011) also explained that 20% of the consumers have problems with their parcel being delivered at neighbours. The solutions to these problems can be found in alternatives for home delivery and better collaboration with the consumers on delivery times. The most preferred delivery methods are home delivery through a letterbox (70%) and at the door (66%) (Sannen and Bonneux, 2011) (Figure 2.4.). The way of home delivery depends on if products can safely be deposited in the letterbox or not (Agatz et al., 2008). Another interesting delivery type is the use of central collection points in the distribution structure. The crucial last mile is in this case travelled by the consumer, collecting his or her products when desired. The use of lockers to deliver the products is less desired by internet consumers (Sannen and Bonneux, 2011). The extension of home delivery by using customer specific boxes requires a large investment. The large investment in refrigerated boxes by Streamline caused its bankruptcy, due to the inability to earn back these investments (Agatz et al., 2008). Madlberger and Sester (2005) explained that the product type affects the preferred delivery type. In their study they distinguished the product categories: groceries, books/music, computer and apparel. Although significant differences are found between product categories, home delivery is most preferred for all product categories (Table 2.3.). All the different delivery methods have certain implications in customer effort and distribution cost. An example of this pointed out by Agatz et al. (2008) is that fully flexible, unattended delivery reduces cost up to a third compared to attended delivery within a 2-hour window. Choice is also important to consumers in terms of delivery method, due to its impact on customer repurchase intention (Posselt and Gerstner, 2005). Sannen and Bonneux suggested (2011) that providing besides home delivery also alternatives such as collection points can be critical for the consumer to choose for a specific e-tailer. In spite of the importance to consumers, only 9% of the webshops currently provide the opportunity to choose for a collection point for the parcels (DeliveryMatch stated in Kindt and van der Meulen, 2011). 18

Product categories Collect from a locker Delivery at work Delivery at other specified adress Collect at physical shop Collect from central collection point Download/e-mail Home delivery at the door Home delivery thourgh a letterbox Preferred Delivery Method Figure 2.4 Preferred delivery method (Sannen and Bonneux, 2011) 0% 10% 20% 30% 40% 50% 60% 70% 80% Delivery type Deposit Home Workplace Store Gas/railway station box Groceries 62% 18% 11% 6% 3% Books/music 51% 21% 9% 8% 11% computer 62% 16% 8% 8% 6% apparel 52% 12% 21% 6% 9% Table 2.3 Preferred delivery method per product category (adapted from Madlberger and Sester, 2005) In terms of delivery time, the majority of the consumers is satisfied with a delivery time between one and four days (Sannen and Bonneux, 2011; Okholm and Möller, 2013). A significant other part of the consumers, wants to be delivered within 24 hours (Sannen and Bonneux, 2011; Okholm and Möller, 2013). In the research of Sannen and Bonneux (2011) this was about one third of the population, while in the research of Okholm and Möller (2013) this was about 60% of the consumers. The consumers expectations on delivery time are affected by product type, as explained in Madlberger and Sester (2005). The different expectations per product category are displayed in Table 2.4. More important than delivery time, Sannen and Bonneux (2011) ascertained that the majority of consumers (65%) prefer the choice of the time of delivery instead of having extra fast delivery. This is underpinned by the research of Intomart Gfk (2013) where 91% of the consumers stated knowing the specific delivery date, and 82% of the consumers stated knowing the delivery time important to very important. It is argued that in practise, e-shops offer very fast delivery without providing the choice of delivery time to the consumers (Sannen and Bonneux, 2011). A research of DeliveryMatch (stated in Kindt and van der Meulen, 2011) found that only 3% of e-tailers provide the opportunity to choose for a specific delivery date and time. This may turn out to be an important competitive advantage over the large amount of competition within e-fulfillment. 19

Product categories Delivery time <1 h 1 to 4 h 5 h to 1 day 2 to 3 days 4 to 7 days 8 to 14 days 14 days + Groceries 28% 42% 29% 1% 0% 0% 0% Books/music 0% 1% 3% 40% 35% 21% 1% computer 0% 1% 3% 21% 43% 27% 5% apparel 0% 1% 3% 16% 42% 32% 7% Table 2.4 Preferred delivery time per product category (adapted from Madlberger and Sester, 2005) On weekdays, the preferred time of delivery for the consumers is in the morning (08:00-11:00) or late afternoon (16:00-19:00) (Sannen and Bonneux, 2011). The research of Hultkrantz and Lumsden (2001) however, showed that the most preferred time of delivery is between 18:00 and 20:00. To ensure a desirable time and day of delivery providing a choice to the consumers on the website is very important. The large amount of weekend sales, the preferred delivery days and the required delivery time suggest that some consumers might order more than a day upfront from where capacity can be spread over the week. The preference on the day of delivery is shown in Figure 2.5 and the preferred delivery time in Figure 2.6. 60% 50% 40% 30% 20% 10% 0% Delivery preferred on Monday Tuesday Wednesday Thursday Friday Saturday Sunday Figure 2.5 Preferred delivery day (Sannen and Bonneux, 2011) Preferred Delivery Time Does not matter to me Longer than a week, in a period discussed with the supplier Between 5 and 7 calender days Between 3 and 4 calender days Between 1 and 2 calender days Within 24 hours Within 12 hours 0% 10% 20% 30% 40% 50% 60% Figure 2.6 Preferred delivery time (Sannen and Bonneux, 2011) 20

Also the charged delivery fee is subject to customer requirements, and is important to choose for online purchasing (Intomart Gfk, 2013). Rabinovich and Bailey (2004) explained that some players adopted a market strategy of aggressive pricing and minimizing charge for fulfillment services. Because consumers stated lower price as the largest advantage of internet shopping, this strategy is aligned with customer expectations on this specific part (Sannen and Bonneux, 2011). Rabinovich and Bailey (2004) however, state that e-tailers that provide fast fulfillment and flexible shipping dates may increase customer loyalty by providing superior fulfillment services. By doing this they may charge higher prices and avoid perfect price competition (Chen and Hitt, 2002). What complicates the pricing decisions in e-fulfillment is the need to anticipate on the cost consequences of fulfillment operations (Agatz et al., 2008). Furthermore using a not understandable pricing policy for consumers, might leave them confused and distrustful (Garbarino and Lee, 2003). In terms of delivery cost, the research of Madlberger and Sester (2005) displayed the accepted maximum delivery fee in Austria per product category for a basket of 50 (Table 2.5). A significant difference is found between groceries and computers on the one hand, and books/music and apparel on the other. Sannen and Bonneux (2011), a Belgian research, explained that the majority of the consumers do not want to pay more than 5 for a delivery and one third of the consumers think that delivery cost should not be charged at all. In Okholm and Möller (2013) free delivery is even preferred by over 90% of the consumers. E-tailers can respond to this by including the delivery cost in the purchasing price or defining a clearly structured price for the service. Product categories Delivery Fee Mean Standard deviation Maximum Groceries 2,08 3,15 20,00 Books/music 1,66 2,24 10,00 Computer 2,28 2,78 10,00 Apparel 1,69 2,21 10,00 Table 2.5 The maximum accepted delivery fee for a basket of 50 per product category (adapted from Madlberger and Sester, 2005) 2.3.5. Returns Internet sales face higher return rates compared to traditional trading, since customers cannot feel and try the product beforehand (Agatz et al., 2008). Some e-tailers in furniture have even experienced returns of 30% or 40%, in contrast to the 5% in the traditional furniture business (Pyke et al., 2001). Intomart Gfk (2013) explained that 72% of the consumers find the product return options important to very important to choose for a specific online store. In case of a product return, a complex process of returns handling within e-fulfillment gets started. First the product needs to be returned to the fulfillment centre. For product returns, almost all the consumers (94%) find the ability return the product for free important to very important (Intomart Gfk, 2013). Different processes involved at the fulfillment centre are quality checks, repackaging, administration and destroying products that cannot be sold again (Kindt and van der Meulen, 2011). 21

The largest amount of returns can be found in the product group of clothes and shoes, followed by the group of books, CDs and DVDs (Sannen and Bonneux, 2011). Krikke, le Blanc and van de Velde (2004) defined the returns that are linked to the sales process as commercial returns, and recognize the increase in volume do to e-commerce. The integration of forward and reverse supply chains is crucial, and can for these commercial returns be found within re-sales and re-distribution (Krikke et al., 2004). Some of the product returns can be integrated in the forward supply chain after a few recovery processes, while others must be made to scrap. Kindt and van der Meulen (2011) argue that the product return process requires good logistic systems, which must be supported with ICT-systems. The integrated products have implications on the inventory level assessment wherefore a forecast of returns has to be made to control stock levels. This forecast needs to be integrated in the process of supply management. E-tailers also need to anticipate on product returns by using strategic product return points and by starting the return process at the customer (Kindt and van der Meulen, 2011). For the return method the presence of a physical distribution structure can reduce return handling costs as well as increase customer value (Forrester Research stated in Agatz, 2008). The importance of the product return process is reflected in the way that ease of product return positively affects customer satisfaction (Laseter, Rabinovich, Boyer and Rungtusanatham, 2007). A very large part of the consumers (76%) find a short distance to a return drop-off point important to very important in the product return process (Intomart Gfk, 2013). Okholm and Möller (2013) show that 80% of consumers prefer to take their return to a parcel collection point. For implementing a physical distribution structure for returns, a trade-off is required between cost and customer value (Agatz et al., 2008). De Koster (2002) also acknowledged the speed of credit as a problem within the handling of returns. In term of consumer requirements within returns payment, almost all the consumers (94%) find it important to very important to quickly receive back the paid amount (Intomart Gfk, 2013). The return process must be designed to deliver fast feedback to the consumer by quickly processing the product returns. The product must be checked to determine whether the consumers are entitled to receive a product refund. Furthermore e-tailers must provide clear communication and detailed product information in the first place, for product returns prevention as much as possible (Sannen and Bonneux, 2011). Retailers can attempt to reduce the amount of returns by increasing the consumers cost of returning the product or informing consumers before purchase how well the product will match their preferences (Shulman, Coughlan and Savaskan, 2009). This detailed product information from which consumers can assess the fit with their preferences is also required for a webshop by a large part of the consumers (69%) in 22

the first place (Intomart Gfk, 2013). By preventing product returns, the complex process and related product return cost can be avoided. 2.4. ICT support Although the importance of ICT support was already acknowledged in supply chain management, the rise of e-commerce has even increased this importance (Stockdale and Standing, 2004). Tarn et al. (2003) explained that a proper synchronization of front, back and middle end of a company is key for survival in the competitive business of e-commerce. Bekkers (2007) explained that when front- and back office activities operate as sequential links, the exchange of information can be done by the introduction of workflow and supply chain information management where interfaces facilitate the flow of information between links. 2.4.1. Middleware Kulkarni, Kumar, Mani and Padmanabhuni (2005) explained that it is required for online retailers to seamlessly connect with partners across the supply chain with the use of web based solutions. The communication and information transfer between the different systems involved is provided by ITsystems referred to as middleware. These web based middleware systems must provide each operation with the right information for execution, and also provide feedback information of the operations to the customers. Hultkrantz and Lumsden (2001) explain that e-commerce requires refined systems for planning, as well as execution and follow-up. The information for process execution is explained below as order information and the feedback information for the consumers is referred to as fulfillment information. 2.4.2. Order information In terms of the forward supply chain, the order information needs to be transferred from the webshop throughout the supply chain and therefore has certain information requirements. The e-tailer needs to provide the service provider with information to create pick- and delivery orders, such as order information (article number, order amount etc.), customer information (name, address etc.) and the choices that are offered to the consumer in the online shopping process. The service provider involved in the fulfillment process needs to transfer the internet order to picking and transportation assignments to efficiently and effectively execute the process. Tarn et al. (2003) described that a single error in information processing is enough to jeopardize a timely delivery. Also the product return process can be connected between the customer and the service provider. An example of this is that the customer must place an online product return request from which the service supplier can arrange the return process and knows which products are about to be returned. 2.4.3. Fulfillment information The customer of the e-tailer needs to be served with some real-time information, about stock levels and about the status of the order. In e-fulfillment, real time stock information is proposed as a must by Kindt and van der Meulen (2011). Slegers and van Essen (2013) explained that 90% of the 23

