One of the most significant challenges in the accelerating business environment created by the Internet is to optimize the value chain while simultaneously providing value to customers and meeting their increasingly demanding expectations. As successful e-businesses have learned, fulfillment reaches far beyond the warehouse or loading dock and affects bottom-line results even more than before. Unfortunately, existing fulfillment processes are typically incapable of supporting the increasingly complex fulfillment needs of e-business, or e-fulfillment, such as end-to-end value-chain visibility and the elimination of excess inventories. However, these challenges can provide the opportunity for significant competitive advantage to those companies who can successfully reinvent their fulfillment model. Customer demands drive change Customers have become more demanding than ever before and will continue to become more demanding in the future. As a result of continuous improvements in value-chain capabilities and responsiveness, customers expect their orders to be delivered on time, wherever needed, and in the manner they want it -- without exception. These escalating customer expectations have placed a significant burden on those companies still struggling to gain control of, and leverage, their value-chain operations. Competing on price is becoming less and less a choice, and quality is the price of participation. To compete successfully, companies are finding that they must distinguish themselves with superior service throughout the entire business cycle -- from the buying experience to the delivery experience. For many products, the Internet has effectively eliminated the cost of changing suppliers -- the competition is just a click away. To be a market leader today, companies must strive for execution excellence, measuring success via customer retention. Because the Internet has lowered the cost of changing suppliers, companies are forced to differentiate themselves with superior service and consistent delivery performance. The rise of e-commerce also has forced companies to increase the velocity and responsiveness of their value chains in order to rapidly respond to changing demand and supply conditions. As customers, products, and business models continue to change, fulfillment processes will need to be increasingly flexible and capable of accommodating new initiatives. Traditional fulfillment processes are not capable Traditional fulfillment systems and processes lack the capability to support the increasing demands of the Internet economy. E-commerce is projected to grow from $51 billion in 1998 to over $1.4 trillion by 2003, according to Forrester research. The rapid growth of B2B and B2C volume is raising customer expectations and creating significant pressures on value chains. Some of the key differences between traditional fulfillment and e-fulfillment models are outlined below: Traditional Fulfillment Model
Kevin P. O'Brien is a Cap Gemini Ernst & Young practice leader for supply-chain consulting with high-growth and middle-market companies.