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The Role of Technology in Ensuring E-fulfilment Success:

A South African Case Study

Mr Kyle Pirie [16712439]

ABSTRACT

E-commerce has changed the global marketplace significantly. Moreover, it requires the

implementation and use of technology in order to become operationally viable. Conventional

supply chain management practices are not always directly translatable to the practice of e-

commerce. Additionally, Tarn, Razi, Wen and Perez (2003) state that the area of supply chain

management that is most influenced by e-commerce are the processes of fulfilment. E-

commerce fulfilment or e-fulfilment necessitates the use of technology in order to achieve the

fundamental goal of any business-to-consumer (B2C), namely, customer satisfaction. The

intent of the study is to examine and understand what technologies are required to ensure the

operational success of e-fulfilment in the areas of order management, warehousing and order

delivery. The study makes use of non-empirical secondary research to provide context into

what constitutes successful e-fulfilment. Furthermore, semi-structured interviews with

Superbalist and Parcelninja, have been used in order to substantiate successful e-fulfilment in

a South African context. In accordance to the study, the use of technology to provide

integration and operational synchronisation between supply chain members is pivotal to the

implementing e-fulfilment in a prosperous manner for e-businesses. The study has proven that

without the use of technology to provide integration and outsourcing to provide strategic

leverage the concept of e-fulfilment, and thus, e-commerce is inconceivable.

1. INTRODUCTION

With the emergence of the internet in the 90’s the ability of performing commercial transactions

was made possible over the World Wide Web. E-commerce was born and so too was the

ability to apply consumer-direct business models. According to Abratt and Da Silva (2008), the

internet has influenced the dynamics of commerce by lowering barriers of entry into markets

by minimising the capital investment associated with the enablement of a conventional supply

chain. It therefore allows retailers to cost effectively penetrate markets by using the core value

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proposition of e-commerce. In other words, to provide “affordable intimacy” by employing

technology to render a highly personalised shopping experience in a cost effective manner.

Customers of today expect immediate gratification. Accomplishing this customer expectation

to successfully result in a satisfied customer falls on the operational capability of the supply

chain, more specifically the practices employed by the fulfilment process (Tarn, Razi, Wen &

Perez, 2003). It is the function of fulfilment which places the product where it needs to be,

when it needs to be there and in the form which is desired by the customer.

Fulfilment involves all the actions that take place from the point of a customer’s purchase intent,

until the point at which the customer is satisfied with the quality and functionality of the product

(Pyke, Johnson & Desmond, 2001). Conventional fulfilment cannot support the operational

requirements of an e-commerce supply chain. The supply chain needs to be made more

automated, flexible, transparent and technologically integrated to effectively provide a prompt

and exemplary service to customers (Tarn et al., 2003).

It is the purpose of this study to determine what the operational requirements are of fulfilment

that supports the success of e-tailer supply chains. The study will focus on the e-fulfilment

implications of business to consumer (B2C) online retailers exclusively. This will be done at

the hand of a case study whereby the application of technology to facilitate e-fulfilment

processes will be emphasised.

2. LITERATURE REVIEW

The introduction of e-commerce into the global market place has seen the emergence and

proliferation of e-tailers (Ricker & Kalakota, 1999). An e-tailer can be defined as a retailer that

provides products and services exclusively through online platforms (Collier & Bienstock,

2006). This signifies the distinct advantage of avoiding the capital investment of establishing

retail stores and substantial warehousing costs, in some instances (Kotabe, Mol & Murray,

2008). Alternatively, e-commerce is an attractive market penetration tool for small retailers, as

they avoid the entrance barrier of large initial inventory investments (Simichi-levi, Wu & Shen,

2004).

E-commerce has had a major influence in the nature of supply chain management, more

specifically in the structure, the transportation and the logistical efforts implemented within the

supply chain (Bayles, 2001). It is ultimately the supply chain management processes that

influence the nature of customer service. As Lambert, Stock and Cooper (2000) state

businesses “no longer compete as a solely autonomous entity, but rather in conjunction with

supply chains”. Therefore, competitive advantage can be attributed to the implementation and

control of a successful supply chain.

Mentzer, DeWitt, Keebler, Min, Nix, Smith and Zacharia (2001) stipulates that supply chain

management becomes a pivotal mechanism in the success of e-commerce, seeing that it

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provides an online purchasing platform that results in a highly fragmented market where

product and service complexity is prevalent. The nature of supply chain management is

augmented by the influence of e-commerce, e-fulfilment and internet enabled business

processes. However, the use of internet can be harnessed to enhance supply chain

relationships and ultimately successfully execute the supply chain strategy (Mentzer et al.,

2001).

