1. Chapter 07 E-Commerce Logistics
Yang Lifan

2. E-Commerce Logistics 10.1 Overview of E-commerce Logistics
10.2 E-commerce Logistics Model
10.3 E-commerce Logistics Model
10.4 The Internet of Things

3. 10.1 Overview of E-commerce Logistics
Logistics system
The Concept and Characteristics of E-commerce Logistics
The Function of Logistics in E-commerce
The Impact of E-commerce on Logistics

4. 10.1.1 Logistics 1.The Origin and Development of Logistics
The concept of logistics was first formed in the United States, which originated in 1930s, meaning “Physical Distribution” or “Goods Distribution” (PD).
It was until 1980s that China had running the business on “logistics”
In 2013, China’s total social logistics reached RMB trillion, which increased 9.5%. Among them, because of the rapid growth of e-commerce, the total logistics of unit and resident maintain growth, which increased 30.4%, and the growth was 6.9 percentage points higher than last year. Logistics has become a new growth point of national economy.
(see Figure 10-1)

5. Logistics
Figure 10-1 The situation of the total social logistics and growth from 2013 to 2014.

6. 10.1.1 Logistics 2. Classification of Logistics
Macro-logistics and Micro-logistics.
(2) Social logistics and enterprise logistics.
(3) International logistics and regional Logistics.
(4) General logistics and special logistics.

7. 10.1.2 Logistics System The Concept of Logistics System
Logistics system refers to, in a certain period of time and space, the organic integration with specific functions consisting of interrelated constraints of dynamic elements, including delivery of materials and related equipment, transportation tools, storage equipment, staff, communication links, etc. With the development of computer science and automation technology, logistics management system is rapidly evolving from a simple mode to an automatic one, which is mainly marked by automated logistics equipments, such as automatic storage and extraction systems, computerized logistics management and control systems.

8. 10.1.2 Logistics System 2. Classification of Logistics System
On the Main Part of Operation
The logistics system with manufacturer as the main part.
The logistics system with wholesale trader as the main part.
The logistics system of retailing as the main part.
The logistics system of storage and transportation as the main part.

9. 10.1.2 Logistics System 2. Classification of Logistics System
(2) On Goods Delivery System
1) Cargo Consolidation Type.
2) Bulk Cargo Type.
3) Mixed Type.

10. 10.1.3 The Concept and Characteristics of E-commerce Logistics
The Concept of E-commerce Logistics
E-commerce logistics refers to the distribution of network goods or services based on information flow, goods flow, and capital flow, including the physical transfer of material goods (or services) and network transfer of software goods (or services).

11. 10.1.3 The Concept and Characteristics of E-commerce Logistics
2. The Composition of E-commerce Logistics System

12. 10.1.3 The Concept and Characteristics of E-commerce Logistics
3. The Characteristics of E-commerce Logistics
(1) Informationization
(2) Networking
(3) Intelligentization
(4) Flexibility
(5) Virtual Logistics
(6) Green Logistics

13. 10.1.4 The Function of Logistics in E-commerce
1. Ensuring the Application of E-commerce
2. Influencing the Quality of E-commerce
3. Making E-commerce Enterprises Profitable
Survey shows that although the Chinese overall domestic prices have been rising, but because of the promotion of advanced logistics technology and management methods, industrial, wholesale and retail enterprise logistics cost rates still down from 9.3% in 2008 to 8.6% in 2012.

14. 10.1.5 The Impact of E-commerce on Logistics
Changing the Traditional Concept of Logistics
Changing the Operation Mode of Logistics
Changing the Operation Form of Logistics Industry
Improving Logistics Infrastructure, Raising Logistics Technology and Management Level
Putting Forward a Higher Demand on Logistics Staff

15. 10.2 E-commerce Logistics Model
The General Model for E-commerce Logistics
The Selection of E-commerce Logistics Model in China
Some Problems Considered in Establishing E-commerce Logistics Model

16. 10.2.1 The General Model for E-commerce Logistics
The general model for E-commerce logistics mainly includes four types.
Self-managing Logistics
Logistics Alliance
Third-Party Logistics
Fourth-Party Logistics

17. 10.2.1 The General Model for E-commerce Logistics
1. Self-managing Logistics
Refers to logistics activities organized by the E-commerce enterprise itself on the basis of its own material conditions (including logistics facilities, equipments and management agencies, etc.).
In self-managing logistics, E-commerce enterprises may also purchase transportation services from transport industry or warehouse services from warehouse industry.