consumers find real time stock information important to very important within online ordering. This way the consumer knows the current stock level of the e-tailer. Through the presentation of the current stock information, also a sense of urgency can be created. Ferdows, Lewis and Machuca (2003) explain that Zara let s its customers know that stock is limited and they need to act now. Also the current order status needs to be transmitted to the customer. Providing tracking and tracing options with a system including e-mail notices, significantly affects the buyers evaluations of delivery (Cao and Zhao, 2004). Cao and Zhao (2004) furthermore explained that the ability to see the status of delivery does not improve delivery time directly, but such a system has a very positive effect on buyers perceptions of delivery time. The majority of the consumers (56%) find the ability to track and trace the package important to very important (Intomart Gfk, 2013). Okholm and Möller (2013) state that over 80% of the consumers find it important to receive an electronic notification (e-mail or text message) of delivery. 2.5. Coding Scheme The issues in e-fulfillment and the use of a full service provider in this process are summarized in Table 2.6. This coding scheme is used in the research to assign certain pieces of information to the specific topics of the research. The use of literature per subcategory is showed in Appendix I. As displayed in this table the literature on order processing, middleware and order information is scarce compared to the other topics. 24

Category Code Subcategory Code Sub-subcategory Code Description Fulfillment FC Characteristics related to the e-fulfillment process and consumers E-fulfillment EF Characteristics Service Triads ST Issues in the triad of e-tailer, service provider and consumer E-Business and EBO Outsourcing OUT Modular Services MS Issues in standardization and modular service design Outsourcing New Client Adoption NCA Issues in new client adoption and starting full service relationship Pre-sale activities Pre Activities that define service quality before the moment of purchase Service Quality SQ Post-sale activities Pos Activities that define service quality after the moment of purchase Assortment Type AT The type of products an e-tailer carries and its impact on fulfillment Supply Management Order Fulfillment ICT Support SM OF ICT Assortment AS Assortment Width AW The assortment width an e-tailer carries and its impact on fulfillment Distribution Upstream Inventory UI Locating inventories upstream within fulfillment network design DND Network Design Downstream Inventory DI Locating inventories downstream within fulfillment network design Stock Levels SL Availability AV The availability of products and the stock levels required for this availability Information IR The information requirements for fulfillment process execution (Order Order Capture OC Requirements information, Customer information, Fulfillment choices) Payment Pay Issues related to payment and payment security in webshops Order Processing OP Information Transfer IT The transfer of information from website to systems, consumers and vice versa Picking Operations PO Issues related to picking operations and the labour intensity Pick and Pack PP Capacity Management CM Issues in managing the required capacity and the fluctuations in demand Damages DA Issues related to product damages and how to prevent these Delivery Returns Table 2.6 Coding scheme of e-fulfillment processes D R Delivery Time DT The required and current delivery time, choice of customers in this issue Delivery Method DM The required and current delivery method, choice of customers in this issue Delivery Fee DF The charged delivery fee and the way this price is built up Returns Handling RH Issues in the handling in returns handling, consumer requirements and volume Return Method RM The method of return that is used by the e-tailer or full service provider Returns Payment RPa The payment process within product returns and the speed of these payments. Returns Prevention RPr The prevention of returns and how to achieve this Middleware MID Information Transfer IT The transfer of information from website to systems, consumers and vice versa Information IR The information requirements for execution (Order information, Customer Order Information OI Requirements information, Fulfillment choices) Stock Information SI The provided information about stock levels, for WMS as well as website Fulfillment FI Tracking and Tracing TT The provided tracking and tracing information, for consumers as well as e- Information tailers

3. Research Design and Data collection This research investigates the consequences of e-tailer activities on fulfillment processes; hence it can be marked as an explanatory research. Saunders and Lewis (2012) described the explanatory research as one that focuses on studying a situation or a problem in order to explain the relationship between variables. In this case this research focuses on e-fulfillment characteristics and customer requirements on the one hand, and the design and control of these fulfillment processes on the other. The strategy of this explanatory research is a single case study conducted at the WeCommerce collaboration. Saunders and Lewis (2012) explained that the case study is particularly good at enabling the researcher to get detailed understanding of the context of the research and the activities taking place within that context. This research uses secondary data in terms scientific and grey literature on the topic of e- tailing and fulfillment processes. Besides secondary research, primary empirical research is conducted at the parties involved in the collaboration. 3.1. Literature study Existing literature is used to clarify the different concepts and to answer research questions aimed on fulfillment characteristics and the requirements of internet consumers. Various sources with different visions on fulfillment characteristics, design and control of fulfillment processes and the connection between these are consulted in order to build an objective view on this subject and the research questions. The articles are found using search engines on the internet and databases at the library of Tilburg University. Articles were selected on relevancy and quality. Relevancy of the article was judged through the presence of key words important to this subject and quality was based on the rating of journal the article is published in, and the number of citations. Also some grey literature, in the form quantitative reports on information regarding consumer behaviour and requirements in the e-fulfillment business, was gathered as input for the process design and control. Online shopping is a relative young phenomenon (Overboom and de Haan, 2013), which causes scarcity of academic literature within this topic compared to the broad offer of grey literature. Furthermore concrete information offered in grey literature can be a good addition to the academic articles used in this research. 3.2. Empirical study Empirical data is gathered to analyse the impact of fulfillment on the design and control of processes at the full service provider. In this research empirical investigation is done by observation and interviewing to make a thorough analysis of the fulfillment processes required at the organization.

3.2.1. Observation Qualitative information regarding the current processes involved at the Versteijnen and Indicia and differences with the fulfillment processes described in literature will be gathered by observation. The researcher will play the role of participant-observer and will be involved in the fulfillment processes involved at the organization. Furthermore the observer will attend the different sessions between Indicia and Versteijnen. These sessions are focussed on the collaboration and logistics within internet trading. The observer has a predetermined set of processes to be studied, namely the processes and issues involved in the e-fulfillment business. Due to this fact, the observation can be marked as a structured observational study (Sekeran and Bougie, 2009). During this observation, the researcher also will conduct non-structured, informal interviews with the employees involved in these processes. 3.2.2. Interviews Furthermore qualitative research will also be conducted in the form of face-to-face semi-structured interviews to get an in depth understanding of the issues related to the research. For a semi-structured interview, an interview guide with the outline of planned topics is made from where the interview can take place (Adams, 2010). The coding scheme in this case will serve as the outline of planned topics. The advantage of face-to-face interviews is that rich data can be obtained and the interviewer can read the nonverbal cues of the interviewee (Sekeran and Bougie, 2009). Interviews will be conducted at the involved parties in the WeCommerce collaboration. Furthermore the researcher will interview an e- tailer to provide insights on this side of the service triad. At these companies different professionals involved in the collaboration and this topic will be interviewed to form an objective view from different perspectives, which is known as the process of data triangulation (Sekeran and Bougie, 2009). Both specialists on the sales and on the operation side will be involved in this research. The semi-structured interviews will at maximum last for one hour, to prevent fatigue for both respondent and interviewer (Adams, 2010). To define the sample of this research non-probability judgment sampling is used. Using judgment sampling, the researcher defines people who are in the best position to provide the information required (Sekeran and Bougie, 2009). Sekeran and Bougie (2009) explained that judgment sampling can be the best sampling design choice, in particular when a limited population can provide the information necessary. In this research professionals specifically related to this topic at these companies can provide the information needed to describe the implications of e-tailing on process control and design. The interviews will all be recorded and transcribed in order to understand, analyse and examine the different visions of the professionals and verify the answers with the respondents afterwards. Seven interviews are used within this research, as displayed in Appendix III. 27

3.3. Data analysis In order to analyse the data, the interviews are transcribed and divided into data pieces. This is done using the codes developed for this research, which can be found in Table 2.6. The transcriptions of the interviews are coded on the issues involved in the research, also known as descriptive coding. Descriptive coding is used for making the data easier to retrieve and aggregate data related to a particular issue (Rogers and Goodrick, 2010). Through the use of labelled data, a structured way to answer the different research questions involved in the empirical part of the research can be accomplished. The coded data pieces and the interview transcripts can be found in Appendix X. 3.4. Rigor in research There is a need to look at qualitative methods of research to ensure the quality of the findings (Krefting, 1990). Gibbert, Ruigrok and Wicki (2008) defined 4 criteria from which the rigor can be assessed: internal validity, construct validity, external validity and reliability. Validity is in a broader sense concerned with whether the findings of the research are about where they appear to be about, and reliability is concerned with consistent findings in the research (Saunders and Lewis, 2012). Both are important factors for producing a good research. 3.4.1. Validity Validity is divided in internal validity, construct validity and external validity. Internal validity refers to the causal relationships between variables and results (Gibbert et al., 2008). The issue is that the researcher must have logical reasoning that is strong enough to defend its conclusions. To ensure internal validity a clear research framework is defined (Figure 1.1), and a theoretical framework is created to underpin the relations (Chapter 2). Construct validity is considered during the data collection phase and refers to if the constructs are about where they claim to be about. First of all to ensure construct validity, reproducibility is made possible through extensively explaining the steps taken in this research. Construct validity will also be ensured by triangulating the data from different sources to find consistency among findings. External validity is concerned with the generalizability of the results. Due to the fact that this case study is specifically aimed at the WeCommerce collaboration, the external validity is of lowered importance. 3.4.2. Reliability Reliability is concerned with the avoidance of random error. Transparency of the research will be ensured through careful documentation and clarification of the research topics. All research documents that are of importance will be inserted in the Appendixes. In this way a replication of this case study is made possible (Gibbert et al., 2008). 28

4. WeCommerce current processes In this chapter the current processes of WeCommerce based on existing clients are described. 4.1. WeCommerce WeCommerce is a collaboration between Indicia and Versteijnen, which present an opportunity for retailers to expand to the online market, where one party offers the whole package. In this collaboration Indicia takes care of the ICT related processes in e-commerce, whereas Versteijnen focusses on the logistic processes needed for these e-tailers. A company description of Indicia, Versteijnen and WeCommerce can be found in Appendix II. The processes of WeCommerce consist of new client adoption, supply management, order fulfillment and ICT support. This hierarchy of the processes is displayed in Figure 4.1. New Client Adoption Supply Management Order Fulfillment 1 2 3 4 ICT support 2.1 2.3 3.1 3.6 Figure 4.1 The process hierarchy of WeCommerce 4.2. New client adoption The client adoption method of the WeCommerce collaboration consists of 6 different steps to create the service an e-tailer desires: exploration and contracting, initiation, design, development and testing, transition and service and support. The design of the webshop and fulfillment processes is highly dependent on the wishes of the e-tailer. 4.3. Supply management The supply management process is related to the management of stock levels in the warehouse of Versteijnen. This process consists of stock level adjustments, new products in the assortment, or replenishment orders at the supplier. The stock level is adjusted by corrections on the stock level, allocation of stock to pick assignments and the arrival of new supplies. Once a day, the stock level in the WMS system is transmitted to the webshop. The e-tailer receives a report on the stock levels once a day from which it can be decided to place replenishment orders at the supplier. 29

