Benefits of Order Management in Online Retailing


Executive Summary

The transformation in retailing entails a revolution. Logistics refers to the function responsible for the entire facets of storage and movement of commodities on their passage from original suppliers through to ultimate customers. Location and competence in distribution will in the future be increasingly accomplished through information movement rather than commodity movement. Every organization requires moving commodities. Manufacturers on the other hand, have factories that gather raw materials from suppliers, and then subsequently deliver finished commodities to customers. The key findings in this paper posit that, in the case of the consortium, it is evident that, online retailing has more time to run, similarly so the physical distribution implications and effects will continue to echo for several years, posing diverse challenges to distribution businesses and practices. The challenges will only be met by innovative, customer-service oriented organizations that would be enthusiastic to invest in appropriate personnel, technology, and logistics management.

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Table of Contents

Executive Summary. 2

Logistic Management 3

Introduction. 3

Order Management Customer Service. 4

Benefits of Order Management and Customer Service in Online Retailing. 5

Australian Distribution Center Design Operation. 8

Merits of Engaging an Experienced Company in Distribution Center Design and Implementation  9

Packaging and Materials Handling. 10

Physical Distribution within Australia. 12

Discussion. 13

Conclusion. 14

References. 15

Logistic Management


Logistics refers to the function responsible for the entire facets of storage and movement of commodities on their passage from original suppliers through to ultimate customers. Every organization requires moving commodities. Manufacturers on the other hand, have factories that gather raw materials from suppliers, and then subsequently deliver finished commodities to customers (Weiss, 2008). Retail outlets have to make deliveries from the wholesalers. Logistics manages the stream of inputs from suppliers, the movement of commodities through diverse operations within an organization, and the stream of commodities to customers. The movement of commodities into an organization from suppliers is referred to as inward or inbound logistics. The moving of commodities out to customers is referred to as outward or outbound logistics. The moving of commodities within an organization, usually described as gathering from internal suppliers and subsequently delivering to the internal customers is referred to as materials management (Cutler, 2007). In the case of the consortium, the company is exploring the feasibility of establishing online stores. This is informed by the members understanding that Australian consumers are fascinated by online shopping as a result of three key factors (Commonwealth, 2011). These key factors are;

  1. Lower prices.
  2. Broader range of commodities to choose from than those accessible from bricks and mortar in-store retailers.

Online retailing is a compartment of e-commerce and refers to the procurement and selling of services and commodities between retailers and consumers through the utilization of the Internet (Commonwealth, 2011).

Order Management Customer Service

Order management in online retailing refers to executing the operating plan that would be based on the demand forecast. In the case of the consortium, this is the interface between sellers and buyers. It would consist of influencing the order, as well as and order execution. Customer Service in the consortium would refer to the interface between marketing and logistics. It would include all activities that affect the flow of information, the product flow, as well as cash flow between the consortium and its clientele. In reference to customer service the Consortium its success would be based on three fundamental tentacles namely philosophy, performance, and activities.

  • Philosophy would refer to the Consortium-wide commitment to offer customer satisfaction by means of exceptional customer service.
  • Performance, in this case, would refer to how the consortium lays emphasis on customer service. This would be demonstrated by precise performance measures and tactical, strategic, as well as operational characteristics of order management.
  • Activities in regard to customer service in the consortium would refer to the manner in which the Consortium would treat the aspect of customer service. It would be important that the consortium identifies benchmarks that it ought to realize in order to perform to meet the requirements of a customer’s order.

It is noteworthy that, in reference to online retailing in Australia, it has been a particularly intricate task for Australian online retailers to coach customers on online retailing. This is particularly due to the fact that as early as the 1980′s and 1990′s when considerable mail-order businesses were started in the UK and US, this category of businesses were never in actuality developed in Australia (Gattorna, 2009). In these early mail-order businesses, the clientele would peruse catalogues. The customer would then subsequently, make a call to a mail-order business to place the order. This order would then be delivered to the clientele at the designated place. This experience was similar to retailing online. With the development and growth of online retailing in the later part of 1990′s and predominantly the early 2000′s, the US and UK clientele easily made the necessary transition from perusing catalogues to the increasingly interactive experience of retailing online (Helmick, 2007).

In this perspective, it is imperative that the Consortium disregards the disparities in implementation between in-store and online retailing operations. This is because the Consortium’s intention to construct a new distribution centre within the following 18 months would deny it the benefits of order management and customer service in online retailing.

