Fulfillment and Sequencing

A special form of value added service that can be performed by functional specialists is fulfillment. Fulfillment is a relatively new label applied to a specialized form of handling and arranging or shipment of promotional or point-of-sale advertising materials. The fulfillment firm is contracted to process and ship particular types of merchandise or supplies on behalf of a manufacturer, wholesaler, or retailer. The typical arrangement is for the fulfillment company to physically maintain but not own the associated inventory. This discussion concerning inventory ownership is the essential factor that contrasts a fulfillment company from a merchant wholesaler. Manufacturers, wholesalers, and retailers engage the services of a fulfillment firm because of its expertise in handling small customized orders.

A classical example of a fulfillment service is Procter & Gamble’s arrangement for the distribution of disposable diapers for premature babies. Confronted with the desire to retain the patronage of mothers of premature babies for future diaper purchases and in light of the low volume of such items in terms of retailer shelf space management, P&G worked out an arrangement with a specialized company to fulfill distribution requirements. Mothers were provided an 800 number at the time of hospital release that they could call for placement of diaper orders the fulfillment company received and processed the order, prepared the shipment, and arranged for home delivery of the diapers by United Parcel Service. The result was effective distribution that represented profitable business for the specialized fulfillment business while offering a distribution solution that cost effective for P&G and the retailer, and, most importantly, one that was convenient for the mother.

Sequencing consists of sorting merchandise into a unique configuration to satisfy a particular customer’s requirements. Since most customers have unique requirements, sequencing is, by definition customized. Three examples illustrate the widespread range of sequencing services.

In the retail garment industry the product of contract manufacturers needs to be size sorted and style and color sequenced to satisfy retail market requirements. American President Companies (APC) offers retailers a service that links procurement with Pacific Rim garment manufacturers. The service offers contained delivery of garments, on hanger, that are size and color sequenced to the retailer’s specifications prior to loading. The service is capable of providing direct to store (retail) delivery of a customized garment sequence. Federal Express Logistics offers a similar service through their Memphis-based distribution facility in which air shipment of garments is used. With this premium transportation system, garments produced in France can be in United States retail stores within forty eight ours. Of course, many primary channel participants provide their own sequencing. For example, The Limited performs store level sequencing ad distribution of garments flown in from Asia using internal systems, facilities, and transport capabilities.

A second of sequencing is typically found in industries in which one public warehouse is the distribution facility for a number of different manufacturers that sell to the same retailer. Dauphin Distribution Services, a warehouse specialist, is capable of providing multiple vendors consolidated inbound delivery for Shaw’s Supermarkets. Rather than receiving truckload shipments of each supplier’s products. Shaw’s can accelerate inventory velocity by frequently receiving a mixed trailer containing products purchased from a combination of suppliers. Perhaps even more important than the mixing is the ability to sequence load trailers to facilitate receiving. Continental Freezers of Illinois offers an inbound staging, assorting, and sequencing of frozen foods allows direct delivery to Jewel Food retail stores. Such sequencing bypasses handling by frozen food distributors as well as by the Jewel warehouse, thereby reducing cost and incorporating the efficiency of direct-to-store distribution.

A popular form of sequencing is related to the support of manufacturing operations. A vital aspect of just-in-time manufacturing support is to sequence parts shipments into the order in which they will be used in assembly. Such sequencing may involve a combination of parts purchased from one or multiple vendors to support scheduled assembly of products. Manufacturing sequencing is typically provided by transportation to warehouse firms that, in numerous situations, operate specialized equipment or facilities to perform the value added services. For example, the development of curtain sided transportation trailers was a response to a need to simultaneously unload a number of different parts. By having access to the side of a trailer as well as t the end, it is possible to sequence load a umber of different parts on the same trailer.

Many sequencing operations can be performed without the benefit of warehouse facilities. A popular form of sequencing is to use specially designed terminals. Such terminals allow trailer contents to be sequenced to the specifications of customers without the need to actually place merchandise into a warehouse facility.