Whenever a new product is added or removed from the assortment, the e-tailer sends an Excel file to Versteijnen. Versteijnen uses this Excel sheet to update the assortment in the WMS system. This same Excel sheet is used by the e-tailer to manually create new articles in the webshop. The report on current stock levels that is transmitted to the e-tailer once a day serves as a guide to create replenishment orders. The e-tailer decides whether or not to place an order based on these stock levels. The order is transmitted to the supplier, and subsequently received at Versteijnen where the stock level needs to be adjusted again. 4.4. Order fulfillment The order fulfillment process is related to the consumer placing an order in the online shopping cart, until the product is delivered and in some cases returned. In the order capture the consumer selects the desired product, fills in the required information, chooses a payment method and pays the product. The order capture operation consists of a one-page-checkout, where only one page is used to complete the checkout process. After the order the consumer receives an order confirmation via e-mail. With order processing the order is first transferred to the WMS of Versteijnen and the e- tailer. The e-tailer receives a confirmation for his administration, while Versteijnen can process the orders to pick assignments. The orders are grouped together and allocated to the stock in the warehouse at pre-defined release times. Currently Versteijnen applies batch picking wherefore batches of about 20 orders are grouped together to a picklist based on order size. The picklists are used to pick the products ordered at the internet. A loading unit is prepared and the terminal creates the route for the orderpicker. After picking all the orders, these are brought to the packing station where the order is checked and packed for delivery to the final consumer. When the order is connected to an export delivery, required documents are automatically printed at the packing station and added to the package. The current design provides next day home delivery without any choice for consumers. The order cut-off time is 4:00 pm and the orders are delivered during the next working day without a specific time window. If the consumer is not at home the package needs to be offered again or returned to the warehouse. The delivery fee is based on the fee of the package carrier and 30

charged to the e-tailer. The e-tailer in his turn can decide whether or not to pass on these costs to the consumers. A package carrier is selected for last mile delivery. If the consumer is not fully satisfied with the product, it can be returned. On the website of the e-tailer it is stated that the products always need to be registered for return, but in practise this step is often skipped by the consumer. When packages are received at the warehouse, they are checked, if necessary repacked, and put back in inventory. If the products are not fit for resales a picture is taken and sent to the e-tailer, while the full service provider waits for response. Compared to the literature within e-commerce product returns, the largest client returns percentage of 5% (ClientB, Fitness clothes and accessories) is relatively low at the full service provider. 4.5. ICT support ICT can be used to support the process in different ways. First of all it can help by providing the information requirements to fulfill the order. On the other hand, it also can provide the consumer with information about their order status and current availability of the product. The communication between the systems involved is referred to as middleware. The systems within the order fulfillment are the Magento webshop, the WMS system of Versteijnen (Redprairie) and the e-tailer s administration. The e-tailer can have an ERP, a cash register system or do the administration manually. Furthermore a payment provider is connected to the webshop and WMS is connected to the software suite used at the package carrier. 31

5. Results In this chapter the results of the research are shown. Results are categorized in e-business and outsourcing, supply management, order fulfillment and ICT support. The data pieces assigned to each misfit are shown in Appendix III, and the connected to the current processes in Appendix IV. Based on the assigned data pieces in Appendix III and reflection at the respondents, a ranking of the recommendations is displayed in the tables within this chapter. 5.1. E-business and outsourcing The part of e-business and outsourcing contains issues within of the fulfillment characteristics and outsourcing. 5.1.1. Refined e-fulfillment characteristics The fulfillment characteristics as described in Table 2.1 do not provide the explanation as the empirical research conducted in this study. This results in the need for these e-fulfillment characteristics to be refined. In terms of the broad and unknown customer base, the term big data popped up in the attended sessions. By the use of big data, the consumer base can be analysed, set up into profiles and service can be adapted specifically to this consumer. Furthermore the competition is not unlimited since the wishes of the consumer play an important role which makes it difficult for small players to enter the market. Also replenishment by real-time demand is not present at a lot of small e-tailers, which still replenish based on planning. From the interviews it appeared that the small order size is the biggest difference and that the amount spent at webshops is lower compared to physical shops. 5.1.2. Design based on consumer requirements and extensive advising role The currently provided fulfillment design was mostly based on the wishes of this e-tailer. One respondent explained that the current approach to a new client was can we make it rather than how can we improve the whole fulfillment process. Furthermore a few respondents noted that the e-tailers were inexperienced and did not have enough knowledge about, and attention to the fulfillment process. One example is that a specific e-tailer was focussed on text colour instead of the whole checkout operation at the webshop. Due to the inexperience in e-commerce logistics, WeCommerce only adopted an advising role based on traditional logistics. It turned out from the literature review that due to lack of knowledge of the e-tailer, the fulfillment design of e-tailers is currently not adapted to these consumer requirements. For future client adoptions the full service provider can have an extensive advising role on consumer requirements and the fulfillment process design. Insights are provided on e- fulfillment and consumer requirements for the full service provider to adopt an advising role within this context. Finally a respondent explained that the dynamics of the internet business require the full service provider to continuously adapt to new consumer requirements and gain knowledge about rising concepts within e-fulfillment. This knowledge can subsequently impact the fulfillment design, in new client adoption as well as service improvement within current accounts. 32

5.1.3. Modular design Currently WeCommerce is striving to standardization within the fulfillment process. A respondent explained that the fulfillment and webshop design was customized based on e-tailer wishes. He stressed that in the future the look and feel of the webshop should be customized, with a standardized functionality. It turned out from literature that modularity can be a solution to the customized webshop and fulfillment design. With modularity, standardized modules are combined to retain flexibility within a standardized design. If is looked at fulfillment design, some parts can be standardized while some other parts are dependent on the size of the e-tailer, the size and type of assortment, product value, the product turnover and the special consumer requirements. The full service provider together with the e-tailer needs to perform trade-offs to define which design fits best to these characteristics. Based on interviews and a reflection session with the respondents, the trade-offs that need to be discussed can be found in Appendix V. An example of this are the payment modules, where more extensive payment modules must be implemented based on the value and possibility of return of the products. The trade-offs are further explained per related improvement section. 5.1.4. Communication Within the current adoption of new clients, the communication between service provider and client was a concern mentioned by the respondents. Within new client adoption, the full service provider needs to gain knowledge about the e-tailer and the assortment it carries. One respondent mentioned making accurate estimates and designing the warehouse operation based on that as the most important issue in new client adoption. The comment of another respondent which noted the lack of preparation in new client adoption implies that this is currently not the case. A few respondents noticed that ClientB communicated that there would be 800 articles in the assortment and that they needed to process approximately 5000 orders per day. The fulfillment design was based on this information, but came out inefficient since the actual assortment raised to 3000 articles and the orders panned out to be approximately 1000 a day. The e-tailer must provide the full service provider with accurate information about number of articles and the number of orders and turnover rates per article. In this way the full service provider can adapt the warehouse operation to this information. On the other hand, the full service provider should provide clear information requirements. Standardized forms need to be designed to inform the e-tailer which information is crucial in new client adoption. An example of this pointed out by one of the respondents is the information that is required in the WMS system, with a standard form explaining what information should be entered in which field. Misfit Dimension Current situation Recommendation Ranking E-fulfillment Refine and elaborate on 5.1.1 Theory characteristics shallow in characteristics based on empirical N/A literature study 33

5.1.2 Fulfillment design Design based on e-tailer wishes, e-tailer no experience with fulfillment Design based on consumer requirements, advising role of e- tailer, continuously adapt +++ 5.1.3 Fulfillment design Customized webshop and fulfillment design Modular design based on consumer requirements and tradeoffs +++ No clear communication Improve communication with 5.1.4 Communication between LSP and e-tailer accurate information and standard ++ in New Client Adoption information requirements Table 5.1 Misfits within e-business and outsourcing 5.2. Supply Management The important issues of supply management are found within assortment, distribution network design and stock levels. 5.2.1. Automated assortment inputs Within assortment, the manual assortment inputs and the fast changing assortments are a misfit. It turned out from literature as well as the empirical study, that e-tailers carry fast changing assortments. These assortments need to be manually inserted in each of the systems involved in the fulfillment process, except for one of the larger clients of WeCommerce where the ERP system is leading in changing assortments. At this client, article information is transmitted from the ERP to the other systems within the fulfillment processes. For e-tailers without an ERP system the assortment needs to be manually inserted in the webshop, and subsequently in the WMS system at the full service provider which is explained by the respondents as very labour intensive. A study needs to prove from which scale an interface provided by a web application or via the Content Management System is possible and profitable for e-tailers without an ERP system. Such an application can reduce manual proceedings and subsequently time involved in the process. Furthermore the automated input can prevent manual mistakes made in the system inputs. The trade-off to describe which situation best fits which assortment input is provided in Appendix Va. 5.2.2. Coordinating role in distribution network design WeCommerce uses one distribution network design for the whole assortment of all the e-tailers, distributor storage with package carrier delivery. Versteijnen is in charge of the storage and arranges delivery with a parcel delivery service. It turned out from the literature review that for future e-tailers another distribution network design based on product specifications (Table 2.2) might be more appropriate. The improvement can be found in supply chain service on the one hand, and supply chain cost on the other. From the interviews it appeared that the full service provider can adopt the required coordinating role within this other distribution network designs. An example of this is an e-tailer with 34

high value products and low demand, from where direct distribution from the manufacturers can be arranged by the full service provider. The use of direct distribution can save inventory cost compared to structures where more downstream inventory is present. The assortment of an e-tailer can also be split into categories, where the most appropriate distribution network design can be applied to each category. The appropriate distribution network design is dependent on a trade-off which is described in Appendix Vb. This trade-off can be applied to a product group or the whole assortment of an e- tailer. 5.2.3. Offer VMI service module The appropriate stock levels are currently only managed by the e-tailer. A report on stock levels is sent each day to let the e-tailer decide to order new products for replenishment or not. From the literature review and the interviews it turned out that the full service provider can help the e-tailer by providing VMI in its service role. With VMI, the vendor or in this case service provider defines inventory levels and inventory policies to maintain the stock levels. One of the respondents mentioned that the e-tailer should focus on sales, and that the full service provider can help the e-tailer with issues in logistics by for example providing such a VMI concept. Together with the e-tailer, the service provider can define minimum stock levels from which replenishment can be automated. In this way the process is accelerated and less manual proceedings are required. The use of VMI is only possible for the e-tailers with a relative stable demand and product life time, as described in the trade-off (Appendix Vc). A few respondents noted that ClientB runs an assortment with 6 launches a year and large fluctuations in demand. This makes it impossible for this specific e-tailer to retain stock levels with a static stock level. VMI is one of the modules which can be added to the current design, if possible and desirable by the e-tailer. Misfit Dimension Current situation Recommendation Ranking 5.2.1 Assortment Manual inputs of often changed assortments Apply assortment input method based on trade-off (Appendix Va) ++ 5.2.2 Distribution Network Design One distribution network design for all products and e-tailers Provide the appropriate distribution network design (Appendix Vb) and adapt a more coordinating role if required + 5.2.3 Stock levels Stock levels only retained by e-tailer Provide the choice for VMI based on Appendix Vc ++ Table 5.2 Misfits within supply management 35