Traditional commerce and e-commerce can be distinguished as different channels with

distinctly different prerequisites of success. The function of a channel is to produce the desired

assortment of outputs in the perspective of the customer at the lowest cost achievable in the

perspective of the organisation (Lambert et al., 1998). Furthermore, Ricker and Kalakota

(1999) state that the market pressures of increasing competition, diminishing operating

margins and empowered consumers place a significant emphasis on the capability of a supply

chains fulfilment strategy. It can be argued that it is ultimately fulfilment which determines the

longevity of a conventional or E-commerce supply chain.

2.1 The logistical differences between traditional commerce and e-commerce

Bayles (2001) argues that e-commerce has altered the way in which products and services

are sold as well as the way in which they are distributed. The characteristics and differences

between traditional commerce supply chain management and e-commerce supply chain

management can be summarised and compared as follows.

SUPPLY CHAIN CHARACTERISTIC

TRADITIONAL COMMERCE

E-COMMERCE

Shipment type Bulk Parcel

Customer Strategic Unknown

Demand Style Push Pull

Inventory Flow Uni-Directional Bi-Directional

Destinations Concentrated Highly Dispersed

Demand Variance Stable Fragmented

Table 1: the comparison between traditional and e-commerce supply chain characteristics

(ADAPTED: E-commerce Logistics and Fulfilment: Delivering the Goods. Bayles, D.L.)

As depicted in the table above there are different characteristics between the supply chain

features of an e-commerce supply chain to that of a traditional supply chain. Therefore, it can

be argued that the fulfilment practices of traditional supply chain management cannot be

directly applied to an e-commerce supply chain.

According to Tarn et al. (2003), e-commerce businesses are influenced by a sizable but varying

amount of customers, thus perpetuating a high degree of demand variability. This necessitates

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the importance of information sharing across the supply chain in order to effectively respond

to changes in demand expeditiously. Ultimately an e-commerce supply chain’s success or

failure is dependent on how integrated the order fulfilment system is, in order to capture and

share information to all supply chain constituents (Phan, Chen & Ahmad, 2005).

2.2 Electronic Commerce Fulfilment (E-fulfilment)

According to Tarn et al. (2003), the most important consideration when conceptualising an e-

fulfilment strategy is that traditional distribution systems cannot effectively provide for the

needs of individual customers. The e-fulfilment system requires highly flexible and agile

systems and procedures, resolute service levels, and an integrated communication system by

which information can be shared to all involved members of the supply chain.

The process of e-fulfilment includes all the activities involved with receiving an order online,

managing the transaction, warehouse management, transportation management,

communication with the customer and reverse logistics management (Muffatto & Payaro,

2004). Although the activities of e-fulfilment appear similar to traditional fulfilment, emphasis is

placed on the use of information and technology to enable the processes to be executed in a

more integrated and collaborative manner. Ricker and Kalakota (1999) state that information

technology has facilitated the success of e-fulfilment. This is due to the fact that it does not

only support new e-fulfilment strategies, it also creates them. Tarn et al. (2003) supports this

as more rigorous customer requirements have necessitated the use of automation as well as

leveraging vast amounts of information. The aim of this is to integrate the supply chain and

therefore achieve superordinate levels of customer service. It is important to note that this can

only be done with the use of information technology.

E-fulfilment is the operational activity which demands the most attention by e-tailers in terms

of bolstering competitive prowess and most e-businesses underestimate the importance of a

resolute e-fulfilment strategy (Lummus & Vokurka, 2002). Ricker and Kalakota (1999)

substantiates that e-commerce customers are most appealed by the convenience, higher

servicing levels, lack of errors and timely delivery of products. If an e-fulfilment strategy can

promote the aforementioned appeals, the result is customer satisfaction, repeat business and

higher profit margins (Lummus & Vokurka, 2002).

The functional competencies of traditional fulfilment such as convenience, speed, variety,

service and quality are still applicable. These competencies need to be considered

concurrently with the additional customer requirements, which have been propagated by e-

commerce. The customer requirements that e-commerce requires consideration of are

inventory availability and order status. The e-commerce customer wants to be more informed

as they are not obtaining the instantaneous gratification of buying a product in store but rather

buying the “service envelope” (Lummus & Vokurka, 2002). According to Benbassat (2014) the

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service envelope can be defined as the maximum achievable service outcome that an

organisation can provide for a given level of resources it invests, whilst implementing the best

practices available.

E-fulfilment facilitates the opportunity to satisfy customers with unprecedented success by

using technology, information and collaborative integration to provide highly demanding

customers with a more prompt service, irrespective of their geographical location (Muffatto &

Payaro, 2004). Furthermore, the operational success of e-fulfilment is dependent on e-

businesses’ ability to implement fulfilment strategies and technological infrastructure in a way

to best suit every aspect of the “service envelope” expected by the customer (Ricker &

Kalakota, 1999).

The success of e-fulfilment is dependent on the integration and synchronisation of all involved

processes. In order to foster synchronisation and integration all the processes of fulfilment

need to have some degree of interconnectivity, which will allow for information to be captured,

interpreted and shared through the entire process of fulfilment. This interconnectivity can be

referred to as the infostructure (Tarn et al., 2003).

