order filling.pptx

7/30/2019 Order Filling.pptx

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5-1

Order Processing andInformation Systems

The difference between mediocre and excellent logistics is often the

firms information technology capabilities.

Dale S. Rogers

Richard L. Dawe

Patrick Guerra


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5-2

Order Processing and Information

Systems in Planning Triangle

PLANNING

ORGANIZING

CONTROLLING

Transport Strategy

Transport fundamentals

Transport decisionsCustomer

service goals

The product

Logistics service

Ord. proc. & info. sys .

Inventory Strategy

Forecasting

Inventory decisions

Purchasing and supply

scheduling decisions

Storage fundamentals

Storage decisions

Location Strategy

Location decisions

The network planning process

PLANNING

ORGANIZING

CONTROLLING

Transport Strategy

Transport fundamentals

Transport decisionsCustomer

service goals

The product

Logistics service

Ord. Proc. & info. sys. .

Inventory Strategy

Forecasting

Inventory decisions

Purchasing and supply

scheduling decisions

Storage fundamentals

Storage decisions

Location Strategy

Location decisions

The network planning process


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Order processing Order processing include

Order preparation

Order transmittal

Order entry

Order filling

Order status reporting

Order preparation refers to activity gathering the information neededabut the products & services desired & formally requesting the products

to be purchased. It may involve determining appropriate vendor

Filling out an order form

Determining stock availability

Communicating order information by telephone to sales clerk

Making selection from website menu.

Examples Bar code scanning at supermarkets

Website providing information about products & allow order to be placed from web

Industrial Purchase orders generated directly from companys computer & send tovendors by Electronic data interchange. paper less transactions lowers orderpreparation costs & reduce order replenishment times.


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Order Transmittal After order preparation it involves transferring the order request from its point of origin

to place where order entry can be handled. It is accomplished by two ways eithermanually or electronically.

Manual transmission includes mailing the orders or physically carrying the orders bysales staff to the point of order entry.

Electronic transmission of orders I snow very popular with the wide use f Toll freenumbers , data phones , websites on internet , EDI ,FAX M/Cs & satellitecommunications. The almost instantaneous transfer of orders with its high degree ofreliability & accuracy , increasing security , and .decreasing cost has replaces manualorder transmittal methods.

EDI is costly than internet but it is secured.

ORDER ENTRY - It refers to tasks that take place prior to actual filling the orders,These include

Check accuracy of order information such as item description , number ,qty , price.

Availability of requested items.

Preparing back order or cancellation of documents if necessary.

Checking customer credit status. Transcribing the order information as necessary.

Billing

The above tasks are necessary as order request information is not always in the form needed forfurther processing. It may not be represented accurately or additional paper work may be neededbefore order can be released for filling.


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5-5

Typical Elements of Order Processing

Salesorder

Order Preparation

Requesting

products or

services

Order Transmittal

Transferring

order information

Order Entry

Stock checking

Accuracy checking

Credit checking Back ordering/

order canceling

Transcription

Billing

Order Filling

Product retrieval, production, or purchase

Packing for shipment

Scheduling for delivery

Shipping document preparation

Order Status Reporting

Tracing and tracking

Communicating with

customer on order

status

Salesorder

Order Preparation

Requesting

products or

services

Order Transmittal

Transferring

order information

Order Entry

Stock checking

Accuracy checking

Credit checking Back ordering/

order canceling

Transcription

Billing

Order Filling

Product retrieval, production, or purchase

Packing for shipment

Scheduling for delivery

Shipping document preparation

Order Status Reporting

Tracing and tracking

Communicating with

customer on order

status


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Order Entry it has greatly benefited from technologicalimprovements. Bar coding , optical scanners , computer havesubstantially increased the productivity of this activity. Bar coding &

scanning are important for entering order information accurately ,quickly , & low cost compare to computer key board data entry. Thishas become popular in retailing , manufacturing ,& service industries.

Computer are also used in order entry activity replacing manualstock & credit checking & transcription activities with more automated

procedures. Order Filling - It is represented by the physical activities required to

acquire the items through stock retrieval , production ,or purchasing

Pack the items for shipment

Schedule the shipment for delivery

Prepare the shipping documents

Many times firms have not established any formalized rules by which orders to beentered & dealt during initial stages of order filling. One company experiencedsignificant delays in filling

Important customers orders when order clerks ,during busy periods ,would handlethe less complicated order first.

