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Why have so many "e-commerce"
companies failed in the last few years? In many cases, it's
the failure to figure out how to extend the supply chain
directly to customers that keeps a company from succeeding.
Using cutting-edge delivery practices and technology-based
order processing, companies can minimize costs, customize
their products, provide increased service and convenience,
and increase customer loyalty -- all leading to a more robust
bottom line.
Extending the Supply Chain examines
in-depth some of the most high-profile practitioners of
telephone and Internet-based order processing and fulfillment.
The authors bring you detailed looks at: Amazon, Dell, and
FreshDirect, which use the decoupled extended supply chain
model to take custom-assembled or custom-packaged orders
from an assembly plant or distribution center to the delivery
destination using third-party delivery specialists like
FedEx and UPS.
The semi-extended supply chain model used
at companies like Lowes Foods and Best Buy involves processing
orders over the Internet or phone and packing the customer's
order at their chosen local retail outlet for pick-up at
the customer's convenience. This strategy is often the most
economical for brick-and-mortar retailers, since it primarily
involves the use of existing physical assets and personnel.
The fully extended supply chain is more
cost-intensive, but may be the most customer-centric option.
Orders are picked and packaged not at central locations,
but at local stores, then delivered to the customer's home,
improving on the old-fashioned "delivery boy"
that local grocers employed a century ago. Online retailers
such as Albertson's and Tesco have developed a base of customers
who will pay for the convenience and level of service that
are the hallmarks of the fully extended model.
The centralized extended supply chain employs
regional distribution centers instead of local stores, but
is still able to provide more personalized delivery service
(including pre-specified delivery times) than the decoupled
model. An in-depth study of Office Depot, the third-largest
online retailer (which has stores but does most fulfillment
of Internet orders through its regional DCs) shows just
how effective this model can be when customers require elements
of speed, service, and cost control.
Extending the Supply Chain features
dozens of clear examples, charts and graphs, and practical
tools to help you establish and maintain a dynamic, customer-focused
fulfillment operation, and offers proactive strategies for
seamlessly integrating marketing and technology initiatives
into your supply chain strategy. Examine the four models,
and the authors' recommendations for adapting and implementing
each one, to determine which one will help your supply chain
stretch all the way to its only acceptable destination --
the home of a happy and loyal customer.
Kenneth Karel Boyer is an associate professor
of operations management at Michigan State University.
Markham T. Frohlich is on the operations
and technology management faculty at Boston University,
and was previously at London Business School.
G. Tomas M. Hult is an associate professor
of marketing and director of the Center for International
Business Education and Research at Michigan State University.
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