International Consolidation Order-fulfillment Model
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Date
2016-05
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Publisher
The Ohio State University
Abstract
Traditionally, there are mainly two methods for companies to fulfill orders that come from international customers: either through its foreign distributors or ship the order through international parcel carrier. However, the disadvantage of both methods are significant. International distributors charge a noticeable commission, which reduce the item profitability, and cost of international parcel is usually higher than the parcel value itself. This research proposes new order-fulfillment model to minimize the international order-fulfillment cost while keeping the delivery lead time short. The proposed order-fulfillment model utilizes freight consolidation as well as inter-model transportation concepts and requires companies to have access to a warehouse located nearby the targeted market. This research simulates a Los Anglos based company fulfilling orders from customers in mainland China. Costco's open source data and costs data from transportation providers are acquired to assess the effect of the proposed model. Current process in the research shows that companies can lower up to fifty-six percent of the cost and reduce the delivery lead time from seven to fourteen days to six days by applying the proposed model. The preliminary findings suggest that the proposed order-fulfillment model will allow companies to reach out to their international customers with less costs and increase customer satisfaction since the customers' anxiety of waiting for packages is reduced. This research provides evidence that the proposed order-fulfillment model can be a powerful tool for companies who wants to expand their business globally, and since the total delivery cost is reduced, international customers can enjoy less expensive imported goods and shorter waiting time.
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Keywords
order-fulfillment, consolidation, international logistics, cost-reduction, supply chain