2.3. Key e-fulfilment processes

According to Tarn et al. (2003) key e-fulfilment processes include order management,

warehousing and the delivery process.

2.3.1. Order Management

The first challenge which e-tailers face is the heightened expectations and bargaining power

of customers (Tarn et al., 2003). Customers expect the prompt and easy execution of online

orders. Additionally, the online platform offered to the customer needs to be user-friendly and

facilitate communication between the customer and the e-business. Furthermore, the interface

needs to be secure in order to protect credit card information and the identity of customers

from larceny.

The “add to cart” action is the first contact with the customer by which all the service

requirement information is generated. Particulars such as quantity, physical product

configuration, location of delivery and expedited shipment requirements are captured by the

Active Server Page (ASP). The customer completes the online purchase requirements through

the e-businesses website. This information is then sent to the Order Management System

(OMS) (Chow, 2004). The OMS bridges the gap between the Supply Chain Planning (SCP)

system and the Transport Management System (TMS) and the Warehouse Management

System (WMS) and the OMS formulates how orders will be handled (Tarn et al., 2003).

According to Phan et al. (2005), the operational success of e-commerce requires a

multifaceted communication link throughout the supply chain in combination will a highly

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integrated OMS. The level of integration is strongly correlated with the level of the service the

customer will experience. Ricker and Kalakota (1999) stipulates that there is often a weak

integration between the ASP and the Enterprise Resource Planning (ERP) system of most e-

businesses and ideally the ASP, ERP system and WMS need to be as integrated as possible

in order to achieve true synchronisation. This is even more imperative for e-tailers, which are

outsourcing fulfilment processes and is quintessentially the selling point for e-fulfilment service

providers. Moreover, supporting standardised informational formats and communication points

amongst trade partners can facilitate this synchronisation (Ricker & Kalakota, 1999).

Integration is supported by the use of Electronic Data Interchange (EDI), which has become a

necessity to ensure transference of information across the supply chain. The more integrated

the ASP, ERP system, TMS, OMS, SCP system and WMS the more accurately and promptly

the transfer of information across the supply chain can occur. This is particularly relevant if a

customer attempts to “add to cart” only to be faced with an out of stock notification. This

immediately results in customer dissatisfaction and a deterred future customer (Ricker &

Kalakota, 1999).

2.3.2. Warehousing

According to Andel (2000), behind every successful website there is a cluster of logistics

activities that deliver the e-tailer’s promises. The ability of the logistics activities to deliver that

promise will ideally result in customer satisfaction. Furthermore, the warehousing component

of an e-fulfilment will influence customer satisfaction more so than site functionality and ease

of the ordering process (Romaine, 2000). It can be said that the process of warehousing is the

central determinant of how quickly products move through the fulfilment process. Tarn et al.

(2003) propose that the latest technology should be applied to the picking and packing

functions in conjunction with the appropriate operational and informational systems that

facilitate the unique complexities of the e-fulfilment process.

Customers have the misconception that the process of warehousing operates instantaneously

much like the functionality of the e-tailer’s website. The order fulfilment from the warehouse is

the point at which the virtual world meets the physical world, and successful e-fulfilment

strategies are multi-layered and saturated with numerous decision points. With the

warehousing component being the process which has the majority of decision points (Tarn et

al., 2003). Although there are multiple decision points, the underlying objective of e-commerce

warehousing is to have a “one touch distribution” as less handling results in diminished costs

and faster inventory velocity through the supply chain. Romaine (2000) argues that the only

measure that will permit “one touch distribution” is through the thorough selection and

integration of products, processes and information technology. Additionally, it is integration and

automation that allow the warehousing process to become more scalable, to mitigate risk, to

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be more flexible, to operate faster and to become less prone to errors (Andel, 2000). All of

which are primary distribution requirements of e-commerce supply chains.

The premise of an e-fulfilment system is to design a facility to allow for a large order volume

and explicit customer service requirements, which are prevalent in global business-to-

consumer (B2C) e-commerce. Therefore, in an e-commerce supply chain the warehouse is

converted into a multi-channel e-fulfilment centre whereby products, services and information

are extremely synchronised in order to leverage resolute levels of customer service (Tarn et

al., 2003). This is made possible by the WMS.

