Activity 1: Assurance of customer payment. Depending on the payment method
and prior arrangements, the validity of each payment must be determined. In B2B,
the company’s finance department or financial institution (i.e., a bank or a credit card
issuer) may do this. Any holdup may cause a shipment to be delayed, resulting in a
loss of goodwill or a customer
• Activity 2: Check of in-stock availability. Regardless of whether the seller is a manufacturer
or a retailer, as soon as an order is received, an inquiry needs to be made
regarding stock availability. Several scenarios are possible here that may involve the
material management and production departments, as well as outside suppliers and
warehouse facilities. In this step, the order information needs to be connected to the
information about in-stock inventory availability.
• Activity 3: Shipment arrangement. If the product is available, it can be shipped to
the customer right away (otherwise, go to step 5). Products can be digital or physical.
If the item is physical and it is readily available, packaging and shipment arrangements
need to be made.This may involve the packaging or shipping departments and
internal shippers or outside transporters
• Activity 4: Insurance. Sometimes the contents of a shipment need to be insured.
This could involve both the finance department and an insurance company, and again,
information needs to flow, not only inside the company, but also to and from the customer
and insurance agent.
• Activity 5: Replenishment. Customized orders will always trigger a need for some
manufacturing or assembly operation. Similarly, if standard items are out of stock,
they need to be produced or procured. Production can be done in house or by
contractors. The suppliers involved may have their own suppliers (subsuppliers or
tier-2 suppliers).
• Activity 6: In-house production. In-house production needs to be planned.
Production planning involves people, materials, components, machines, financial
resources, and possibly suppliers and subcontractors. In the case of assembly, manufacturing,
or both, several plant services may be needed, including possible collaboration
with business partners. Services may include scheduling of people and
equipment, shifting other products’ plans, working with engineering on modifications,
getting equipment, and preparing content.The actual production facilities may be in
a different country from the company’s headquarters or retailers. This may further
complicate the flow of information and communication.
• Activity 7: Contractor use. A manufacturer may opt to buy products or subassemblies
from contractors. Similarly, if the seller is a retailer, such as in the case of
Amazon.com or walmart.com, the retailer must purchase products from its manufacturers.
Several scenarios are possible. Warehouses can stock purchased items,
which is what Amazon.com does with its best-selling books, toys, and other commodity
items. However, Amazon.com does not stock books for which it receives only a
few orders. In such cases, the publishers or intermediaries must make the special
deliveries. In either case, appropriate receiving and quality assurance of incoming
materials and products must take place. Once production (step 6) or purchasing from
suppliers (step 7) is completed, shipments to the customers (step 3) are arranged.
• Activity 8: Contacts with customers. Sales representatives need to keep in constant
contact with customers, especially in B2B, starting with notification of orders received
and ending with notification of a shipment or a change in delivery date. These contacts
are usually done via e-mail and are frequently generated automatically.
• Activity 9: Returns. In some cases, customers want to exchange or return items.
Such returns can be a major problem, as more than $100 billion in North American
goods are returned each year