chapter 5 information slides only
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8/12/2019 Chapter 5 Information Slides Only
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Order Processing
• The nerve center of a logistics system.
• In marketing and business in general:
nothing happens until somebody sells
something.
• In logistics: nothing happens until
somebody orders something.
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Six Components of the Order Cycle
Customer prepares order and transmits it.
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Six Components of the Order Cycle
Customer prepares order and transmits it.
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Six Components of the Order Cycle
Order receipt and order entry
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Six Components of the Order Cycle
Order processing.
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Six Components of the Order Cycle
Warehouse picking and packing
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Six Components of the Order Cycle
Warehouse picking and packing
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Six Components of the Order Cycle
Order transportation
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Prepare, transmit order
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Receive, process order
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Pick and pack order.
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Transportation
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Customer receives and unloads order
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Actual order cycle = eight days
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Actual order cycle = eight days
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The sending organization’s actual processing.
Receive, process
Pick, pack
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Actual order cycle = eight days
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What the sending organization sometimes sees.
Receive, process
Pick, pack
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Actual order cycle = eight days
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What the receiving organization sometimes sees.
Prepare, transmit order
Receive,
unload order.
? ? ? ? ? ? ? ? ? ?
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Improving the 8-day order cycle
• The three-days in-house may be tooexpensive to shorten.
• Better selection/monitoring of carriers may be a more cost-effective way to reduce theorder cycle.
• Also, the 8-day order cycle may be anaverage. The cycle may range from 4 to 20days.
T l O d C l i h V i bili
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Total Order Cycle with Variability
2. Order entryand processing
Frequency:
1 2 3
1. Order preparationand transmittal
Frequency:
1 2 3
3. Order pickingor production
Frequency:
1 9
Frequency:
TOTAL
3.5 days 8 20 days
5. Transportation
Frequency:
1 3 5
6. Customerreceiving
Frequency:
.5 1 1.5
Instructional material from “Strategic Logistics Management,” by Stock and Lambert (2001).
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Improving the 8-day order cycle
• The three-days in-house may be too expensive toshorten.
• Better selection/monitoring of carriers may be amore cost-effective way to reduce the order cycle.
• Also, the 8-day order cycle may be an average.The cycle may range from 4 to 20 days.
• To cover variability, customer should carry 12days safety stock (average of 8 days plus stock tocover maximum of 20-day order cycle).
T diti l
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TraditionalSupply Chain Flows
Demand flow
Product flow
Supplier RetailerDistributorManufacturer
Instructional material from “Strategic Logistics Management,” by Stock and Lambert (2001).
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Traditional
Supply Chain Flows
Demand flow
Product flow
Supplier RetailerDistributorManufacturer
Barriers because
individual orders
are required.
Instructional material from “Strategic Logistics Management,” by Stock and Lambert (2001).
I f i b d
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Information-basedSupply Chain Flows
Timely, accurate information flow
Supplier Manufacturer Distributor Retailer
Smooth, continual product flow
matched to demand
Instructional material from “Strategic Logistics Management,” by Stock and Lambert (2001).
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End of Program.
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