5.3. Order fulfillment In this paragraph the issues and results within order capture, order processing, pick and pack, delivery and returns are described. 5.3.1. Secure and safe ordering processes As explained by one of the respondents, currently the perception of safety at the online consumer is increased with information on payment processes on the website and in the FAQ. As turned out from the sessions and interviews, security and safety within online ordering is the most important issue. Consumers are more and more aware of the risks within online ordering, and e-tailers need to respond to that. Besides extensive information about the payment process, the full service provider must adapt payment methods that provide the required safety of the consumer. A few respondents and participants in the sessions stressed the dependency of payment safety based on product type and price. For example for high value products, the ability to pay cash at delivery or afterwards may be important for a consumer to order at this specific webshop. Furthermore two respondents stressed that when possibility of returning the product is high, consumers do not want to pay in advance. The payment methods are modules that can be implemented based on product characteristics, as described in Appendix Vd. An example of an e-tailer which provides an extensive range of payment methods is displayed in Appendix VI. 5.3.2. Backorder approach Currently backorders are not permitted and only available products are shipped to the consumer. One of the respondents pointed out the risk of returns if products are automatically backordered. He explained that when the ordered product is delayed, the consumer might order the product at another e- tailer. The e-tailer needs another approach to deal with the backorders. The webshop needs to provide the option to allow for partial shipments or not within the order capture process (example shown in Appendix VII). After that, there are two approaches left to respond to backorders: cancel or wait for the delayed products. For some e-tailers the backorder approach might be generally applicable to all consumers and for some e-tailers the backorder approach must be adapted to the specific consumer. When providing services to e-tailers which operate on a large scale, a digital feedback form can be implemented to automate this response by the internet consumer. For smaller e-tailers the consumer specific feedback on backorders can be done manually. In this way the consumer can choose whether or not they want to wait for the product. A trade-off is displayed in Appendix Ve. 5.3.3. Warehouse layout Currently the layout of the warehouse is not adapted to the internet orders. For one of the two specific internet clients the warehouse locations are already divided into four smaller locations due to the smaller quantities. Currently only the ground floor level is used for internet orders. The respondents at the LSP explained that in the future the warehouse layout should be further aimed on internet orders. They elaborated that smaller locations can be implemented and floors above the 36

current floor level can create more storage. The respondents furthermore noted that clients can be mixed and the design should be based on fast- and slowmovers to create more efficiency in the picking process. When splitting orders based on fast- and slowmovers, a reduction in throughput time and walking distance can be achieved. As mentioned by one of the respondents, the split orders need to be recombined at the packing operations. The information about fast- and slowmovers should be provided by the e-tailer in new client adoption (Misfit 5.1.4.) and reviewed by the full service provider from time to time. The trade-off in product layout allocation at the warehouse is shown in Appendix Vf. 5.3.4. Mechanical or semi-mechanical picking Also, the manual picking causes high labour intensity due to walking distances as described in literature and verified by the respondents. In literature mechanical or semi-mechanical picking is explained as a solution to this high labour intensity in e-fulfillment. There is a wide range of mechanical or semi-mechanical picking methods possible to deal with the large walking distances. The full service provider can implement several zones in which products can be allocated based on product turnover rates and product size (Appendix Vf).The appropriate mechanical or semi-mechanical picking methods are subject to future research. Furthermore it is mentioned by the respondents at the LSP, that WeCommerce currently does not have the scale to implement mechanical or semimechanical picking methods. They explained that a large and stable amount of orders is required to implement these picking methods. For the full service provider this means creating long term contracts with several clients up which they can rely. A trade-off is required to study from which scale the investment in mechanical picking outweighs the extra walking distances within manual picking (Appendix Vf). Finally it is mentioned by one of the respondents that the design should be generally applicable since the full service provider is dependent on several clients. 5.3.5. Deal with fluctuations The service provider makes use of flexible capacity to deal with the fluctuations in demand. As turned out from literature delivery is most preferred on Saturdays. Subsequently literature described that the order peak can be found on Mondays, which is also mentioned by the LSP respondents. The order peak on Monday, and the preferred delivery on Saturday and spread over the rest of the week suggest that the use of a flexible delivery date offered to consumers can improve the capacity spread over the week. As mentioned by the warehouse supervisor currently the allocation times are based on fixed, which can cause capacity problems if a large order volume is released at the latest moment. To further improve flexibility, he mentioned the option to use dynamic allocation times. The dynamic allocation times should be based on the order volume and the required time to process these orders. Due to the strong advising role on packaging the service provider adopted during new client adoption, damages did not appear to be a problem at WeCommerce. For new client adoption this same advising role is important. 37

5.3.6. Choice of delivery time Only next day delivery is provided in the current fulfillment design, and delivery on Saturdays is not allowed. Literature as well as the e-tailer in the interview underlined the importance of providing choice to the consumers in terms of delivery time and time of delivery, instead of only fast delivery. Furthermore it is found in literature that delivery on Saturday is most preferred at internet consumers. The full service provider must implement options to choose for a specific delivery date and time, and delivery on Saturdays. The full service provider can highlight the importance delivery choice and delivery on Saturdays to the e-tailer in its advising role. The orders which are filled in more than a day upfront should be hold in the webshop or the WMS before they are allocated to picking assignments. The possibility for choice of a specific delivery time should be reviewed together with the package carrier. Examples of e-tailers who provide choice in shipping date and time of delivery are shown in Appendix VIII. 5.3.7. Choice of delivery method In terms of delivery method, only home delivery is provided. It turned out from literature that offering choice in delivery method is important and that home delivery, delivery at another specified address and at a parcel collection point is most preferred. One respondent explained that if consumers are not at home and the product does not fit through the letterbox the product is offered again or returned to the service provider which causes extra cost since the product needs to be re-delivered. The delivery method should be adapted to the requirements of the consumers by providing choice in delivery method. One of the respondents furthermore mentioned that in the section of order capture, an option to indicate whether or not the package is allowed be delivered at the neighbours should be provided. This way the returned products can be kept to a minimum and the delivery method will fit the consumer requirements. Examples of e-tailers which provide collection options are shown in Appendix VIII. The full service provider should review the options for delivery methods together with the package carrier and adopt an advising role towards the e-tailer. 5.3.8. Structured delivery fee The charged delivery fee passed on to the e-tailer who decides what amount is charged to the consumers. The theoretical framework brought forward that a structured delivery fee is very important and that a large part of the consumers do not want to pay for delivery. The e-tailer also mentioned that they used to charge delivery cost to the consumers, but indicated that nowadays charging a delivery fee is not done. Furthermore it turned out that the delivery fees charged by the package carriers are complex. If a delivery fee is charged, this fee should be clearly structured and understandable for the consumers. The full service provider must adopt an advising role in this context and can explain the importance of a structured delivery fee, or including the delivery fee within the e-tailers margins. An example of a structured delivery fee is shown in Appendix VII where no shipping costs are charged based on supersaver delivery and the cost rise among the other shipping methods. 38

5.3.9. Register product returns As mentioned by the respondents, the non-registered product returns cause much work and subsequently cost in identifying the sender, and the prior order of the consumer. Currently the address of the service provider is shown on the website of the e-tailer from which consumers can return products directly. The interviewed e-tailer uses a product return sticker with delivery so the consumer can easily return the package without interaction with the e-tailer if desired. This also is an option for the full service provider, where the return sticker can contain a barcode to connect the return order to the prior order. Another option is to arrange product returns using a digital form, from where the e- tailer as well as the service provider can be notified about the product return. An example of an online return registration can be found in Appendix IX. 5.3.10. Product return cost Currently the consumer must pay the product return unless other arrangements are made with the e-tailer. Some respondents, as well as participants in the sessions and the literature review stressed the importance of a free return process for the consumer. The full service provider must adopt an advising role and explain this importance to e-tailers. Furthermore one of the respondents noticed that the handling and return cost are higher than the product price wherefore the option to not let the product to be returned at all should be reviewed. Besides avoiding product return cost this can also improve the perceived ease of return at the consumers. The disadvantage of this return policy is the possibility of abuse by the consumer. The choice of implementing such a policy is the responsibility of the e-tailer, where the full service provider again can adopt an advising role and provide information (e.g. cost of returns handling) to the e-tailer. 5.3.11. Choice in product return method At WeCommerce, no choice is offered to the consumer in terms of return methods. The literature review revealed that consumers prefer to bring their return package to a parcel delivery point. Furthermore the use of a physical product return structure can improve the perceived ease of return for the consumer, and subsequently customer satisfaction. The physical structure of parcel collection points described in the delivery section can also be offered to the consumer for the product return process. The full service provider can provide information and adopt an advising role about consumer requirements and cost, from where the e-tailer can choose to implement such a structure. 5.3.12. Fast product return process The processing of product returns currently should be finished at the end each week. The warehouse supervisor indicated that currently it takes about 2/3 days, and the operations manager stated that the process can be designed on handling of these returns within 24 hours. Literature brought forward that fast handling of these product returns is important for fast reimbursement to the consumers. In the interview with the e-tailer it is also indicated that it is important to provide fast return payment. He explained that if consumers would not receive their money back within a day after 39

receipt at their store, they immediately contacted the e-tailer. The full service provider should provide a fast product return process from which the e-tailer can provide fast crediting to his consumers. Misfit Dimension Current situation Recommendation Ranking 5.3.1 Payment Extensive information and payment methods Extensive information and provide payment methods based on Appendix Vd ++ Backorder products Implement partial shipment 5.3.2 Backorders always cancelled and e- tailer feedback via Excel allowance in order capture, create backorder feedback based on + sheet Appendix Ve 5.3.3 Warehouse Warehouse layout not adapted to internet orders Use small locations and split orders based on mixed client fastand slowmovers +++ 5.3.4 Warehouse Manual picking with high labour intensity A study towards (semi-) mechanical picking methods and from which scale this is profitable ++ Expand the use of flexible 5.3.5 Warehouse Flexible capacity to deal with demand fluctuations capacity with flexible shipping dates and dynamic allocation ++ times 5.3.6 Delivery Only next day delivery provided Provide choice in delivery date, time of delivery and delivery on Saturdays ++ Expand choice in delivery method 5.3.7 Delivery Only home and other address delivery provided with parcel collection points and the option to allow for neighbour + shipping 5.3.8 Delivery Delivery fee passed on to the e-tailer Extensive advising role towards the charged delivery fee to the consumers + 5.3.9 Returns In many cases product returns not registered Add a return sticker at delivery or implement an online return form ++ 5.3.10 Returns Consumers must pay for returning products Adopt an extensive advising role to stress the importance of a free product return process + 40