18. 10.2.1 The General Model for E-commerce Logistics
2. Logistics Alliance
The logistics partnership among E-commerce websites, E-commerce enterprises, logistics industries, etc.
By contract, it will achieve the goals of the advantages complemented mutually, elements flowing in a two-way or multi-way, mutual trust, sharing risk and profits.
Absorb the advantages and strengths of different enterprises
Complement each other in logistics facilities, transport capacity and professional management skills, so as to achieve better economy efficiency.

19. 10.2.1 The General Model for E-commerce Logistics
3. Third-Party Logistics
From a broader perspective and the perspective of logistics operation, Third Party Logistics may cover all the logistics activities, and some value-added services to the shippers provided by professional logistics agents.
Third Party Logistics in its narrow sense refers to the logistics management in which the enterprise carries on the logistics business without any fixed asset, and serves as the shipper to accomplish the whole logistics process with outside forces.

20. 10.2.1 The General Model for E-commerce Logistics
The flow diagram of the third party logistics with the participation of traditional convenience store.

21. 10.2.1 The General Model for E-commerce Logistics
The processes in the above flow diagram include: 1) Through the Internet, customers browse goods in the online stores, make orders, pay directly on line or to the community convenience stores marked by the online stores, or according to their own conditions, ask for home delivery or cash against delivery at certain convenience stores; 2) Through virtual store headquarter, online stores send goods-delivery notices to the distribution center; 3) The distribution center delivers the goods to the customers or to their appointed convenience stores; 4) The customer receives the goods delivered by the distribution center or fetches from the community convenience store; 5) In case of encountering problems, customers can either consult on the net or seek solutions from the community convenience store.

22. 10.2.1 The General Model for E-commerce Logistics
4. Fourth Party Logistics
Refers to a supply chain integrator who, by deploying and organizing resources, capabilities and technologies of its own and other complementary service providers.
Provides the comprehensive supply chain solutions.
The advantages
1) The advantage of integrating and planning the whole supply chain and logistics systems.
2) The advantage of integrating the resources of the supply chain service providers.
3) The advantage of information and service network.
4) The advantage of cost-reducing and service quality.

23. 10.2.2 The Selection of E-commerce Logistics Model in China
Though it is an important component in E-commerce information flow, capital flow and logistics, logistics distribution is still the bottleneck for E-commerce development, which can not meet the needs of E-commerce development mainly in technical means, service quality and delivery speed. Therefore, seeking for an E-commerce logistics model with Chinese characteristics has become a hot topic in developing E-commerce logistics in China.
China Post’s Third Party Logistics Model
Rong Tai Group’s Commodity E-commerce Logistics Model
Logistics Po Platform of Taobao Network

24. 10.2.2 The Selection of E-commerce Logistics Model in China
1. China Post’s Third Party Logistics Model
China Post enjoys obvious advantages in logistics distribution.
First, the Post has a large delivery team and an extensive delivery network spreading over urban and rural areas, with which any other domestic enterprise can not compare.
Second, the Post has a good social reputation.
Third, the existing postal workplaces, facilities, business functions and processes basically meet the requirement of modern logistics.

25. 10.2.2 The Selection of E-commerce Logistics Model in China
1. China Post’s Third Party Logistics Model
Characteristics:
1) Informationization in the process.
2) Active service.
3) Security certification.
4) Meeting different needs.
The international “E- mail Bao” in the delivery process

26. 10.2.2 The Selection of E-commerce Logistics Model in China
2. Rong Tai Group’s Commodity E-commerce Logistics Model
As a large-scale comprehensive logistics group, Rong Tai Logistics Group Co., Ltd. in Fujian Province . They jointly build a steel E-commerce service system, providing full flexible services of online transaction, settlement, pledge, financing credit, storage and distribution, cutting processing, etc., which makes online steel products possible for spot trading.

