Cross-chain order fulfilment coordination for internet sales

Cross-chain order fulfilment coordination for internet sales

Principal investigator / main applicant

Subsidy from: Dinalog
Time period: 2010-2015
Budget : €1.1 million
Consortium partners : University of Groningen, VU University Amsterdam, Erasmus University Rotterdam, University of Amsterdam, Neckermann.com, Ctac, Centraal Boekhuis, Scanyours.com, Sectorinstituut Openbare Bibliotheken (SIOB), Vereniging Openbare Bibliotheken (VOB).

The internet has completely changed the ways in which people communicate. Gradually, the internet is now also getting a firm grip on the physical goods flows. More and more consumers are ordering products via the web instead of buying them in a retail store. From a logistics point of view, this sales channel switch has an enormous impact. Deliveries to traditional brick-and-mortar stores can be made in relatively large quantities at regular intervals. Consumers then buy the product in the store and provide an important logistics service: they transport their own products to their own homes for free. With the internet, products are ordered in small quantities by individual consumers and the web store has to arrange for transporting the products to the consumers' home address. It is almost needless to say that this significantly increases logistics costs.

From the consumers' perspective, there seems to be a desire to increase online ordering, provided that some circumstances are improved. An important limiting factor for consumers is the delivery process. In many web stores, the consumer has no influence on the timing of delivery. As a result more than 30% of all orders cannot be delivered at the first delivery attempt. Besides planning, there is also the issue of speed. Information gathering and ordering is so fast on the web, that even a delivery time of 24 hours feels like a lifetime. Faster is better.

In this project, we will develop new concepts, models and solution methods for a number of problems in the internet order fulfillment.

• New design methods will be developed for shaping the distribution network.
• New models and solution procedures will be created for efficiently merging flows of multiple web stores to individual consumers.
• New concepts for delivering products to consumers' homes will be tested.

An important role in this project will be played by the cross-chain control center (4C), which has a coordinating role, spanning across multiple supply chains. To highlight one innovative aspect in this project for the future role of an 4C, we mention the plans for "instant order delivery". This concept has the potential to bring down delivery times of internet orders from 24 to under 3 hours. To this end, the cross-chain control center will do a real-time check for achievable delivery options during the consumer's ordering process on the website. If the requested product is available at a nearby brick-and-mortar retail store and a delivery can be scheduled within the required time, then this ultra-speed delivery option is presented to the consumer on the website.

The consortium contains universities as well as companies with extended experience in internet sales. This combination will ensure results that blend academic rigor and practical applicability. Consortium partners Neckermann.com and Centraal Boekhuis are already active as 4C and are open for innovation. The Dutch public libraries are in search for a new network design and coordination concept for book transports between library branches. Scanyours.com is an eBusiness consultancy company and mYuice has its expertise in SAP implementations for Small and Medium Enterprises. The involved knowledge institutes are Rotterdam School of Management, University of Amsterdam, and VU University Amsterdam.