No choice offered to the Expand the return options with a 5.3.11 Returns consumers in product physical structure to collect these + return methods returns 5.3.12 Returns Product returns finished at the end of each week Fast handling of product returns to speed up reimbursement + Table 5.3 Misfits within order fulfillment 5.4. ICT support In this section the issues within ICT support are described. 5.4.1. Automate information exchange Some parts of information exchange are excluded from the middleware. An example of this is described as Misfit 5.2.1. The respondents explained that the manual proceedings cause much time, and subsequently delay the process. A respondent explained that based on the size of the information exchange some data connections can be automated with an interface wherefore less manual proceedings are needed (Appendix Vg). This includes manual proceedings at the warehouse as well as at the e-tailer. 5.4.2. Expanded information requirements Currently information about the delivery address and the order is transmitted to the systems to fulfill the orders. The order capture process should be expanded with the extra information requirements: delivery time, delivery method, partial delivery allowance and neighbour delivery allowance. A respondent explained that this information should be entered in a mandatory field within order capture. The importance of a one-page-checkout within order capture is emphasized by another respondent, wherefore these extra information requirements should be implemented on this page. The consumer should be provided with a clear overview of the entered order and information. 5.4.3. Improve stock level reliability Currently the stock level in the webshop is updated once a day from the WMS. The webshop provides a signal with product is available to inform consumers. Respondents of the interviews noted that a time difference between the stock information on the webshop and the WMS is present. Due the fact that orders are not directly allocated and the stock levels are updated only once a day, the stock levels on the webshop lag behind on actual inventory. The respondents explained that this causes mispicks which can lead to unsatisfied consumers. A respondent explained that this problem can be solved with a separate inventory display on the webshop. The WMS stock levels should be used once a day to correct differences. Beside the more reliable stock level, also more detailed information can be provided to the consumer. The stock information can be displayed in terms of quantities, instead of only an availability notification. Furthermore consumers should be informed upfront that if the product is not available, what the estimated delivery time is. 41

5.4.4. Automated mailing in tracking and tracing The tracking codes are available at the moment the package carrier scans the package for the first time. These codes are sent to the e-tailer who subsequently can provide the consumer with the current order status by mail and at the website. One of the respondents explained that the order status should be brought back to the consumers as fast and easy as possible. An automatic mailing system with the order status can be implemented to reduce manual proceedings within tracking information. Also the feedback to the webshop can be automated instead of manually entered. Misfit Dimension Current situation Recommendation Ranking 5.4.1 Middleware Parts of information with much manual proceedings Implement interfaces based on the scale of the communication (Appendix Vg) ++ 5.4.2 Order information Order information based on address and order Expanded order information about address, order and delivery options ++ Use separate inventory display on 5.4.3 Fulfillment information Stock level updated once a day from WMS to display availability on webshop the webshop. Display stock levels in terms of quantities. Display estimated delivery time if the ++ product is not available. 5.4.4 Fulfillment information Tracking codes manually entered on the webshop and communicated to the consumers Implement automatic feedback to the e-tailer as well as consumers to inform about order status ++ Table 5.4 Misfits within ICT support 42

6. Discussion, conclusion, limitations and future research This research was aimed at the design of the e-fulfillment processes at a full service provider. This chapter describes the discussion, conclusion and limitations of this research, and ends with suggestions for future research. 6.1. Discussion The service provider needs to execute flawless services to retain satisfied consumers at the e-tailer. From the literature review it appeared that currently a large part of the e-tailers do not provide the service required at internet consumers. The most important issues seem to be providing delivery options in terms of time and method to the consumer, while currently a large part of the webshops do not provide these choices. Furthermore the ease of return, having sufficient stock and providing accurate information about stock levels and order status are important to consumers. This is in line with the empirical part of this study, where it is found that the service is not adapted to consumer requirements mentioned in literature. The characteristics and consumer requirements within literature are specified at a high and abstract level and do not provide deeper insights about these characteristics. The use of grey literature and interviews helped making the abstract level of academic literature concrete to the companies involved in this project. In the empirical part of this study it is found that e-fulfillment characteristics mostly differ from traditional logistics in terms of small orders and fast changing assortments. Previous research is scarce on pick and pack, order capture, order processing, middleware and order information within e-fulfillment. In particular within academic literature, order fulfillment and ICT support can benefit from a stronger attention. This attention should be aimed at how to design a good fulfillment model linked to consumer requirements. Furthermore the combination of ICT and logistics within e-fulfillment, as provided by a full service provider, is a concept unknown within literature. 6.2. Conclusion The beginning e-tailer often does not have the required knowledge about webshops, e-fulfillment and consumer requirements. The LSP on the other hand has had difficulties in new client adoption since communication between the service provider and the e-tailer was not optimal. The service provider needs to offer an extensive advising role to e-tailers on how they can optimally serve their consumers within e-fulfillment. Insights are provided on consumer requirements which can be used to inform the e-tailer, and trade of schemes (Appendix V) to create a fit between e-tailer and fulfillment design. The e-fulfillment processes can be divided into new client adoption, supply management, order fulfillment and ICT support. Within the current processes of WeCommerce, the services needs to be extended based on the consumer requirements within order capture (payment), delivery (time and 43

method) and returns (options and registration). Furthermore the e-tailer requirements need to be adapted within supply management. The warehouse layout should be aimed on internet orders using small locations and distinguishing fast- and slowmovers. If in the future a larger scale of internet clients is achieved, the LSP can turn to mechanical or semi-mechanical picking. The suggestion of adapted processes is shown in Appendix IV. 6.3. Limitations This research makes use of a case study conducted at one specific full service provider. Due to this fact the generalizability of the results within this study are limited. The theoretical framework however can provide interesting insights to e-tailers as well as full service providers, ICT service providers and Logistics Service Providers. It is stated in theory that product types affect the consumer requirements within different e-fulfillment processes. Since the full service providers serves several e-tailers with different product types the general consumer requirements described therefore should be interpreted with some carefulness. It is important to adopt the modular design based on the characteristics of the e-tailer. Finally as described in the empirical part of this research e-tailing takes place within the dynamic market of internet business. It is key for the full service provider to continuously keep track of changes within this market and adapt to new consumer requirements. The possibility exists that the concrete results of this research soon will be outdated. 6.4. Future research E-fulfillment is a relatively young topic within academic literature. There is a stream of literature based the logistic problem on the one hand and a stream of literature based on the front end, the marketing side of e-tailing, on the other. The order capture and the order processing process are underexposed and will benefit from a stronger attention within academic literature. An example of this is the impact of a one-page-checkout use within the order capture process on website conversion. Also no articles on the concept of a full service provider are found which makes it an interesting topic for future research. An example of an interesting research topic would be if the logistic performance or service quality of a full service provider exceeds the service of a normal logistics service provider for e-tailers. Finally the strong advising role as recommended in this research is not mentioned in literature of e- fulfillment. An interesting topic for future research would be how this knowledge can be transferred from the service provider to the e-tailer. Furthermore how this advising role can affect the results that are achieved at the e-tailer can be empirically tested in future research. 44

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Appendices Appendix I: Literature per subcategory Code E-business and Outsourcing Supply management Order fulfillment ICT support Subcode Grey Literature Academic Literature E- fulfillment Outsourcing Service Distribution Quality Assortment Network Design Stock Levels Order Capture Order Processing Pick and Pack Delivery Returns MID OI FI Agatz, Fleischmann and van Nunen (2008) X X X X X X Cao and Zhao (2004) X X Cho, Ozment and Sink (2008) X X Chopra (2003) X X Delfmann, Albers and Ghering (2002) X X Garbarino and Lee (2003) X X Gil-Saura and Ruiz-Molina (2011) X X Holloway and Beatty (2008) X X Kim, Tao, Shin and Kim (2010) X Krikke, le Blanc and van der Velde (2004) X Laseter, Rabinovich, Boyer and Rungtusanatham (2007) X X Li and Chio (2009) X Malik, Niemeyer and Ruwadi (2011) X X Pekkarinen and Ulkuniemi (2008) X Posselt and Gerstner (2005) X X X X X Rabinovich and Bailey (2004) X X X Shulman, Coughlan and Savaskan (2009) X Tarn, Razi, Wen and Perez (2003) X X X Thirumalai and Sinha (2005) X X X Wolfinbarger and Gilly (2003) X Bowersox, Closs, Cooper and Bowersox (2013) X X Currence (2013) X de Koster (2002) X X X X X X X Ferdows, Lewis and Machuca (2003) X Fontoura, Pree and Rumpe (2001) X X Ghezzi, Mangiarancina and Perego (2012) X X X X X X Hultkrantz and Lumsden (2001) X X X Intomart Gfk (2013) X X X X X X X Kindt and van der Meulen (2011) X X X X X X Madlberger and Sester (2005) X X Okholm and Möller (2013) X X X X X X X Overboom and de Haan (2013) X X X X X Pyke, Johnson and Desmond (2001) X X X X X X X Ricker and Kalakota (1999) X X Sannen and Bonneux (2011) X X X X X Slegers and van Essen (2013) X

Appendix II: Company description Indicia Indicia is a company located in Tilburg which provides a wide range of services in the ICT business. One of the segments within the services offered by Indicia is commerce and connectivity, where is focussed on webshops and the related information flows. Indicia believes in the power of collaboration and the use of combined expertise to achieve the best results. Versteijnen Versteijnen Logistics is a LSP located in Tilburg, which is continuously aspiring to add value to customers. This ambition is translated through the mission of the company as the + in your logistics. Versteijnen facilitates customers in various segments with various solutions in transport, warehousing, packaging and tracking and tracing. WeCommerce WeCommerce is a collaboration between Indicia and Versteijnen offering a full service concept to e-tailers. Indicia is in charge of the webshop, and the integration between the systems involved in e- fulfillment. Versteijnen on the other hand is in charge of logistic processes of warehousing and transport, where a parcel carrier is selected to deal with transport. The joined expertise of ICT and logistics, and the better alignment of processes are the competitive advantages of this collaboration.

Appendix III: Interviewees, data pieces and misfits Interview Interviewee A E-tailer at www.jimmysmode.nl B Warehouse IT specialist at Versteijnen Logistics C Warehouse Manager at Versteijnen Logistics D Operations Manager at Versteijnen Logistics E Warehouse Supervisor at Versteijnen Logistics F Marketing Manager at Indicia G E-business Consultant at Indicia Misfit Data pieces from interviews A B C D E F G SUM Observation Sessions 5.1.1 1 1 2 1 - - - 5 X 5.1.2 2 3 7 4 1 6 15 38 X 5.1.3 3 6 2 1-3 4 19 X 5.1.4-2 5 5 5 - - 17 5.2.1 4 2 2 - - 3 11 X 5.2.2 1 1 1 1 - - - 4 X 5.2.3 1 1 3 1 - - 1 7 X 5.3.1 2 - - - - 2 5 9 X 5.3.2-3 2 - - - - 5 X 5.3.3-9 4 4 6 - - 23 X 5.3.4-5 4 1 - - - 10 X 5.3.5. 2-3 5 9 - - 19 5.3.6 2 3 4 1 - - - 10 X X 5.3.7 1 1 1 2 1 - - 6 X X 5.3.8 2 1 2 - - 1-6 X X 5.3.9 1 3 2 4 1 - - 11 X 5.3.10 1-2 - - - - 3 X X 5.3.11 1 1 - - - - 1 3 X X 5.3.12 1 - - 2 1 - - 4 X 5.4.1 2 4 2 2-1 5 16 X 5.4.2-5 3-2 - - 10 5.4.3 1 2 1 2 - - 3 9 X 5.4.4-1 - 1-2 1 5 X 53