Benefits of Order Management and Customer Service in Online Retailing

The company believes that there is a growing market for online retailing in Australia for the following product groups:

  • Car accessories and tools, competing with for example Supercheap Auto retail stores
  • Leisure products for boating, camping, and fishing, competing with for example BCF Boating- Camping-Fishing retail stores
  • Electrical household appliances, competing with for example Harvey Norman retail stores

In order to realize the benefits of order management and customer service in online retailing, the company requires introducing the micommerce order management approach. Through a blending of specialized business service techniques and workflows, the complex order management functionality would automate some vital processes that support the necessary kinds of intricate orders. It would facilitate the company in executing the following six tasks successfully:

  1. Creating precise quotes for new services and products.
  2. Creating precise quotes to modify current services and products.
  3. Transform in-process orders that are presented for provisioning.
  4. Creating orders to shift services from one place to another.
  5. Creating orders to disengage services when customers no longer demand them.
  6. Generating accurate order data for submission to the back office provisioning and billing systems.

Additionally, a manifold price type module would facilitate the company to have manifold price types and totals for services and products. The company may develop appropriate pricing models for periodic, usage-based, and onetime charges. The micommerce order management would integrate with other customer relationship management applications. On the front end, such applications would facilitate the company in setting up the requisite structure for order management. This would be realized through pricing structures, defining products, and product catalogs. On the back end, such applications would comprise the ability to putrefy orders into manifold work orders and subsequently route them to the suitable system for provisioning service. The table below illustrates the appropriate fields that the consortium would be feature in its online order management system



Field Function

Service Instance

The check box would designate the product as a service item.

Clientele-facing applications would employ his flag in check-out to request supplementary information in relation to the account. Unknown or anonymous users would not place their orders that have products noted as a service instance. The anonymous users ought to create and account through registering, in order to place their orders for such products. In order to recognize the products that would display in the Trouble Tickets Service Instance field, Service Instance would be utilized.

Track as Asset This Track as Asset check box would cause the Order To Asset workflow to replicate the entry to the asset table.  Items in the asset table would be exhibited as customer assets in the Billing Items or Service Items applet.

The applets would subsequently list the assets that the client has procured. Asset tracking may be inappropriate for some items. For instance, usage-based products such as Installation charges or Excess Minutes would not be tracked as assets.

Price Type The menu choices would be Recurring, Usage, and One-Time.

In the menu choices, Select Recurring would be selected in the event that the client is periodically charged for the product. For instance, Recurring would be selected in the menu choices if the product is a monthly service. Items in this grouping that would have the Per Month unit of measure would be totaled in orders and quotes as monthly recurring charges. No other unit of measure would be totaled in orders and quotes.

One-Time would be selected in the menu choices if the client is charged once for the product. For instance, One-Time would be selected in the menu choices for car accessories and tools, as well as electrical household appliances that the client procures. Items in this grouping are totaled in quotes and orders as non-recurring charges.

In the event that the customer would be billed based on quantity of usage for specific products, then Usage, would be selected in the menu choices. For instance, select Usage for leisure products for boating, camping and fishing, services billed by hours of usage. This price category would be for data only and would not be employed in price computations in the online order management system.

Ship The Ship check box would designate the product as having been shipped to the client.
UoM The Unit of Measure menu would provide an assortment of choices such as per Month, Day, Dollar, Case, Dozen, Pounds. Per Month would be the only unit of measure in which totals and subtotals would be provided in quotes and orders. Other unit of measure totals would be configured using other tools and applications. The UoM that would be selected would be determined by price category.



It should be noted that, caution ought to be exercised when restructuring any customizable products that would be in use. In the event that the company regroups product components under dissimilar relationships in a customizable product, there would be inconsistencies between the new versions of the customizable product and current transaction data in quotes, assets, and orders (Wu, 2002). If the company must restructure any customizable products, it may require implementing the Auto Match business service to facilitate the resolution of such inconsistencies (Van Hoek & Harrison, 2009). The benefits of micommerce as a multi-channel software resolution includes the ability to reduce costs, minimize administration, restructure processes, reduce stockholdings and deliver accurate and prompt information on every occasion when needed.  Each of these merits has a focus on releasing personnel and financial resources that would subsequently be dedicated to sustaining the growth and development of the business (Melendrez, 2002).

Australian Distribution Center Design Operation

The consortium is of the opinion that it should locate the company’s distribution centre(s) in Australia. This is in consideration of the transportation cost and the insufficient logistics networks for distribution from China to Australia. The consortium has developed the following outline of its operations. Products for resale are to be procured domestically and through the China-based overseas sourcing office. The rationale is to have suppliers deliver their goods to collection centers in Hong Kong and in Shanghai and then ship the goods in bulk in containers to distribution center (s) in Australia. Although the ultimate intention is to have distribution centers in Sydney, Melbourne, Brisbane, and Perth, the company will start with one distribution centre located in Sydney and then distribute products to customers in Australia from there. In regard to this scenario, it would be important to investigate the intricacies of warehouse management and distribution centre design.

