As companies drive to become more efficient and reduce cost , their order fulfillment demands increase as they add more links in their supply chain. This is especially true in the world of technology vendors. There are now multiple delivery models for software, it can be delivered digitally, subscribed to or shipped on a CD. Delivery models have also changed. Technology vendors do not want to cover the cost associated with maintaining thousands of tangible goods in their own warehouses and have moved to a drop ship fulfillment model. This makes perfect sense particularly when it comes to high value items.
When you look at the processes that vendors are switching to it is clear that the changes they are trying to implement are beneficial to both the consumer and the vendor. Customers can receive software and goods faster, while vendors reduce their cost of doing business. With all these positives why are more companies not switching to this model? The problem lies within supply chain solutions of the past. They were not built for these models and rightly so. Who would have thought 20 years ago that you would be able to deliver software in an email or that you would not house the inventory you wanted to sell?
Companies who sell in these models have created work arounds to trick their existing systems into this process; creating fake inventory to represent the receiving of drop shipments into inventory or intangible items. These processes are difficult to understand, very time consuming, and even more difficult to trace. The complex debits and credits of trade (let alone the taxation of these fulfillment models) require organizations to examine their current applications and consider upgrading their internal systems. The benefits in efficiency and flexibility of fulfillment models open new markets and lower costs.
As Supply Chain models have matured, back end software applications that support these chains need to step up to the challenge.