Appendix IV: Current processes including misfits and recommendations 1. Nieuwe klanten Bedrijf Datum Auteur Auteur 07-1 WeCommerce April-Juni 2013 Ron van Loon Start Verkenning en contractering Vanaf het begin van de samenwerking is het verstandig voor WeCommerce een duidelijke adviesrol aannemen over logistiek, ICT en de wensen van internetconsumenten. Partij WeCommerce/Etailer Omschrijving De klant en WeCommerce verkennen de mogelijkheden en stellen een offerte samen. Initiatie Ontwerp Bij het ontwerp is het van belang een modulair design te gebruiken. Het gebruiken van standaard modules voor het afstemmen van het ontwerp op de e-tailer (tradeoffs). WeCommerce/Etailer WeCommerce In de initiatiefase worden projectafspraken en planningen gemaakt en worden uren vrijgemaakt voor de ontwerp en ontwikkelingsfasen. Bij het ontwerp is zowel het ontwerp van de webshop als het ontwerp van het fulfillment proces belangrijk. Het aanbod van WeCommerce bestaat uit een verschillende opties voor zowel webshop als logistiek. 1 1 Ontwikkeling en Test WeCommerce In de ontwikkeling en testfase wordt de webshop en het warehouse ingericht voor deze klant. Er worden verschillende testen uitgevoerd op het ontwerp. Het assortiment wordt handmatig in de webshop ingevoerd Webshop WMS 1 2 3 Transistie Support en Service 1 2 3 1 1 2 3 11 2 3 11 3 4 2 3 4 Hier wordt instructie en training gegeven aan de e- tailer. Voor de live-gang moeten ook de assortimenten verwerkt worden in het WMS systeem, inclusief de juiste voorraden. De assortimentsupdates worden handmatig verwerkt. WeCommerce/Etailer Hier biedt WeCommerce ondersteuning aan de klant. Naast het aanbieden van de service worden ook incidenten opgelost, de voorraad geupdate en nieuwe WeCommerce/Etailer/Consumenten assortimenten verwerkt in de webshop en het WMS. Assortimenten worden handmatig verwerkt. Verder worden track en trace updates verzorgd naar de webshop en de consumenten.... Einde... Page 1

2. Klantorder proces Bedrijf Datum Auteur Auteur 07-1 WeCommerce April-Juni 2013 Ron van Loon Start Vorige stap: Shopping Partij Omschrijving Plaatsing order door klant 2.1 Consument Klant besteld het gewenste product op de website van de e-tailer. Order voorbereiding 2.2 Indicia/Versteijnen Door de middleware wordt de order naar het WMS verstuurd en doorgezet in pickopdrachten en wordt er voorraad aan gekoppeld. Orderpicking 2.3 Versteijnen De order wordt verzameld door de orderverzamelaar in het warehouse van Verstejnen. Verpakken 2.4 Versteijnen De order wordt gecontroleerd, verpakt en gereed gemaakt voor verzending. Verzenden product en ontvangst door klant 2.5 Pakketleverancier De order wordt opgehaald bij Versteijnen en verzonden naar de consument door een pakketleverancier. Ja Nee Nieuwe levering? Retouren Ja Product retourneren? 2.6 Nee E-tailer/Indicia/ Versteijnen Wanneer een klant problemen ondervindt kan deze contact opnemen en/of het product retourneren. De mogelijkheid bestaat dat de klant een nieuwe verzending wenst waardoor het proces opnieuw start bij 1.2.... Einde... Page 2

3. Voorraadbeheer Bedrijf Datum Auteur Auteur 07-1 WeCommerce April-Juni 2013 Ron van Loon Start Partij Omschrijving Voorraad Artikel toevoegen 3.1 toevoegen of 3.2 of weghalen weghalen E-tailer Voor voorraadbeheer is het van belang dat er wordt gehandeld wordt bij het toevoegen of weghalen van voorraad of artikelen. Het toevoegen van voorraad en artikelen is te zien in 3.1 en 3.2. Voorraad correcties +/- Assortiment update +/- E-tailer De e-tailer zal moeten zorgen voor een update in het assortiment of een update in de voorraadgegevens. Verwerken in systemen Versteijnen/E-tailer Deze updates zullen verwerkt moeten worden in de systemen die betrokken zijn in het fulfillment proces 3.3 Bestelling leverancier Ja Bestellen benodigd? Nee E-tailer Op basis van de voorraadniveaus kan de e- tailer besluiten een bestelling te plaatsen. Het bestellen van nieuwe voorraad is weergeven in 3.3. Einde... Page 3 56

Bedrijf 4. ICT ondersteuning Datum Auteur 07-1 WeCommerce April-Juni 2013 Ron van Loon Pakketleverancier Verzendingen 11 12 13 Informatie Inhoud 1: Klantgegevens NAW consument, afleveradres, telefoon, e-mail 2: Klantorder Artikel, aantal, klantgegevens(1), waarde, land van herkomst Versteijnen/WMS (Redprairie) 3: Betalingsgevens Betaalwijze, bedrag, rekeningnummer,... 4: Orderbevestiging consument Naam, adres, product, aantal 4 7 2 8 Pick en Pack opdrachten Voorraadgegevens Assortimentgegevens Verzendhistorie 5: Betalingsstatus Klantgegevens (5),Ordergegevens (8), betaalstatus 6: Assortimentupdate Artikel, omschrijving, bestelaantal, afmetingen 7: Voorraadupdate Webshop Artikel, artikelmutatie (eenmaaldaags) 1 3 2 Webshop (Magento) Middleware 12 15 13 10 E-tailer (administratie/erp) 6 8: Voorraadupdate WMS Artikel, artikelmutatie (eenmaaldaags) 9: Bestelling leverancier 10: Aanpassing order Artikel, aantal, klantgegevens(5) 11: Verzendopdracht Leverancier, artikel, aantal, adres Versteijnen Adresgegevens, vervoerder, opdrachttype, leverdatum Database Klantgegevens Assortimentgegevens Voorraadgegevens Mijn omgeving Track en Trace gegevens Order historie 3 7 Payment provider Betalingen 2 6 5 12 2 8 Het is afhankelijk van de schaal van de e-tailer hoeveel van de connecties geautomatiseerd kunnen worden voor het voorkomen van manuele handelingen. Database Assortiment gegevens en updates Huidige voorraad WMS (dagelijks) Verzorgen facturen en updaten betaalstatus Orders verwerken tot facturen 12: Track and Trace update 13: Onverkoopwaardige retouren 14: Retour registratie 15: Retour informatie E-tailer Ordergegevens (8), klantgegevens (5), Order status/trace nummer Artikel, Aantal, Oorzaak Retourgegevens,klantgegevens (5), ordergegevens (8) Retourregistratie (13)... Page 4 57

2.1. Plaatsing order door klant Bedrijf Datum Auteur Auteur 07-1 WeCommerce April-Juni 2013 Ron van Loon Start Previous step: Functie Omschrijving Klant voegt product toe aan winkelmand Webshop 1 2 Consument De klant zoekt een product uit en voegt deze toe aan zijn winkelmand. Wat hiervoor nodig is qua informatie is het assortiment en voorraadhoogte. De voorraadhoogte wordt nu éénmaaldaags geupdate. Wanneer de klant naar de checkout gaat is het van belang een onepage-checkout aan te bieden. Dit wordt momenteel al toegepast. Ja Ja Meer producten? Nee Al een account? Het bieden van de juiste voorraadinformatie is belangrijk op de webshop. Het voorraadbeheer zal apart van het WMS uitgevoerd moeten worden om tijdsverschillen te voorkomen. Verder zal bij producten die niet op voorraad zijn de extra verwachtte levertijd aangegeven moeten worden. Magento Als de klant nog meer producten wenst, kunnen deze ook toegevoegd worden aan de winkelmand. Nee Inloggen 5 Invoeren gegevens/ aanmaken account 5 Webshop Consument De klant geeft zijn/haar NAW gegevens, e-mail adres en telefoonnummer. Deze kunnen wanneer de klant dat wilt in een account worden verwerkt en opgeslagen in de database. Vinkje voor het toestaan van deelleveringen. Vinkje voor het toestaan van levering bij de buren. Kiezen leveringswijze Kiezen leverdatum en tijd Het aanbieden van verschillende leveringswijzen: Thuislevering Parcel Collection Points Ander adres (werk/buren) Het aanbieden van keuze in datum en tijd van levering: Weekdagen en zaterdaglevering Kiezen van een aflevertijd wanneer mogelijk bij de vervoerder Consument De klant kiest de gewenste leveringswijze, afleverdatum en -tijd en betalingsmethode. Veiligheid van betaling kan verhoogd worden met juiste informatievoorziening. Op dit moment wordt dit al toegepast op de onderzochte klanten. Het bieden van verschillende betaalmodules is afhankelijk van e-tailer en product. Wanneer de bestelling bevestigd wordt zal dit in de nieuwe situatie invloed moeten hebben op het voorraadniveau dat weergeven wordt op de website. Kiezen betaalwijze 5 Betalen product Bevestigen bestelling 7 8 Orderbevestiging voor consument 6 2 7 15 Webshop Webshop Webshop Consument Magento Magento/ Consument De klant betaald het product via de gewenste betaalwijze. Dit zorgt voor een betalingsverwerkingdoor de payment provider. Wanneer de betaling votooid is wordt een betalingsbevestiging op de webshop gezet. De bestelling wordt bevestigd aan de e-tailer. Op dat moment wordt deze order aangemaakt waardoor hij als input kan dienen voor process 1.2. De voorraad die besteld is wordt op de webshop gereserveerd. De klant ontvangt een bevestiging van zijn of haar bestelling. De input hiervoor zijn adres en ordergegevens. Next Step: 2.2. 2.2. Print Date... Document Name:... Page 5

2.2. Order voorbereiding Bedrijf Datum Auteur Auteur 07-1 WeCommerce April-Juni 2013 Ron van Loon Previous step: 2.1. Start Functie Omschrijving E-tailer 8 Order koppeling 8 Indicia/Middleware Iedere 15 min worden de orders van de webshop verzonden naar het WMS en naar de e-tailer voor het verwerken van de facturen Order administratief verwerken Terugkoppeling e-tailer 8 Nee WMS Product op voorraad? Ja 8 Wanneer er extra levertijd is aangegeven op de website zal het niet meer extra teruggekoppeld hoeven te worden naar de e-tailer. Voor onverwachtte voorraadverschillen moet dat nog wel. E-tailer WMS/ Bedrijfsbureau Versteijnen Bij de e-tailer worden de bestellingen/orders verwerkt tot facturen. Wanneer het product wel op voorraad is wordt een regulier order aangemaakt. Het verschil met een backorder is dat deze reguliere order meteen vrij mag worden gegeven. De voorraadallocatie zal plaats moeten vinden een dag voor de gewenste leverdatum. Producten die dus voor deze datum besteld worden zullen dus later vrijgegeven moeten worden. 3 Voorraad allocatie 3.1 WMS/ Bedrijfsbureau Versteijnen Door het bedrijfsbureau wordt er voorraad toegewezen aan de orders die doorgezet worden. Vanuit dit wordt de voorraad in het WMS ook automatisch aangepast (zie 3). Aanmaken exportorder 8 8b Ja Export order? Nee Aanmaken reguliere order 8 8a WMS/ Bedrijfsbureau Versteijnen Het verschil tussen de aanmaakt van een reguliere en een exportorder is het toevoegen van factuurgegevens. Dit wordt aangepast in de opdracht en toegevoegd in proces 2.4. Orders verwerken tot pickopdracht WMS De orders worden verwerkt tot pickopdrachten. Clusteren pickopdrachten Ontwikkelen picklijsten Op dit moment wordt er volgens vastgestelde tijden orders geclusterd voor batchpicking. Een aanpassing hierin is mogelijk voor het maken van dynamische vrijgave-tijden. Wanneer er in het magazijn gemechaniseerd wordt kan er teruggeschakeld worden op orderpicking. WMS/ Bedrijfsbureau Versteijnen WMS De pickopdrachten worden geclusterd om batchpicking te faciliteren. De picklijsten worden ontwikkeld zodat deze afgedrukt kunnen worden voor het pick and pack proces. Next Step: 2.3. 2.3. Print Date... Document Name:... Page 6 59

