ABSTRACT

In today’s world of digitization, the rise of the e-commerce business around the globe has brought a tremendous change not only in our purchasing habits, but also to the entire retail and logistics industry. Given the irregular e-commerce order arrival patterns, limited time for order processing in e-fulfilment centers, and the guaranteed delivery schedules offered by e-retailers, such as same-day or next-day delivery upon placing an order, logistics service providers (LSPs) must be extremely efficient in handling outsourced e-commerce logistics orders. Without re-engineering the order fulfilment processes, the LSPs are found to have difficulties in executing the order fulfilment process due to the tight handling requirements. This, in turn, delays the subsequent processes in the supply chain, such as last-mile delivery operations, consequently affecting customer satisfaction towards both the retailer and the LSP. In view of the need to improve the efficiency in handling e-commerce orders, this study aims at re-engineering the fulfilment process of e-commerce orders in distribution centers. The concept of warehouse postponement is embedded into a new cloud-based e-order fulfilment preprocessing system (CEPS), by incorporating the genetic algorithm (GA) approach for e-commerce order grouping decision support and a rule-based inference engine for generating operating guidelines and suggesting the use of appropriate handling equipment. Through a case study conducted in a logistics company, the CEPS provides order handling solutions for processing e-commerce logistics orders very efficiently, with a significant reduction in order processing time and traveling distance. In turn, improved operating efficiency in e-commerce order handling allows LSPs to better align strategically with online retailers, who provide customers with aggressive, guaranteed delivery dates.

INTRODUCTION

The e-commerce business is rapidly expanding around the globe. To increase physical presence, online retailers are using brick-and-mortar stores for the display of their products (referred to as “showrooming”) while enabling customers to make purchases online. The rise of such online-tooffline (O2O) retailing and e-commerce business has revamped the entire order fulfilment process along supply chains (Lekovic & Milicevic, 2013). A recent study by Forrester Research (2016) indicated that the total online retail revenues in China, Japan, South Korea, India, and Australia will nearly double from US$733 billion in 2015 to US$1.4 trillion in 2020. While the emerging e-shopping trend is expected to continue, bringing billions of transactions to every corner of the world, order fulfilment along supply chains has been identified as one of the major bottlenecks affecting the development of the global e-business and end consumers’ online purchase experience (Cho et al., 2008; Wang et al., 2014). On the one hand, logistics service providers (LSPs) attempt to grasp the blooming market segment of e-commerce in a wider business perspective. On the other hand, however, at the operational level, they are struggling with the problem of e-commerce order handling inefficiencies in warehouses or distribution centers (Lang & Bressolles, 2013). Though the bottlenecks of e-order fulfilment process, as illustrated in Figure 1, have received greater concern by both industry practitioners and researchers in recent years, the increased complexity and dynamism of the handling requirements of e-commerce orders, i.e. orders being purchased via the Internet using computers or smartphones, have worsened the logistics industry’s headaches.