The order-to-delivery cycle from the merchant’s perspective has been managed with an eye toward standardization and cost.
To achieve a better understanding, it is necessary to examine the order management cycle (OMC) that encapsulates the more traditional order-to-delivery cycle. OMC has the following generic steps.
4.4.1. Order Planning and Order Generation
The business process begins long before an actual order is placed by the customer.
The first step is order planning. Order planning leads into order generation. Orders are generated in number of ways in the e-commerce environment. The sales force broadcasts ads (direct marketing), sends personalized e-mail to customers (cold calls), or creates a WWW page.
4.4.2 Cost Estimation and Pricing
Pricing is the bridge between customer needs and company capabilities. Pricing at the individual order level depends on understanding, the value to the customer that is generated bye ach order, evaluating the cost of filling each order; and instituting a system that enables the company to price each order based on its valued and cost. Although order-based pricing is difficult work that requires meticulous thinking and deliberate execution, the potential for greater profits is simply worth the effort.
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Cost estimation and pricing of product services
Order receipt and entry
Order Selection and Prioritization Customer inquiry and order planning generation
Fig. 4.2
4.4.3. Order Receipt and Entry
After an acceptable price quote, the customer enters the order receipt and entry phase of OMC. Traditionally, this was under the purview of departments variously titled customer service, order entry, the inside sales desk, or customer liaison. These departments are staffed by customer service representatives, usually either very experienced, long-term employees or totally inexperienced trainees. In either case, these representatives are in constant contact with customers.
4.4.4 Order Selection and Prioritization
Customer service representatives are also often responsible for choosing which orders to accept and which to decline. In fact, not all customer orders are created equal; some are simply better for the business than others.
Another completely ignored issue concerns the importance of order selection and prioritization. Companies that put effort into order selection and link it to their business strategy stand to make more money.
4.4.5 Order Scheduling
During the ordering scheduling phase the prioritized orders get slotted into an actual production or operational sequence. This task is difficult because the different functional departments – sales, marketing, customer service, operations, or production-may have conflicting goals.
Communication between the functions is often nonexistent, with customer service reporting to sales and physically separated from production scheduling, which reports to manufacturing or operations. The result is lack of interdepartmental coordination.
4.4.6 Order Fulfillment and Delivery
During the order fulfillment and delivery phase the actual provision of the product or service is made. While the details vary from industry to industry, in almost every company this step has become increasingly complex. Often, order fulfillment involves multiple functions and locations. The more complicated the task the more coordination required across the organization.
4.4.7. Order Billing and Account / Payment Management
After the order has been fulfilled and delivered, billing is typically handled by the finance staff, who view their job as getting the bill out efficiently and collecting quickly.
4.4.8. Post-sales Service
This phase plays an increasingly important role in all elements of a company’s profit equation: customer value, price, and cost. Depending on the specifics of the business, it can include such elements as physical installation of a product, repair and maintenance, customer training, equipment upgrading and disposal. Because of the information conveyed and intimacy involved, post sales service can affect customer satisfaction and company profitability for years.
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4.5 SUMMARY
In this chapter, we come across the process of purchase / sale of goods. The entire process can be viewed either from the buyers’ point of view or the merchant’s point of view. Accordingly, the consumer’s perspective can be considered to be made up of 3 stages – purchase determination, purchase consummation and post purchase interaction. We also learnt that consumers can be categorized as impulsive, patient and analytical buyers. The purchases themselves can be specifically planned, generally planned, reminder purchases or unplanned purchases. We went through the details of each of these phases. Similarly from the merchant’s point of view, the stages can be presales interaction, product service production and postsales interaction.
4.6 QUESTIONS
1. Name the three broad phases of consumer’s perspective. 2. What are the categories of consumers?
3. What are the four types of purchases? 4. Why are information brokerages needed?
5. What issues are included in post purchase interaction? 6. Name the phases from the merchants point of view? 7. What is order selection?
8. Why is a critical mass necessary for market? 9. What is the need for standardization?
10. On what factors can negotiations take place?
11. List the desirable characterstics of e-commerce market place? 12. Explain mercantile model from consumer’s perspective? 13. Explain mercantile model from merchant’s perspective?
4.6.1 Answers
1. Pre-purchase determination, purchase consummation, post purchase interaction. 2. Impulsive buyers, patient buyers and analytical buyers.
3. Specifically planned, Generally planned, reminder purchases and unplanned purchases. 4. To help in comparison shopping, reduce search costs and integration.
5. Inventory issues, database access issues and customer service issues.
6. Presales interaction, product service, production and delivery and post sales interaction. 7. Prioritize orders based on same factors.
8. Otherwise the cost per unit goes up.
9. To move seamlessly across various hardware and software.