2.3. Orderpicking Bedrijf Datum Auteur Auteur 07-1 WeCommerce April-Juni 2013 Ron van Loon Previous step: 2.2. Start Functie Omschrijving Picklijst Printen opdrachten op picklijst WMS 8a 8b WMS/Orderpicker Vanuit het WMS worden de pickopdrachten afgedrukt om de orderpicker van informatie te voorzien. Verder worden er labels afgedrukt voor de laadeenheden. Scannen pickopdracht Voorbereiden laadeenheid Lopen naar locatie Op dit moment is er nog niet het volume om de magazijnoperatie te mechaniseren. In de toekomst bekeken moeten worden vanaf welk volume dit rendabel kan zijn voor het verminderen van loopmeters en doorlooptijd. Orderpicker Orderpicker De laadeenheid wordt voorbereid door het plaatsen van labels op de dozen die gebruikt worden voor het picken. Vervolgens worden deze laadeenheden gebruikt voor het picken. Order picker loopt naar de locatie die aangegeven wordt op de terminal. Scannen locatie en scannen product Orderpicker/WMS De orderpicker scant het product en de locatie. Vanuit daar wordt gecontroleerd door het WMS of hij zich op de juiste locatie bevindt en het juiste product in handen heeft/ Voldoende voorraad? Nee 9 Terugkoppeling pickverschillen Orderpicker/WMS Wanneer er niet voldoende voorraad is, moet dit via de terminal teruggekoppeld worden aan het WMS en de e-tailer (zie 9). Ja Scannen laadeenheid en plaatsen product Orderpicker/WMS De juiste laadeenheid wordt aangegeven en gescand om het product te plaatsen bij de goede order. Nee Picklijst afgewerkt? Ja Orderpicker/WMS Als de pickopdracht afgewerkt is ontvangt de orderpicker een speciale odpracht. Is dit niet zo dan ontvangt hij de volgende pickopdracht. Lopen naar paktafel Orderpicker De orderpicker loopt met de verzamelde orders naar de paktafel Afgeven product op paktafel Orderpicker De orderpicker geeft het product af zodat het verwerkt kan worden bij inpak en eindcontrole. Next Step: 2.4. 2.4. Print Date... Document Name:... Page 7 60

2.4. Verpakken Bedrijf Datum Auteur Auteur 07-1 WeCommerce April-Juni 2013 Ron van Loon Start Previous step: 2.3. Functie Omschrijving 8a Invoeren order voor controle 8b Inpakker/WMS De order wordt ingevoerd voor controle in het WMS systeem. Controleren order Inpakker/WMS De order wordt gecontroleerd door het scannen van de artikelen en handmatig bekijken van de aantallen. Herstellen pickfout Nee Pickopdracht juist? Ja Inpakker Wanneer een pickopdracht niet juist uitgevoerd is moet deze hersteld worden. Dit wordt gedaan door de controleur. Verpakken order Inpakker Wanneer de order compleet en correct is kan deze worden verpakt. De inpakker bepaald welke maat doos of enveloppe wordt gebruikt voor het verpakken Indien gewenst bij de e-tailer zal er ook een retoursticker toegevoegd moeten worden voor het gemakkelijk retouren voor de consument. 8a Printen en 8b plaatsen pakbon en vrachtsticker Inpakker/WMS De pakbon en vrachtsticker worden afgedrukt en geplaatst. Hierdoor is voor de pakketleverancier duidelijk waar geleverd moet worden. Bij exportorders worden ook factuurgegevens in het pakket mee verpakt. Gereed melden order en plaatsen op baan Inpakker/WMS Wanneer de order gereed gemeld wordt heeft dit invloed op de status in het WMS. Tracking and Tracing update 11 10 8a Aanmaken verzendopdracht pakketvervoerder 11 8b De verzendopdracht zal de juiste leverwijze en/of levertijd moeten bevatten om dit door de pakketvervoerder uit te laten voeren. Sorteerder/ Software van pakketleverancier Vanuit de vrachtsticker wordt een verzendopdracht aangemaakt. Vanaf dit moment is het pakket ook te tracen. Export order? Ja Toevoegen factuurgegevens 8b Sorteerder/ Software van pakketleverancier Wanneer vanuit de opdracht lvijkt dat de opdracht voor export is worden ook digitale (barcode) of handmatige exportgegevens toegevoegd. Nee Sorteren pakket Sorteerder De pakketten worden gesorteerd in het warehouse. Er wordt onderscheid gemaakt tussen enveloppen die in een plastic zak worden geplaatst en dozen die op een pallet worden geplaatst. Next Step: 2.5. 2.5. Print Date... Document Name:... Page 8 61

2.5. Verzenden Bedrijf Datum Auteur Auteur 07-1 WeCommerce April-Juni 2013 Ron van Loon Start Previous step: 2.4. Partij Omschrijving Laden pakketten Gewenste afleverwijze Het aanbieden van verschillende afleveropties aan de consument. Op dit moment lijkt thuislevering, op een ander adres en het leveren via een PCP het meest gewenst bij de consumenten. Pakketleverancier Pakketleverancier De pakketleverancier komt de pakketjes laden bij Versteijnen. De pakketleverancier brengt het pakket naar de klant. 10 Transport naar adres klant Nee Iemand thuis? Ander adres Ja Parcel Collection Point Pakketleverancier Op basis van de keuze van vervoerder en van service level, wordt het pakket een aantal keer aangeboden, bij de buren afgegeven en/of geretourneerd naar Versteijnen. Op dit moment wordt gebruik gemaakt van UPS die het aanbieden of terug sturen naar Versteijnen Opnieuw aanbieden of retourneren versteijnen Afgeven pakket Afgeven pakket Pakketleverancier/ Consument Het pakket wordt afgegeven aan de consument, deze tekent voor ontvangst. 2.4. Track and Trace update 11 11 Gereed melden order Pakketleverancier De order wordt gereed gemeld door de pakketleverancier waarna een laatste track and trace update gegeven kan worden. Bevestiging aan klant Ophalen pakket door klant Product retourneren? Nee Ja 2.6. Consument Wanneer het product niet bevalt mag deze binnen 7 dagen geretourneerd worden. Verder kunnen producten geretourneerd worden vanwege problemen. Einde Next Step: 2.6. Print Date... Document Name:... Page 9 62

2.6. After sales en retouren Bedrijf Datum Auteur Auteur 07-1 WeCommerce April-Juni 2013 Ron van Loon Previous step: Start 2.5. 2.2 Ja Opnieuw verzenden? Nee Contact opnemen e-tailer Momenteel wordt deze stap nog wel eens overgeslagen. Het aanmelden van een retour moet het proces beter ondersteunen door te registreren: wat er terugkomt, wanneer dit terug komt en wat ermee moet gebeuren voor de LDV. Partij Consument Omschrijving De klant neemt contact op met de e-tailer voor het retourneren van het product. In sommige gevallen wordt deze stap overgeslagen en wordt het product direct geretourneerd naar Versteijnen. Versturen pakket naar Versteijnen In plaats van dat de consument het verzenden moet betalen zal hier een gratis pick-up en hand-in kunnen worden verwerkt. Consument De klant verstuurd het pakket naar versteijnen. Bij zumba wordt dit momenteel geregeld en betaald door de e-tailer, bij good4hair wordt dit door de klant zelf gedaan en betaald. Gegevens verzamelen en invoeren Nee Product juist geretourneerd? Ja Product verkoopwaardig? Ja Nee Door het in het begin aanmelden van het product zal dit volume voor deze handeling zo klein mogelijk worden gemaakt. Zo weet de LDV al wat ermee gedaan moet worden. 12 Product locken wachten op e- tailer voor response Versteijnen Versteijnen Wanneer het product niet geretourneerd is met de juiste formulieren en aanvragen, kan via de verzendhistorie de juiste informatie worden terug gehaald en ingevoerd in het systeem. Wanneer het product niet verkoopwaardig wordt gevonden wordt deze door Versteijnen op een gelockte locatie gelegd en wordt dit naar de e-tailer gecommuniceerd. Registreren retour 13 De ontwikkeling van een webapplicatie voor het invoeren van de retour in het WMS systeem en het automatisch verzenden van informatie naar de e-tailer kan dit proces versnellen. Versteijnen In een Excel bestand worden de retouren geregistreerd om deze later door te geven aan de E-tailer. Verpakking geopend? Ja Herverpakken product Versteijnen Wanneer het product geopend is moet deze worden herverpakt. Nee Opnemen product in voorraad Versteijnen Het product wordt terug opgenomen in de voorraad. Binnen melden producten 3.1 Versteijnen Voor het product fysiek in de voorraad wordt geplaatst wordt het product binnen gemeld in het WMS. Dit wordt uitgebreid uitgelegd in proces 3.1. 13 14 Financiele afhandeling retour Het is van belang voor de consument om de financiële afhandeling zo snel mogelijk te laten verlopen. Te denken valt aan 1 dag na ontvangst. E-tailer Wanneer het product volledig verwerkt is kan de administratieve en financiele afhandeling van de retour plaatsvinden. Einde Next Step: Print Date... Document Name:... Page 10 63

3.1. Toevoegen voorraad Bedrijf Datum Auteur Auteur 07-1 WeCommerce April-Juni 2013 Ron van Loon Start 2.2 2.6 3.3 Previous step: Functie Omschrijving 3 Voorraad correcties (telling en af- / opboeken) 3 Voorraad allocatie Binnen melden product(en) 3 Versteijnen Het starten van het proces van toevoegen van voorraad kan beginnen vanuit retouren en nieuwe bestellingen. Het verminderen van de voorraad vanuit voorraad allocatie (2.2). Verder kunnen er tellingen uitgevoerd worden. Voorraad correcties in WMS WMS De binnenkomende of uitgevoerde voorraad zal gewijzigd moeten worden in het WMS. Dit gebeurd automatisch aan de hand van de handeling in het WMS systeem bij binnenkomst of allocatie. Dit rapport zal wanneer er een apart voorraadbeheer gebruikt wordt alleen voor correcties nodig zijn. Rapport update naar webshop WMS 2 Rapport update naar e-tailer 3.3 WMS Versteijnen De juiste voorraad komt op dat moment in het WMS systeem te staan. Een keer per dag worden de voorraad gegevens naar de webshop en de e-tailer verstuurd. De e-tailer kan dit rapport gebruiken voor het bestellen (3.3). Middleware Middleware De middleware zorgt voor de automatische koppeling tussen het WMS en de webshop waardoor een keer per dag de voorraad in de webshop wordt geupdate. Webshop 2 Wanneer VMI wordt toegepast voor deze e-tailer zal het voorraadbeheer (3.3) door de full service provider worden uitgevoerd. Webshop Op dat moment wordt de juiste voorraad in de webshop weergeven. Op dit moment wordt er in het algemeen aangegeven of het product op voorraad is zonder specifieke aantallen te noemen. VMI? Nee Ja 3.3 Einde Next Step: Print Date... Document Name:... Page 11 64