A WMS is required to achieve synchronisation and integration by which all the e-fulfilment

processes can experience true connectivity. The WMS is an operational imperative for e-

tailer’s as it will allow for all the activities such as sorting, packing, bar coding and picking to

be perpetually unified (Tarn et al., 2003). The WMS should be as integrated as possible with

the ERP system, OMS and the SCP system of the e-tailer in order to provide decision makers

with qualitative and quantitative “real time” data (Ricker & Kalakota, 1999). Furthermore, the

WMS facilitates the collection of warehouse performance statistics via Automated Data

Collection (ADC) and multiple verification points throughout the warehousing process (Agatz,

Freischmann & Nunen, 2007). The collection of warehouse performance data and multiple

verification points allow e-tailers to identify and correct inefficiencies quickly so to improve

accuracy and expedite the fulfilment process. Andel (2000) supports that the WMS should be

flexible, especially due to the volatility of demand which e-businesses are faced with. As a

result flexibility of the WMS will allow for scalability when the throughput of the warehouse

fluctuates.

2.3.3. Delivery

According to Tarn et al. (2003), the main challenge faced by e-tailers is the customer

expectation of fast delivery of the ordered product. Therefore, the delivery process has a major

influence on customer satisfaction (Romaine, 2000). E-commerce delivery becomes complex

due to the fact that the customer can be located anywhere in the world. Furthermore,

customers expect the e-tailers to deliver every product that they market in a time sensitive

manner. The shipping process of fulfilment is a commonly outsourced process of e-tailers

(Pyke et al., 2001).

Traditional commerce delivery in the field of retail follows the process of generating stocking

schedules, receiving the product in store, picking the product from the backroom, stocking the

shelf, filling the shopping cart, checkout and delivery (SCC, 2012). Whereas delivery, with

respect to e-tailers, is a very distinct process as there are multiple ways in which the product

can be delivered. According to Lummus and Vokurka (2002), the ways e-tailers can distribute

their products to the customer include transporting from an existing Distribution Centre (DC),

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acquiring a dedicated warehouse or e-fulfilment centre, using a distributive 3rd Partly Logistics

(3PL) Provider, ship directly from supplier to customer (Drop Shipping), ship from existing retail

stores or shipping to a collection point (Clicks-to-Bricks). All of which, respectively, offer unique

advantages. The distribution strategies differ as much as the e-tailers themselves and there is

no generic strategy that can be endorsed. Additionally, the strategy implemented does not

always remain unchanged and needs to be constantly revised (Tarn et al., 2003).

Bayles (2001) stipulates that OMS, WMS, SCP system and ERP system provide the

connections by which information is collected and analysed to be applied to the Transportation

Management System (TMS). The TMS manages the delivery component of the e-fulfilment

process and spans the life cycle of the shipment. Furthermore, the TMS allows the e-tailer to

gain visibility of shipments which have been dispatched to customers (Ricker & Kalakota,

1999). The information collected from the TMS can then be relayed to customers for

confirmation of dispatch, as well as sequentially updating them on “milestones” through the

transportation leg. This can be an application of customer expectation management as it

decreases the chance of customer dissatisfaction.

2.4. E-fulfilment key enablers

According to Tarn et al. (2003) the infostructure of an e-tailer is vital to the successful

implementation of e-fulfilment. Cho, Ozment and Sink (2007) also stipulate that outsourcing is

a key e-fulfilment enabler.

2.4.1. Infostructure

Tarn et al. (2003) stipulate that in the context of e-fulfilment, infostructure is the cross functional

network capable of facilitating the exchange of information across multiple platforms internally

and externally throughout the supply chain. The systems involved in the e-fulfilment process

include the ERP system, the OMS, the WMS, the TMS and the SCP system. All

aforementioned systems allow for the collection of vital information across the entire e-

fulfilment process.

Chow (2004) suggests that the integration of the different systems can significantly improve

the performance of supply chain performance and ideally, the more integrated the systems are

the better the e-fulfilment process will operate. In addition, the complexity of e-fulfilment

necessitates that information be used well. Lee and Whang (2001) suggest that the use of

accurate and up-to-date information on demand fluctuations allows the delivery of products to

occur in the most immediate manner. Moreover, this will increase efficiencies and lower

associated costs. E-tailers aim to use their infostructure to assemble or allocate products

according to demand, thereby shipping products faster with fewer costly intervening stages.

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2.4.2. Outsourcing of logistics activities

Outsourcing can be defined as “the relationship between a shipper which, compared with basic

services, has more tailored offerings, encapsulates a broader range of service functions and

is characterised by a long term and mutually beneficial relationship” (Cho et al. 2007).

The fulfilment process is capital intensive and the avoidance of large investment in supply

chain infrastructure can be advantageous. A study by Cho et al. (2007), found that outsourcing

some and sometimes all logistics processes can greatly enhance a business’s financial

performance, especially in an e-commerce setting. Kotabe, Mol and Murray (2008) endorse

that outsourcing can improve strategic focus by reducing assets, lowering production costs,

providing strategic flexibility and avoiding bureaucratic costs. However, outsourcing can also

be harmful to an organisation as it may increase transactional costs because of higher levels

of coordination. It can also impede intra-organisational innovation and potentially decouple

important processes (Bayles, 2001).

