The paper was presented at the International Logistics Conference “Logistics 2002 – Flexible supply chains – concepts, experiences, challenges”. Poznań, May 14-15, 2002.
In the context of supply chain management, the term e-logistics often appears, which can be defined as the execution of logistics processes using modern IT solutions, although a coherent and unambiguous definition has not yet been developed. This term, often used in the context of B2C transactions, is associated with the process of fulfilling an order placed by a customer via the Internet (e-fulfilment). It is worth mentioning the specificity of this type of transaction, as it is a good illustration of the transformation of logistics processes occurring in other industries as well.
E-tailers’ troubles
E-tailers, i.e., companies conducting retail sales on the Internet, process a large number of small orders. The same IT technologies that contribute to the development of the electronic economy simultaneously shape high customer requirements regarding delivery speed and the availability of information on the current status of orders. Returns turn out to be a huge problem. According to McKinsey & Co., returns account for as much as 25% of the value of goods sold, and in the case of clothing purchased online, this indicator rises to 35%. The need for fast delivery, providing real-time information related to their execution, and handling returns increases the complexity and costs of the logistics process. According to Merrill Lynch data on the British home shopping market, the cost of fulfilling an electronically placed order for grocery products ranges from 15 to 24 pounds. Trying to reduce costs, more and more companies involved in e-commerce are deciding to hire specialized logistics service providers known as 3PL (third-party logistics provider). Armstrong & Associates Inc., a company monitoring the American contract logistics market, reports that the value of 3PL services in 1999 amounted to 45.4 billion USD. In 2000, this value increased by as much as a quarter, reaching 56.4 billion USD. The most technologically advanced 3PL providers offer their clients services that consist not only of delivering the product to the customer but also managing the entire transaction with the customer, inventory management, returns logistics, sales analysis and reporting, as well as IT system integration.
The fourth party of logistics
The scope of services offered by 3PL is becoming increasingly broad, yet none of these companies possesses the resources or competencies that would allow them to provide services in all aspects related to the flow of products and information. Therefore, organizations known as 4PL have emerged. Using modern IT tools and Internet communication, they integrate the functions of individual supply chain participants – manufacturers, recipients, and specialized service providers. An example of cooperation between an e-tailer and a logistics service provider is the relationship between Wellbeing.com and MetaPack. Wellbeing.com was established in March of last year as a joint venture of two British companies – the drugstore and chemical store chain Boots and the producer and broadcaster Granada Media. It was decided to entrust logistics to MetaPack, a company specializing in fulfilling orders placed in online retail. MetaPack’s task was, among other things, to create an IT system supporting e-fulfilment. MetaPack integrated the online order acceptance system with a call center and systems handling customer payments. The integration also included SAP R/3 modules used by Boots, which were connected to the IT system supporting the MetaPack distribution center. The designed system allows merchants handling both “traditional” business and online sales to monitor sales results, control inventory, and manage assortment. The system also provides reliable information about the availability of individual items.
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