27. 10.2.2 The Selection of E-commerce Logistics Model in China
Commodity Spot Trading Model of Haixi Steel Logistics Network

28. 10.2.2 The Selection of E-commerce Logistics Model in China
Through adopting unified warehouse management software, it has reached electronic data interchange in the entire logistics-chain enterprises and warehouse bases.
Rong Tai Group's Warehouse Management System

29. 10.2.2 The Selection of E-commerce Logistics Model in China
3. Logistics Po Platform of Taobao Network
Three core aspects in Taobao’s great logistics program

30. 10.2.2 The Selection of E-commerce Logistics Model in China
The perfect seamless connection between the back-end logistics management system and off-line logistics distribution system will greatly enhance the efficiency of E-commerce logistics distribution.
Taobao logistics service process

31. 10.2.3 Some Problems Considered in Establishing E-commerce Logistics Model
In E-commerce environment, the construction of logistics business model should be considered in the following aspects. (1) Setting up E-commerce logistics sites to provide powerful services for customers. (2) Setting up online logistics management information systems to move logistics management on the internet. (3) Forming the linkage of online and off-line operation to improve all-round services.

32. 10.3 E-commerce Logistics Model
Basic Processes of E-commerce Logistics
The Selection of E-commerce Logistics Model in China
Some Problems Considered in Establishing E-commerce Logistics Model

33. 10.3.1 Basic Processes of E-commerce Logistics
1 Design and Layout Planning of Logistics System
2 Receiving Cargo
3 Storage
4 Processing and Selection
5 Order Selection
6 Packing and Shipping

34. 10.3.1 Basic Processes of E-commerce Logistics
1.Design and Layout Planning of Logistics System
Reason: To achieve the efficient operation of E-commerce logistics.
Method: Through the comparison of different logistics systems, the investigation of different production capacities and the evaluation of various logistics plans.
Important tool: Simulation
Effective in designing a complex process
The latest software can make the system closer to the real world through four-dimensional (x, y, z, time) design.

35. 10.3.1 Basic Processes of E-commerce Logistics
2.Receiving Cargo
Logistics layout: Combination type, separation type and direct-forward type.
Requirements of timely information exchange:
1) The goods delivery destination has been confirmed on their arrival.
2) The customers who need these goods are ready to receive shipment.
3) The arrival goods have been labeled and printed with bar code in advance.
4) The storage conditions of warehouses or distribution centers are well informed.
5) The prices of the arrival goods and materials are predefined.

36. 10.3.1 Basic Processes of E-commerce Logistics
3.Storage
A logistics process rather than a static storage technology
New concepts of storage:
JIT (Just In Time),、Continuous logistics、Cross docking shipment.
The new WMS (Warehouse Management Software)
Functions a small computer-based server system, providing a real-time inventory management system of storage, distribution, manufacturing, etc.

37. 10.3.1 Basic Processes of E-commerce Logistics
4.Processing and Selection
Great potential benefits in this field.
Comprehensive plan, improvement of material handing and information processing system are the key to increase productivity.
Many transportation equipments such as forklifts, automated guided vehicles (AGV), conveyor belts, etc. play important roles in it.

38. 10.3.1 Basic Processes of E-commerce Logistics
5.Order Selection
A labor-intensive work requires both efficiency and accuracy
Inventory Analysis
Analysis of stock articles is the key to rightly choose storage devices and storage areas. For example, the size of articles and the selected quantities (number of separation containers, cosmetic devices, unit pallets, etc.) will narrow the choice of storage devices.
Selection Strategy
Three popular selection strategies:
Strict selection: Completing one order at a time
Batch selection: Selecting several orders simultaneously
Regional selection: Each handler has a fixed duty, responsible for one certain area

39. 10.3.1 Basic Processes of E-commerce Logistics
6.Packing and Shipping
Packaging is an extension of manufacturing process, the key of which is to apply packaging equipments into the process of manufacturing and order fulfillment, so that the natural flow of goods forms from orders to shipping docks.
Some requirements for packing include intact packaging for products, clear identification marks, shipping errors avoided, etc.
EDI has been widely applied in the process of shipping. By applying EDI , which means using computer networks, manufacturers can accomplish the standard business transactions, and deliver goods to all retailers on the same day. After production, products will be automatically stacked, unpacked and temporarily placed on the conveyor tunnel. EDI can fully provide and control all the information in the process.