Tarn et al. (2003) report that many e-businesses resort to outsourcing their e-fulfilment

processes to 3PL’s. Through this they avoid the massive capital investment of establishing

fulfilment facilities, and, therefore, should consider the viability of outsourcing. The incidence

and diversity of 3PL’s allow e-businesses a wealth of choice when deciding what processes to

outsource. The majority of e-tailers outsource some if not all of their fulfilment processes to

focus on core competencies (Agatz, Fleishmann & Nunen, 2007).

It is important to note that outsourcing to a 3PL comes with the advantage of a faster set up

time and thus appeals to prospecting start-up e-tailers and most package carriers, such as

Fedex and UPS, providing some degree of e-fulfilment service capability (Berger et al., 2001).

However, outsourcing can be problematic as integrated fulfilment requires constructing the e-

fulfilment capability into an existing bulk distribution centre. Additionally, traditional logistics

companies are apprehensive to partner in supply chain networks as they have less experience,

and therefore faith, in the ability of new technology to successfully integrate the e-tailer to the

3PL (Berger, 2001). It is deep technological integration between e-tailer and 3PL where the

significant advantages of outsourcing e-fulfilment processes are abundant (Ricker & Kalakota,

1999).

2.5. Key concepts of e-fulfilment

According to the literature review there are a multitude of factors which are required to

successfully execute the processes of e-fulfilment. In order to understand what constitutes

success with regards to e-fulfilment processes the following table summarises the concepts

identified in the literature that need to be addressed in order to achieve successful e-fulfilment:

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E-FULFILMENT PROCESSES

KEY E-FULFILMENT CONCEPTS

Order Management 1. The online platform (ASP) should make order placement easy 2. The online platform should be able to facilitate multifaceted

communication (EDI) between the customer and the e-tailer 3. The online platform must be able to capture order particulars

accurately 4. The OMS must support standardised informational formats and

communication points 5. The OMS must bridge the gap between the SCP, ERP system TMS

and WMS to ensure true operational synchronisation

Warehousing 1. The warehouse of e-tailers needs to be converted in to an e-fulfilment centre whereby products, services and information are intimately synchronised.

2. The latest technology should be utilised in the areas of picking and packing concurrently with the appropriate operational and informational systems (OMS, TMS, SCP system and ERP system)

3. Warehousing should have multiple decision points supported by multiple verification points to cultivate operational efficiencies

4. Warehousing should attempt to create “one touch distribution” to minimise handling costs and increase product velocity

5. The warehousing process for e-tailers should be designed to allow for risk mitigation, increased product velocity, operational flexibility and scalability to variations in demand

6. Integration and automation (such as automatic data collection) are vital to allow for risk mitigation, flexibility, speed and scalability.

7. The WMS should be as tightly integrated as possible with the OMS, ERP system, SCP system and the TMS.

Order Delivery 1. Outsourcing the order delivery process to avoid substantial capital investment

2. There are a multitude of ways in which e-tailers can deliver their product, the e-tailer should choose according to cost and the effect on customer satisfaction that the different delivery options offer

3. The OMS, WMS, SCP system and ERP system provide the input data to the TMS. Furthermore, the TMS should be closely integrated with the all the aforementioned systems

4. The TMS should capture and relay real-time data to the e-tailer to ensure order visibility throughout the transportation leg of e-fulfilment so that the e-tailer can relay the information to the customer.

Table 2: The Key Success Factors of e-Fulfilment

3. PROBLEM INVESTIGATED

The study will focus on e-fulfilment processes that contribute to the operational success of e-

commerce supply chain management. The processes include order management,

warehousing and order delivery. Furthermore, the implementation of technology to facilitate

and integrate the aforementioned processes will be emphasised.

Therefore, the intention of this study is to provide an understanding of how the implementation

of e-commerce as a purchasing platform affects supply chains in the different processes of e-

fulfilment. At the hand of a case study the e-fulfilment processes of order processing,

warehousing and delivery will be addressed as well as how technology is used to enable and

facilitate these processes. The study will investigate the practices of a South African E-

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commerce company so to compare the aforementioned principals of e-fulfilment. These

companies being Superbalist and Parcelninja. It is important to mention that returns

management, quintessentially an e-fulfilment process, will be omitted from the scope of the

study.

4. RESEARCH OBJECTIVES

4.1. Primary research question

The study will determine and provide an understanding of which e-fulfilment processes and

technology are required to facilitate operational success of e-fulfilment within an e-commerce

supply chain. The use of primary research collected from the South African e-tailers,

Superbalist and Parcelninja, will be employed to further elaborate what technologies are being

used to facilitate e-fulfilment practices.

4.2. Secondary research questions

The e-fulfilment processes and practices of e-tailer supply chains will be examined in order to

interpret the intricacies of what contributes to the successful implementation of e-commerce

as a buying platform. This study will investigate how technology is used in the following e-

fulfilment processes that contribute to successful e-commerce.