In any company, as the level of logistics management required rises, the customer needs for warehouse management systems change also. There is growing demand for support functions that involve warehousing tasks. Consequently, greater significance is currently being connected to the functions that enhance the management and accuracy of these tasks. The rationale being to ensure that they are executed at lower costs (Martin, 2009). One of the vital events in any company’s history is the launching of a new distribution center. The layout and design of a new distribution center is critical to the establishment of the most efficient utilization of space at the lowest feasible operating cost (Meindl, 2007). Such a project involves considerable capital investment, coordination, and risk as well as integration of suppliers and appropriate technologies. In light of these reasons, the company in the case study may require to engage the services of an experienced organization in the field of distribution center design as well as implementation (Kostoulakos, 2003).  Distribution centers are vital to the success of several supply chains. This is because the distribution centers are usually the ultimate point at which commodities are consolidated and dispatched to the customers. In addition, in terms of costs, the distribution centers characteristically account for approximately 25% of total costs in the logistics aspects of a company. While the distribution centre operation and design have a significant impact on both costs and service levels, these have the propensity to be relatively neglected aspects in supply chain research (Taylor, 2010).

Merits of Engaging an Experienced Company in Distribution Center Design and Implementation

The company in the case study ought to hire such services from an experienced company in order that the engaged company may manage the new distribution center design project. The benefits would include:

  1. The engaged company would provide unbiased and independent advice.
  2. The engaged company would have the capacity to construct the new distribution centers based on its proven and innovative design concepts.
  3. The engaged company would develop the specification, negotiation, evaluation, and coordination, of the bids from suppliers for all solution that would relate to technology, as well as building and materials handling equipment. This service would provide significant savings to the consortium.
  4. The engaged company would enable the consortium to establish its competitive advantage via logistics by assessing options prior to investing in any solutions. This would consequently minimize risk and cost associated with such projects.

The consortium ought to implement warehouse management strategies that are produced from established solutions aimed at eradicating activities that are non-value-adding. Such strategies ought to address the business drivers that bear significance to the consortium. Such strategies would bring the company’s logistics policy into alignment with its business strategy and consequently provide the requisite competitive edge in the industry (Fredenhall & Hill, 2006).

Packaging and Materials Handling

The company should in its endeavor to locate the company’s distribution centre(s) in Australia, consider the following ten strategies;

  1. Minimize time wasted in traveling.

Depending on the volume of the company’s operation, a considerable part of an order picker’s time is utilized traveling in-between picks. The company ought to install methods that decrease travel time such as optimized flow paths, flow rack, and dynamic slotting.

  1. Shift orders to zones.

The company should consider techniques that manage the flow of materials for quicker, more resourceful order assembly as well as consolidation. The probable solutions in this case would be zone course conveyor networks and pick carts.

  1. Batch orders and sort.

By categorizing and concurrently picking stock-keeping units for manifold orders, the order pickers would become more industrious. Probable solutions would include pick-to-tote and sort as well as pick carts.

  1. Abolish travel, divide case selection and refill.

The company should consider systems that convey the inventory to the pickers. The pickers should be located in a central location. Probable solution would include goods-to-individuals pick stations that are maintained with automated staging systems for inventory.

  1. Eradicate travel, full case selection, and replacement.

The company should consider systems that convey the cases straight to a palletizer. The probable solution in this case would be automated case buffer systems with the functionality of semi-automated palletizing.

  1. Buffering and sequencing.

As parts of clients’ orders are picked, the items could be combined into a buffer storage system as a technique of process optimization. Potential solution would be automated staging systems.

  1. Free picking.

By making the stock-keeping unit that is not picked become the stock-keeping unit that is picked, the company would essentially pick one stock-keeping unit and get one for absolutely free. The potential solution would be negative-pick software.

  1. Layer picks.

This would refer to optimizing picking activities with layer picking. This is a system that the company would employ for the mechanized handling of entire layers from pallets. The possible solution would be layer picking machines.

  1. Mixed-case palletizing.

This would determine if the case assembly procedure for mixed-case palletizing is effective. This multifaceted process may be streamlined with automated or semi-automated systems. The potential solutions would be staging buffer systems connected to ergonomic palletizer systems, case picks and sort.

  1. Go real time.

The company requires ensuring that it operates with real-time systems. This would help the company in gaining visibility, attaining real-time operational ranking, as well as monitor the productivity of its labor force. The potential solutions would include software for warehouse control systems, dashboards, light-and voice-directed activities (Bowersox, 2008).