40. 10.3.2 Logistics Information Technology
Logistics information technology is used in various aspects of logistics.
According to the functions and characteristics of logistics, logistics information technology mainly includes:
Information classification coding technology
Bar code technology
Radio frequency identification technology
Electronic data interchange technology
Global positioning system (GPS)
Geographic information system (GIS)

41. 10.3.2 Logistics Information Technology
1.Bar Code Technology
Bar Code is a sign that can be identified by machines.
Today’s logistics industries, such as ECR (Efficient Consumer Response), QR (quick response), AR (auto-replenishment system), etc. are inseparable from Bar Code Technology.
Currently one-dimensional bar code and two-dimensional bar code are mainly used in logistics operations

42. 10.3.2 Logistics Information Technology
One-dimensional bar code
Conveys information only in one direction (usually horizontal direction), not in the other direction (usually vertical direction)
Disadvantages
Small data capacity (about 30 characters), only with letters and numbers.
Bar code is relatively large in size (lower space utilization), and can not be read if damaged.
1D Barcode Graph

43. 10.3.2 Logistics Information Technology
Two-dimensional bar code
Generated in the early 1990s.
Stores information in two-dimensional space of horizontal and vertical directions.
Can hold 1 KB characters, dozens of or hundreds of times larger than 1D Barcode in data capacity.
Has a strong capability of automatic error correction.
Can describe detailed information of the goods in English, Chinese, numbers, symbols and graphics, print in the way the original label printer does, and encrypt as needed to prevent illegal data tampering.
China has approved four kinds of 2D bar code standard, in which the most widely used one is PDF417 bar code standard.

44. 2D Barcode Graph

45. 10.3.2 Logistics Information Technology
2.EDI Technology
EDI (Electronic Data Interchange), commonly known as “paperless trade”, is in accordance with a set of common standards to transmit standard economic information over the communication network, exchanging and processing data automatically in the computer system of the trade partners.
The three elements in EDI system are EDI software and hardware, communication network and standardized data.

46. 10.3.2 Logistics Information Technology
3.Radio Frequency Identification Technology
Radio Frequency Identification (RFID) is a non-contact automatic identification technology which uses radio-frequency signal to automatically recognize target and get access to the relevant data.
Three parts:
(1) Tag: It is composed of coupling components and chips, and each tag has a unique electronic code attached to the object for identifying the target.
(2) Reader: It is used for reading (sometimes writing) tags which can be designed in handheld or fixed form.
(3) Antenna: It can transmit RF signals between tags and readers.

47. The operating principle of RFID system

48. Differences between Barcode and RFID
Logistics Information Technology
Differences between Barcode and RFID
Bar code
RFID
only scanning one bar code at a time
reading several RFID tags simultaneously
needing light when reading
Reading without light
Small storage capacity
Large storage capacity
Unable to update data
reading and writing repeatedly
Keeping medium clear , unable to be defaced or folded
reading with bad weather and poor sanitary conditions
unable to be covered
reading even if covered by nonmetals
Reading slowly
reading at a high speed

49. 10.3.2 Logistics Information Technology
Radio Frequency Identification Technology
RFID is suitable for non-contact data collections and exchanges, such as material tracking, means of delivery and shelf identification, and so on. Due to its reading/writing capability, it particularly applies to the frequent changes of data content.
In December 2005, China established the National RFID Standards Working Group, and in June 2006 issued the “White Paper on China’s RFID Technology Policy”. In December 2006, “Animal Radio Frequency Identification Code Structure”, a national standard recommended for applying RFID to animals, came into effect.