Order management

Warehouse management

Order delivery and transport management

The importance of outsourcing e-fulfilment processes to enable supply chain success

The aforementioned secondary research objectives will be compared to the key e-fulfilment

concepts mentioned in the literature.

4.3. Research method

The e-fulfilment practices of Superbalist and Parcelninja will be compared to the key e-

fulfilment concepts mentioned in the in the literature review. The table has been constructed

by identifying key technological requirements of e-fulfilment processes that appear in literature.

The aforementioned key e-fulfilment concepts are required to effectively and efficiently perform

e-fulfilment.

The study has been exploratory in nature utilising a non-empirical approach with the use of

primary research in the form of semi-structured interviews in affirmation to the secondary

research. The study will also provide insight into what e-fulfilment practices are currently being

undertaken in a South African context. Secondary research will be used to provide perceptivity

of how e-fulfilment can be successfully implemented from the global arena of e-commerce.

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As previously stated, primary data was collected from two South African companies. As a

result, these companies will be used to elaborate as to how their e-fulfilment processes are

performed in accordance with the key concepts mentioned in the literature. The first company

interviewed was Superbalist, an online fashion and art retailer. Superbalist defines their value

proposition as providing unique new fashion products, rather than premium fashion products,

that are of significant quality and are offered at an affordable price (Superbalist, 2015). Mikael

Hanan (2015), the chief operating officer of Superbalist, suggests that customer loyalty is

cultivated due to an idyllic online experience and a superior e-fulfilment process.

The second company interviewed, Parcelninja, is a 3PL who Superbalist outsources their e-

fulfilment process to. Parcelninja offers scalable warehousing and fulfilment processes to e-

commerce companies. According to Terrence Murphy (2015), cofounder and chief operations

officer at Parcelninja, their value proposition is their ability to provide a centralised e-fulfilment

process which offers scalability, flexibility and speed to their clients.

5. RESULTS

Murphy (2015) of Parcelninja emphasises that they offer full end-to-end integration through

their self-service web interface and their self-programmed Active Program Interface (API). The

self-service web interface allows clients to manage their stock on an easy to use web platform,

ideally replacing what would be the OMS. As Daniel Van Flymen (2015), a software engineer

at Parcelninja, mentioned Parcelninja’s API “plugs in” to a client’s existing SCP and ERP

system to offer effective integration throughout the entire e-fulfilment process. The high level

of integration allows the client to manage their inbound and outbound stock, manage inventory,

provide customers with updates throughout the e-fulfilment process, manage reverse logistics

and obtain real time data throughout the e-fulfilment process.

The process of e-fulfilment on the part of Superbalist will be further discussed as well as the

impetus which Parcelninja has on the success of Superbalist as one of the fastest growing

fashion e-tailers in South Africa.

5.1. Infostructure

Parcelninja, Superbalist and Parcelninja’s network of parcel couriers need the implementation

and use of an infostructure in order to effectively synchronise their operations. In order to

provide an understanding of how the interconnectivity of the supply chain partners is calibrated,

the following diagram was utilised:

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Diagram 1: The Infostructure of Superbalist, Parcelninja and Parcel Courier Network

As can be seen by the diagram the integration of systems such as the ASP of Superbalist, the

WMS and API of Parcelninja and the TMS of the parcel couriers is well calibrated. The

interconnectivity of the systems allows for a high degree of integration between the supply

chain partners and ensures that they benefit from operational synchronisation.

5.2. Order management

Hanan (2015) stipulates that Superbalist has a user friendly Active Server Page (ASP) or

website which they catalogue the 14 000 SKU’s they sell. The customer simply signs up to

become a member of Superbalist, fills their shopping cart with the desired items, completes

the informational input requirements and proceeds to payment. This payment can be made via

credit card, EFT, Payfast, Discovery, e-bucks or Snapscan (Superbalist, 2015).

Once the payment is made by the customer the ASP of Superbalist captures all of the relevant

order information. Furthermore, Superbalist’s ASP is integrated with the API of Parcelninja and

EDI is used to relay the order placement from Superbalist’s ASP to the WMS of Parcelninja.

The WMS of Parcelninja effectively operates as Superbalist’s ERP system, SCP system and

OMS due to the fact that the Parcelninja software engineers have created an all-encompassing

WMS which forcibly integrates the different processes of e-fulfilment (Mikael Hanan, 2015).

According to Daniel Van Flymen (2015), a software engineer at Parcelninja, the fact that the

WMS of Parcelninja operates as a multifaceted system ensures that informational formats are

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2

3

4

5

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standardised. This effectively bridges the gap between the ASP and the WMS to ensure

synchronisation.