3.2. Toevoegen artikel Bedrijf Datum Auteur Auteur 07-1 WeCommerce April-Juni 2013 Ron van Loon 1 Start Artikel toevoegen of weghalen Excel rapport creëren met artikelgegevens Voor grotere partijen is het gebruik van het ERP systeem en middleware als assortiment input beter. Hierdoor hoeft het artikel slechts éénmaal in het systeem worden ingevoerd en verloopt de verwerking in de andere systemen via de middleware. Voor kleinere partijen zou bekeken moeten worden in hoeverre het mogelijk is hiervoor een webapplicatie of interface met het WMS systeem te ontwikkelen. Previous step: Functie E-tailer E-tailer Omschrijving De e-tailer bepaald wanneer er een artikel toegevoegd of weggehaald wordt uit het assortiment. De e-tailer moet een excel rapport creëren waarin wordt aangegeven welke artikelen worden toegevoegd en welke artikelen worden weggehaald. Excel file mailen naar Versteijnen E-tailer Dit excel bestand moet gemaild worden naar Versteijnen voor verdere verwerking. 1 Handmatige invoer Webshop 1 Handmatige invoer WMS E-tailer/Versteijnen De e-tailer voert het nieuwe assortiment in de webshop in en Versteijnen zorgt voor de verwerking in het WMS. Dit gebeurd door manuele handelingen. Webshop WMS Webshop/WMS Na deze invoeren wordt het juiste assortiment zowel in de webshop als in het WMS weergeven. Einde Next Step: Print Date... Document Name:... Page 12 65

3.3. Bestellen leverancier Bedrijf Datum Auteur Auteur 07-1 WeCommerce April-Juni 2013 Ron van Loon 3.1 Voorraadrapport WMS Start Bekijken voorraad per artikel Wanneer VMI wordt toegepast zal dit een automatische voorraadhoogte in het systeem zijn en een beslissingsregel in het WMS die aangeeft of er besteld moet worden ja of nee. Previous step: Functie E-tailer Omschrijving De voorraden weergeven in de rapporten van het WMS die dagelijks worden verstuurd worden bekeken door de e-tailer. Bestellen benodigd? Ja Nee Einde E-tailer Per artikel bekijkt de e-tailer of het product bij besteld moet worden of niet. Het proces vervolgt alleen wanneer dit wel het geval is. 4 Bestellen bestelhoeveelheid leverancier E-tailer De e-tailer besteld de gewenste of mogelijke besteleenheid bij zijn leverancier. 4 Ontvangst levering Versteijnen De levering wordt ontvangen in het warehouse bij Versteijnen. 3 Binnen melden producten 3.1 Versteijnen Voor de bestelling worden de producten binnen gemeld. Dit proces is uitgebreid beschreven in 3.1. Einde Next Step: Print Date... Document Name:... Page 13 66

System System Bedrijf Datum Auteur Auteur 07-1 WeCommerce April-Juni 2013 Ron van Loon ID Naam Doel Input Output Processen Systeempad 1 Assortiment gegevens Opslaan assortiment gegevens Artikel, omschrijving, bestelaantal, afmetingen Assortimentgegevens, zowel in webshop als WMS Input (1) à Throughput (1) à Output (1) e-tailer à handmatige invoer à WMS/Webshop 2 Voorraad gegevens webshop Opslaan voorraad gegevens op webshop Artikel, voorraadmutatie Nieuwe voorraad webshop Input (1 & 3) à Throughput (1 & 3) à Output (1 & 3) WMS à Middleware à Webshop 3 Voorraad gegevens WMS Opslaan voorraad gegevens in WMS Artikel, voorraadmutatie Nieuwe voorraad WMS Input (1 & 3) à Throughput (1 & 3) à Output (1 & 3) WMS à WMS 4 Bestelling Leverancier Nieuwe bestellingen invoeren Leverancier, Artikel, Aantal Bestelling naar leverancier van e-tailer Input (3) à Throughput (3) à Output (3) E-tailer à Middleware à WMS 5 Klantgegevens Opslaan klantgegevens NAW consument, aflever-adres, telefoon, e-mail Klant- en adresgegevens Input (2.1) à Throughput (2.1) à Output (2.1) Webshop à Webshop database 6 Betaalgegevens Afrekenen bestelling door klant Betaalwijze, bedrag, rekeningnumme r,... Betaling consument Input (2.1) à Throughput (2.1) à Output (2.1) Webshop à Middleware à Payment provider 7 Orderbevestiging klant Order bevestigen aan klant Naam, adres, product, aantal Orderbevestiging voor klant Input (2.1) à Throughput (2.1) à Output (2.1) Website à Mail/Website 8 Klant order Uitvoeren fulfillment opdrachten Artikel, aantal, klantgegevens( 5), waarde, Pickopdracht WMS en verzendopdracht vervoerder Input (1.1) à Throughput (2.2) à Output (2.2) Webshop à Middleware à WMS l.v.h. 8a Reguliere pickorder Uitvoeren pickopdracht Artikel, aantal, klantgegevens( 5) Pickopdracht WMS Input (2.2) à Throughput (2.2) à Output (2.3 & 2.4) WMS à WMS 8b Export pickorder Uitvoeren pickopdracht Artikel, aantal, klantgegevens( 5), waarde, land van herk. Pickopdracht WMS Input (2.2) à Throughput (2.2) à Output (2.3 & 2.4) WMS à WMS 9 Aanpassing klantorder Aanpassen klantorder Artikel, aantal, klantgegevens( 5) Nieuwe klantorder Input (2.3) à Throughput (2.3) à Output (2.3 & 2.4) WMS à Middleware à Webshop 10 Verzendopdracht Pakketdienst Adresgegevens, Afleveropdracht Input (2.4) à WMS à vervoerder verzorgen vervoerder, opdrachttype, pakketleverancier Throughput (2.4) à Output Pakketleverancier leverdatum (Pakketleverancier) 11 Track and Trace update 12 Niet verkoopwaardige retouren Huidige orderstatus klant Aangeven e-tailer welke voorraad niet gebruikt kan worden Order status/ Trace nummer Artikel, Aantal, Oorzaak Huidige orderstatus Niet verkoopwaardige retouren voor e-tailer Input (2.4 & 2.5) à Throughput à Output (2.4, 2.5 & 1) Input (2.6) à Throughput (2.6) à Output (E-tailer) Pakketleveranci er à Middleware à Webshop Excel à Mail e- tailer 13 Retour registratie Verwerken retouren Retourgegevens,klantgegevens, ordergegevens Retourregistratie Input (2.6) à Throughput (2.6) à Output (2.6) Excel 14 Retour informatie e- tailer 15 Update betaalstatus Financiele afhandeling retouren Update betaalstatus Retourgegevens,klantgegevens, ordergegevens Klantgegevens, Ordergegevens, betaalstatus Financiele retourafhandeling door e-tailer aan consument Betaalstatus op webshop: mijn omgeving Input (2.6) à Throughput (2.6) à Output (2.6) Input (2.1) à Throughput (2.1) à Output (2.1) Excel à Mail e-tailer à betaling consument E-tailer à Middleware à Webshop 67

Legenda Legenda Bedrijf Datum Auteur Auteur 07-1 WeCommerce April-Juni 2013 Ron van Loon Processtap Beslissing Document 1 Verwijzing naar hoofdproces 1.1 Verwijzing naar subproces... Verwijzing naar systeeminput... Verwijzing naar systeemoutput Aanbeveling Geschreven aanbeveling over issues binnen een proces Aanbeveling op het gebied van een proces Aanbeveling op het gebied van een beslissing Aanbeveling op het gebied van een document Print Date... Document Name:... Page 15 68

Appendix V: Fulfillment design trade-offs The trade-offs in this appendix display the choices the full service provider has in order to determine the sufficient fulfillment design. Each rhombus represents an option where a decision is needed to define the sufficient fulfillment design. Product group trade-offs need to be performed per product group an e-tailer carries, product trade-offs per product and e-tailer trade-offs need to be performed per e-tailer. Finally a LSP trade-off needs to be performed by the LSP to determine the right picking method. The concrete numbers on which the choice must be based is subject for future research. Appendix Va: Assortment input trade-off per e-tailer Assortment inputs E-tailer trade-off E-tailer ERP (yes or no) Yes ERP assortment iterface No Assortment changes (# new articles per year) Low High Web application for interfacing assortment Assortment width (# of articles) Small Manual assortment inputs Large Web application for interfacing assortment 69

Appendix Vb: Distribution Network Design trade-off per product group Distribution Network Design Product group trade-off Required response time (days) High Manufacturer response time (days) (if present, retail response time) Low Low High E-tailer scale (# of transactions) Distributor storage with package carrier delivery Small Large Distributor storage with package carrier delivery Value of products ( ) Low Current physical structure (yes or no) High No Required batch sizes possible at manufacturer (yes or no) Yes No Yes Retail storage with package carrier delivery Distributor storage with package carrier delivery Manufacturer direct shipping 70

Appendix Vc: VMI trade-off per e-tailer Vendor Managed Inventory E-tailer trade-off Volatility of demand (standarddeviation) Low High E-tailer executes inventory management Assortment changes (# new articles per year) Low High E-tailer executes inventory management VMI desired at e-tailer (yes or no) Yes No E-tailer executes inventory management Provide Vendor Managed Inventory 71

Appendix Vd: Payment module trade-off per e-tailer Payment module E-tailer trade-off Product Value ( ) Low E-tailer scale (# of transactions) High Small Normal (most consumer required) payment methods Possibility of return (return %) Large Low Extensive payment methods High Extensive payment methods including the possibility to pay afterwards without risk (such as Klarna) 72

Appendix Ve: Backorder feedback trade-off per e-tailer Backorder feedback E-tailer trade-off Allowance in partial shipment delivery (yes or no) No Always wait for the whole order to be delivered at once Yes General approach applicable at e-tailer? (yes or no) Type of backordering (wait or cancel) Yes No Wait Cancel E-tailer scale (# of transactions) Always send the available products, wait for the delayed products Always send the available products, cancel the delayed products Large Automated feedback (e-mail) and adapt to specific consumer requirements Small Manual feedback (phone or e-mail) and adapt to specific consumer requirements 73

Appendix Vf: Warehouse layout and design trade-off for the LSP Warehouse layout and picking method Logistic Service Provider trade-off Warehouse Scale (# picks) High Medium Low Complete mechanical picking Semi mechanical picking Complete manual picking Product layout allocation Product trade-off SKU size (dm²) Large Small Product turnover rate (# picks per day) Product turnover rate (# picks per day) High Low High Low Large picking spot near packing station Large packing spot further from packing station Small picking spot near packing station Small picking spot further from packing station 74

Appendix Vg: Interface/Middleware trade-off per communication line Middleware Automated communication line trade-off Communication Scale (# transactions) High Low Complete automated communication via middleware Manual Inputs 75

Appendix VI: Example of extensive payment modules 76

Appendix VII: Example of partial shipment allowance and structured delivery fee 77

Appendix VIII: Examples of delivery options in order capture 78