50. 10.3.2 Logistics Information Technology
4.Portable Data Terminal
Portable Data Terminal (PDT) has been widely applied, which can store the useful data collected or transmit them to a management information system.
Includes a scanner, a memory-attached computer small in size but powerful in function, a displayer and a keyboard for manual input.
The data in PDT memory can be transmitted to the host computer by RFID at any time.

51. 10.3.2 Logistics Information Technology
5.GIS Technology
The short of Geographical Information System
An interdisciplinary product, a computer technology system serving for geographical research and decision-makings, which, on the basis of geospatial data and by means of geographic model analysis, timely provides a variety of spatial and dynamic geographical information.
Its basic function is to transform tabular data into a geographic graph (whether it comes from a database, a spreadsheet file or enters directly in the program), and then browses, operates and analyzes the displayed results.

52. 10.3.2 Logistics Information Technology
6.GPS
Can perform tasks of real-time three-dimensional navigation and positioning respectively at sea, on land and in air.
All-time service, high precision, automation and high efficiency.
Has been successfully applied to geodesic survey, engineering survey, aerial survey, vehicle navigation and control, crust movement monitoring, engineering deformation monitoring, resource survey, geodynamics and many other disciplines.
As for logistics industry, GPS is applicable to automotive self-positioning, tracking, scheduling, and to rail transport management and military logistics as well.

53. 10.3.3 Logistics Supply Chain
1. Supply Chain Management
2. Goals and Characteristics of the New E-commerce Supply Chain
3. Contents of Supply Chain Management
4. The Application of E-commerce in Supply Chain Management

54. 10.3.3 Logistics Supply Chain
1. Supply Chain Management
Supply Chain Management (SCM) refers to the whole process of products’ track management from manufacturer to retailer, including procurement, raw materials handling, production planning and control, logistics and warehousing, inventory control, distribution and delivery.
Generally speaking, the smooth supply chain will determine the management benefits.

55. 10.3.3 Logistics Supply Chain
2. Goals and Characteristics of the New E-commerce Supply Chain
Traditional supply chain system: “promotion system”,sell whatever manufacturers have produced
The objective of the new E-commerce supply chain is to integrate supply and marketing.
New E-commerce supply chain adopts the business mode of “customer centered” and “pull system”, which stimulates and promotes goods supply in accordance with the consumption demand.

56. 10.3.3 Logistics Supply Chain
2. Goals and Characteristics of the New E-commerce Supply Chain
Characteristics
(1) Working with fewer links and shorter supply chain. As the supply, production, sails contact with each other directly, some intermediate links of transferring goods have been reduced, thus the speed of commodity circulation is improved.
(2) Flexibility. The importance of POS (Point Of Sells) should be emphasized. Not only is it a cash register, but also much data and distribution information can be got by it, which makes supply chain more flexible.
(3) Low transaction costs. Due to the intermediate links of commodity circulation reduced and the flow speed of commodity information improved, the whole transaction costs have been greatly reduced, and it is beneficial to both the buyer and the seller.

57. 10.3.3 Logistics Supply Chain
3. Contents of Supply Chain Management
SCOR (Supply-Chain Operations Reference-model V5.0) issued by International Supply Chain Council (SCC) in 2001 divided supply chain into five basic links: plan, source, make, deliver and return.
Supply chain model

58. 10.3.3 Logistics Supply Chain
3. Contents of Supply Chain Management
(1) Plan Management. Plan stands as the first link in supply chain management. In the production activities of enterprises, production plan is responsible for coordinating goods supply and demand.
(2) Source Management. Source is a process of enterprises getting raw materials, goods and services. Enterprises are required to do the following in accordance with procurement plan: Reasonably estimating the amount of raw materials and other resources, making an overall arrangement for the procurement funds, its time and the amount, selecting the right suppliers and establishing a stable business contact with them, and ensuring the supply chain to operate orderly and efficiently.

59. 10.3.3 Logistics Supply Chain
3. Contents of Supply Chain Management
(3) Make Management. In supply chain management, production departments are required to standardize production processes or processing procedures, accurately determine the time in advance for products, adopt an overall quality management to strictly monitor products quality, keep equipments in good condition and with immediate repair capability, and finally deliver the finished products punctually.
(4) Delivery Management. The primary function of transportation in the supply chain is to transfer various materials and products, from raw material suppliers to production plants, from manufacturers to retailers, then to customers.