5.3. Warehousing

Parcelninja houses all of Superbalist’s stock at their warehouse. The Parcelninja’s staff

component consists of primarily software engineers who improve, manage and integrate the

WMS in perpetuity. Murphy (2015) argues that the ideology of Parcelninja’s WMS is for it to be

able to plug into any prospective clients’ existing OMS, SCP and ERP system so that the client

can manage their stock throughout the e-fulfilment process. Parcelninja’s API provides

Superbalist with a real-time dashboard whereby they can gain access to the relevant

performance metrics associated with the e-fulfilment process, such as individual item age,

inventory levels, replenishment notifications and dispatch (Parcelninja, 2015).

Daniel Van Flymen (2015) stipulates that Parcelninja’s warehousing offers a multitude of

advantageous characteristics to Superbalist. Firstly, their warehouse provides cost savings as

Parcelninja employs the latest technology in order to streamline processes and create a more

information affluent e-fulfilment process. They afford Superbalist access to a highly automated,

synchronised and integrated warehouse that is able to offer reduced costing in the areas of

handling, packaging and storage. Secondly, Parcelninja operates the first completely

paperless warehouse in South Africa. All of their warehousing processes are executed digitally

using cloud software which applies automated data capturing (ADC) that directs real time

information to the WMS which relays the information to Superbalist’s dashboard (Parcelninja,

2015).

Receiving staff are equipped with a touch screen computer, scanners, barcode printers and

volumetric instruments that capture all the inventory data upon receipt of stock from the

supplier. Again, ADC directs the information to the WMS. This is the first step of the three stage

verification process (Parcelninja, 2015). Additionally, picking staff are fitted with mobile

devices with barcode scanners that direct them through the picking process. The picking

process works on a first-come-first-serve basis and once the pick is complete the tote is

scanned which signifies the second stage of verification (Murphy, 2015). The tote is then sent

to the packaging staff which are also equipped with touch screen computers, scanners,

barcode printers and volumetric instruments. The packaging staff package the contents of the

tote in the clients desired packaging so that the contents are sufficiently protected and sealed,

the package is then weighed and measured to produce the relative volumetric dimensions

used to quote the shipment of the product. According to Murphy (2015), this signifies the final

stage of the triple verification process.

One of Parcelninja’s unique selling points is that they offer fine picking and storage cost

reduction (Van Flymen, 2015). According to Murphy (2015), this is particularly relevant in a

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South African context as no other 3PL offers fine picking and can assure storage cost

reduction. All warehousing 3PL’s in South Africa use a bin allotment technique for storage of

inventory. Essentially clients that cannot fill the bin with their inventory pay for unutilised space.

Parcelninja prevents Superbalist from paying for unutilised space due to the fact that

Parcelninja employs a “chaotic” storage methodology whereby products are placed anywhere

that there is an available space (Murphy, 2015). During packing, floor staff simply find a vacant

shelving space. The staff will scan the unique barcode which is located on all the shelves within

the warehouse and then scan the barcode placed on the stock which has been printed by the

receiving staff. The location of the stock is then electronically transmitted to the WMS whereby

the location is logged and ready to be located and picked upon request. The “chaotic” storage

methodology allows Parcelninja the advantage of efficiently utilising warehouse space, an

advantage derived from the use of technology, whilst allowing Superbalist to avoid bearing the

cost of unused storage space (Murphy, 2015).

5.4. Delivery

Parcelninja offers “Courier Live-Quote” software which is a multi-courier integrated system

(Parcelninja, 2015). Parcelninja partners and integrates with various couriers in South Africa

due to the fact that the transportation component of e-fulfilment is incredibly capital demanding.

Once the volumetric particulars are captured during the packaging stage and appear on the

WMS, Parcelninja obtains quotes from their courier network, the 3PL parcel carrier which offers

the lowest quote will be chosen, therefore providing their clients with the cheapest delivery

rates whilst providing Superbalist with real-time cost and location data which Superbalist can

relay to their customers (Murphy, 2015). The “Courier Live-Quote” system also provides

Superbalist customers to decide to expedite their delivery at an additional charge. Parcelninja

has a network of 3PL parcel carriers which they outsource the delivery process to. This network

consists of Dawn Wing, Bex Express, Fastway Couriers, DHL and Fedex (Parcelninja, 2015).

The fact that Parcelninja uses a pool of 3PL parcel carriers allows them to leverage lower

delivery costs on behalf of Superbalist. Parcelninja fosters the relationships with the respective

courier companies as well as their ability to produce attractive volumes for the 3PL parcel

carriers to distribute (Parcelninja, 2015). Furthermore, Parcelninja’s WMS is integrated into the

TMS of the courier companies therefore Parcelninja relays real-time tracking data from the

courier company to Superbalist who then relay that information to the customer. Therefore, the

customer is informed upon dispatch until the parcel arrives at their door.