Physical Distribution within Australia

The transportation operation determines the effectiveness of moving commodities. The progress in management principles and techniques enhances the moving load, speed in delivery, operation costs, service quality, utilization of facilities as well as energy saving. Transportation assumes a critical part in the management of logistics (Thomchick, 2005). Reviewing the contemporary conditions, a strong physical distribution system requires a clear structure of logistics and appropriate transport techniques and implements to connect the producing procedures (Croucher & Rushton, 2007). In the absence of well developed transport systems, logistics cannot fully exploit its advantages entirely. Besides, an appropriate transportation system in logistics activities would provide superior logistics efficiency, decrease operation costs, and support service quality. The improvement of transport systems requires the efforts from private and public sectors (Christopher, 2010). A well-operated logistics system increases the competitiveness of enterprises and the government. In the pie chart below it shows the elements of logistics costs that are based on the evaluation from Air Transportation Association. The analysis depicts transportation is the main cost, which accounts 29.4% of logistics costs. The ratio is approximately 30% of the entire logistics costs. The transport costs include the corridors, means of transport, pallets, containers, terminals, labor, and time. This figure indicates the cost framework of logistics systems as well as the significance of order in improvement processing. This occupies a significant ratio in logistics activities. The upgrading of an item of higher operation costs may get improved effects. Therefore, logistics managers should comprehend transportation system operations thoroughly (Kaminsky, 2010).

(Kaminsky, 2010).

Transportation systems make commodities mobile and present timely as well as regional effectiveness to support value-added according to the minimum cost principle. Transportation affects the outcome of logistics activities and it influences sales and production. In logistics system, transport cost may be considered as a constraint of the objective market. The value of transportation differs with diverse industries (Stapleton, 2000). For the commodities with small volumes, high value and low weight, transportation cost occupy a small fraction of sale and is less considered. For the commodities with big volumes, heavy as well as low-valued commodities, transportation take up a very big portion of sale and influences profits more, and hence it is more considered (Waters, 2007).


The integration of e-business and logistics is the future drift. In order attain a more beneficial position and build dependent and complementary relationships, networking industries, like e-bay and Yahoo, normally collaborate with logistics industries. This integration may lessen the middle-level procedures. Producers could instantaneously provide the commodities to the customers. This reduces expenses and also helps in administering sources more resourcefully.

In addition, companies may not require bearing the costs of warehousing and inventories, and consequently they develop into efficient industries of low cost, increased efficiency as well as division of specialty (Keller, 2002). For instance, clients may acquire ordered commodities from convenience stores. The competition condition in industries may be promoted by knowledge economics through e-logistics. Customers and companies could transform business efficiently and easily through the aid of the internet and e-commerce. On the other hand, physical delivery depends on the transport system to complete its operations (Handfield & Nichols, 2009).


This paper concludes that the transformation in retailing depicted and discussed entail a revolution. Location and competence in distribution will in the future be increasingly accomplished through information movement rather than commodity movement. In the same manner that online retailing has more time to run, similarly so the physical distribution implications and effects will continue to echo for several years, posing diverse challenges to distribution businesses and practices. The challenges will only be met by innovative, customer-service oriented organizations that would be enthusiastic to invest in appropriate personnel, technology, and logistics management. An ultimate caveat, however, is essential. Companies should not suppose that distribution challenges would be easily met. In the same manner that online retailing revolution has brought about major casualties, up to date evidence proposes that several companies treat too frivolously the complexity of contemporary physical distribution systems.


Bowersox, D. (2008). Supply Chain Logistics Management, McGraw-Hill, New York, NY.

Christopher, N. (2010) Logistics & Supply Chain Management , FT Prentice Hall, Harlow,            Essex.

Commonwealth 2011, Economic Structure and performance of the Australian Retail Industry        July 2011, Australian Government Productivity Commission, Commonwealth of         Australia, viewed on

Croucher, B, & Rushton, N. (2007). Handbook of Logistics & Distribution Management, Kogan Page, London.

Cutler, H. (2007). Introduction to Logistics and Traffic Management. Transportation Journal,      8(3), 63-64

Fredenhall, R. & Hill, L. (2006). Fundamentals of SCM, St Lucie Press, Philadelphia, PA.

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Handfield, R. & Nichols, E. (2009). Introduction to SCM, Englewood Cliffs, NJ: Prentice Hall.

Helmick, J.S. (2007). International Logistics: The Management of International Trade       Operations, Transportation Journal, 46(4), 68-69.

Kaminsky, T. (2010). Managing & Designing the Supply Chain, McGraw Hill, New York.

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Stapleton, D. (2000). Strategic Logistics Management, Transportation Journal, 40(2), 60-60.

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Meindl, M. (2007). Supply Chain Management, Pearson Education, Upper Saddle River, NJ.

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