60. 10.3.3 Logistics Supply Chain
3. Contents of Supply Chain Management
(5) Acceptance and Return. If any problem exists, the procurement department, the materials users and the finance department should be immediately informed. If they are found damaged or not corresponding to the order, the commodities should be returned in accordance with inspection system.
Supply chain management is a complex systematic engineering. It needs to establish the basic framework of the relationships among various entities in the supply chain, and integrate the resources in the supply chain system.

61. 10.3.3 Logistics Supply Chain
4. The Application of E-commerce in Supply Chain Management
(1) The orders can be automatically processed through EDI, Internet-based EDI or extranets.
(2) By electronic payments, we can shorten order fulfillment cycle and the interval time spent between payment and delivery.
(3) With introducing make-by-order production process (pull system) and providing faster and more accurate information for suppliers, inventory amount can be greatly reduced.
(4) Direct sales of digital products. If the products can be digitalized (e.g. software), the order will be immediately fulfilled.
(5) By taking advantage of business website, the business cooperation among the members of the supply chain can be launched to strengthen supplier relationship management and customer relationship management.

62. Involved in the Internet of Things
An Overview on the
Internet of Things
Key Technologies
Involved in the Internet of Things

63. 10.4 The Internet of Things
An Overview on the Internet of Things
Key Technologies Involved in the Internet of Things
The Application of the Internet of Things

64. 10.4.1 An Overview on the Internet of Things
(1) The Concepts and Characteristics of the Internet of Things
Concept:
The Internet of Things is a sort of network for achieving intelligent identification, locating, tracking, monitoring and managing, by using information sensor equipments of radio frequency identification (RFID), infrared sensor, global positioning system, laser scanner, etc., integrating all the physical goods into Internet to bridge communication and information exchange. In other words, it is based on the concept of Internet, exposing all the goods to its clients so as to realize information exchange and communication.

65. 10.4.1 An Overview on the Internet of Things
Three important characteristics of the Internet of Things:
(1) Comprehensive sense: able to get the information of objects at any time and any place with the help of RFID, sensors, two-dimensional code, etc. (2) Reliable delivery: able to accurately send out the information of objects on time through the integration of telecommunication networks and the Internet. (3) Intelligent management: able to analyze and process the vast amounts of data and information, and able to get objects under intelligent control using various intelligent computing technologies, such as cloud computing, fuzzy recognition, etc.

66. 10.4.1 An Overview on the Internet of Things
(2) The Internet of things is new competitive world focus in the future
The Internet of Things was first proposed by MIT Auto-ID Center in 1999.
In 2005 International Telecommunication Union (ITU) released its annual technical report: we are standing on the brink of a new ubiquitous communication era—the “Internet of Things”.

67. 10.4.1 An Overview on the Internet of Things
Since 2009, all circles in China have also paid great attention to the development of the Internet of Things. Mainly there are four aspects: （1）Emphasized and promoted by the high-level leaders in China. （2） the Ministry issued “12th five-year plan of Internet of Things” （3）October 2010, "the State Council decision on accelerating the cultivation and development of strategic emerging industries" released. （4）Industry attaches great importance to the development of Internet of things and has the development of enthusiasm

68. 10.4.2 Key Technologies Involved in the Internet of Things
(1) Information collection technology (2) Short-range communication technology (3) Remote information-transmission technology (4) Technology of intelligent analysis and control of massive information

69. 10.4.3 The Application of the Internet of Things
Applications of Internet of things already have some technical basis.
(1) Intelligent transportation
(2) Security
(3) Production management
(4) Digital home
(5) Health care

70. 11.4.3 The Application of the Internet of Things
Characterized by information perception, the Internet of Things is the third wave in the world’s information industry, and a commanding height of the new round of development and competition in information field.
In order to practically apply the Internet of Things in different industries and fields, we need further explorations, and create as soon as possible a production chain including perception, transmission, processing, control, etc.

71. THE END
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