5.5. Outsourcing

Superbalist outsource their e-fulfilment processes to Parcelninja and Parcelninja outsource the

order delivery process to their network of parcel couriers. The advantageous use of

outsourcing is evidently seen in the case of Superbalist. Outsourcing has effectively allowed

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both Superbalist and Parcelninja to improve their strategic focuses by reducing costs, creating

operational flexibility and allowing for operational scalability. The outsourcing allows

Superbalist to focus on the marketing and demand management of their products, it allows

Parcelninja to focus on driving efficiencies in the warehousing process and it allows the

network of parcel courier’s focus on planning and implementing an effective order delivery

process.

Furthermore, the true success of the e-fulfilment processes of Superbalist are driven by the

deep technological integration that Parcelninja’s WMS facilitates. The WMS of Parcelninja

synchronises the order management perspective of Superbalist’s ASP with the TMS’s of their

courier network. Essentially it is the Parcelninja WMS that creates the informational link

between all the supply chain partners. Additionally, the WMS captures and dispenses all the

key metrics required by the supply chain partners, thus providing a highly integrated and

synchronised group of supply chain partners.

6. CONCLUSION

Firstly, the topic of information technology should be emphasized and thereby the importance

of information technology to Superbalist and Parcelninja. The use of the appropriate

information technology appears in all the processes of e-fulfilment. Furthermore, integration of

systems allows for operational efficiency of e-fulfilment. Additionally, it facilitates true

synchronisation with all supply chain partners. Integration allows Superbalist to become more

scalable, to mitigate risk, to be more flexible, to operate faster and respond more effectively to

demand variations through the practices of Parcelninja.

Technology should be accentuated and implemented as much as possible to all processes of

e-fulfilment. Suffice to say that e-fulfilment is made inconceivable without the use of an ASP,

OMS, WMS, TMS, SCP system, ERP system, ADC and EDI. All of the aforementioned have

been implemented in some way, shape or form by Superbalist and Parcelninja. According to

the case study it is seen that Superbalist, Parcelninja and the network of parcel couriers employ

all of the key concepts of e-fulfilment highlighted in literature.

The act of outsourcing e-fulfilment processes can only be done successfully when there is

operational synchronisation due to integration. This can be seen at the hand of the case study.

Without the integration of e-fulfilment systems the vital data capturing through ADC and the

pivotal information transfers through EDI are inconceivable. Furthermore, without technology

e-fulfilment becomes impossible, the establishment of an infostructure is critical. There is a

high incidence of outsourced processes, with regard to Superbalist in their e-fulfilment

processes. This supports the fact that outsourcing e-fulfilment processes is where an e-tailer

can leverage competitive advantages. This is evident due to the nature and structures outlined

in the study.

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7. IMPLICATIONS

According to Murphy (2015) the success of Parcelninja is due to their ability to integrate with

their supply chain partners. As can be seen by the results, Parcelninja and Superbalist have

effectively implemented the e-fulfilment key concepts outlined in the study. Furthermore, it can

be argued that the growth of Superbalist and Parcelninja can be attributed to their ability of

carrying out the aforementioned key success factors. Superbalist is currently experiencing

100% year-on-year growth rate (Hanan, 2015). Moreover, Parcelninja is currently experiencing

a staggering 400% year-on-year growth rate (Murphy, 2015). The ability of the aforementioned

companies to implement the key e-fulfilment concepts can only be attributed to the degree of

integration they have established with the appropriate use of technology.

Parcelninja and Superbalist’s success is a by-product of their ability to analyse, augment and

implement the e-fulfilment processes of world class organisations such as Norstrom and

Amazon. By understanding the complexities faced by globally recognised e-tailers and e-

commerce exemplars, Superbalist and Parcelninja gain insight into what works and what does

not. Furthermore, allowing them to implement an e-fulfilment strategy which arguably one of

the most resolute in South Africa.

The case study portrays that the e-commerce practices are strategically feasible in the context

of South Africa. The incidence of 3PL’s, which facilitate the practice of e-fulfilment and thus e-

commerce, are increasing significantly. It is now becoming known to industry members of B2C

commerce that e-commerce is practicable and can be executed successfully in South African

markets. It is the intention of this study to be used in context with South Africa. Furthermore,

to substantiate that the rate of adoption of e-commerce is growing rapidly and that the

importance of a resolute and integrated e-fulfilment strategy, which is enabled by technology,

is pivotal in pursuing success in the world of e-commerce.

8. RECOMMENDATIONS

Due to the fact that the study was industry specific, it is recommended that future research in

the field of e-fulfilment in South Africa should be done in multiple industries and not exclusively

for B2C retailers. Future research could also be done more expansively and focus on both

upstream and downstream logistics processes, this study completely omitted the process of

returns management, which can be considered a significant e-fulfilment process due to returns

management’s ability to resolve customer dissatisfaction. Additionally, future research could

be undertaken with a more quantitative and operational perspective whereby the technological

influences on e-fulfilment can be justified with numerical evidence.

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