Order Entry & order filling


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Order filling order fulfillment as the complete process from point of sales inquiry to delivery of a

product to the customer. That is to say, it refers to those activities that take place fromthe moment a buyer places an order to the moment the order is delivered in full.

Here is a look at the activities involved in the order fulfillment process.

Product Inquiry : It refers to the initial inquiry about offerings through visit to thewebsite or catalog request.

Order Booking: It stands for the formal placement of the order.

Order Acknowledgment / Confirmation: It refers to the confirmation of the order.

Invoicing / Billing: It refers to the providing of commercial invoice / bill to thecustomer.

Order Sourcing / Planning: It is the process of determining the source / location ofitem(s) to be shipped.

Order Changes: The customer can make changes to orders, if any.

Order Processing: It refers to the processing of the orders. It involves receiving andstocking inventory, picking, packing and shipping orders.

Shipment: It refers to the shipment and transportation of the goods. Delivery: It stands for the delivery of the goods to the consignee / customer.

Settlement: It is the payment of the charges for goods / services / delivery.

Returns: It refers to the process of returning goods in case the goods areunacceptable / not required.


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Order fulfillment activities are either done in house or outsourced. Outsourcing is a goodoption especially for large enterprises as it helps the enterprises to focus on their core

competencies. Here is a look at the services provided by a best of the breed supply chainsolutions provider.

Handles one configuration to one customer, low-volume-high mix through high-volume-low-mix orders

As it facilitates placing the order for a configured product through a secure link to a globaltech page, it allows clients to stay informed at every step of the process with real-timeinformation. This reduces program management time and enables quick managementdecision making.

With an extensive array of test experience and skilled staff, the solution provider canaccomplish the highest levels of test and debug on a wide variety of products

Their value added distribution services ensure clients are only shipping the most recentproducts in the quantities that are ordered and no stocking of products with a limited shelflife.

The clients products are configured with everything from electro-mechanical assembly (boxbuild) and retail pack out (RF sealing, shrink-wrap, clamshells, etc.) to custom labeling.

A skilled quality control management staff oversees all the processes that help to ensure thatonly highest quality products are delivered to the consumer.

Thus, collaboration with the right supply chain solution provider helps enterprises byproviding them all operational controls without the day- to-day cost and stress of owning ormanaging those operations.

Order filling


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5-9

Order FillingProcessing rules affect order filling speed

First-received, first-processedShortest processing time first

Specified priority numberSmaller, less complicated orders firstEarliest promised delivery dateOrders having the least time before promised delivery dateThe order filling eithe rfrom available stock or from production adds to order cycle

time in proportion to time required for order picking or production. Order picking

time is extended by split order processing or freight consolidation.

Order fill rate lower than item fill rate

ii

P

n

inPFR

itemofyprobabilitstock-inorderonitemofnumber

where


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5-10

Order Filling(Contd)

Question Suppose that an order contains five items, each having a

stocking probability of 93%. What is the probability that the order will befilled complete?

70%or,70.0)93)(.93)(.93)(.93)(.93(. FR

Answer


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Order status Reporting This final order processing activity ensures good customer service is

provided by keeping the customer informed of any delays in order

processing or delivery of order which includes

Tracing & tracking the order through out the entire order cycle

Communicating with the customer about where the order may be in order cycle &

when it will be delivered.

Customers by knowing their order no can check the order progress throughout the

entire order cycle from companys website or call on toll free no for customerservice.


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5-12

Commerce Through the Internet

Orders:

ConfirmationShipment arrival

Shipment status

COMMUNICATION NETWORK - INFORMATION SUPERHIGHWAY

Orders:

Confirmation

Shipment notice

Shipment statusDistributor

CustomersSuppliers Products

Logistics

provider

Direct to customer delivery using the Internet


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Finished goods distributors can us EDI to create a direct from-supplier

distribution system. Product need not be stored in distributors warehouse.

Order information& products flows through the supply chain in following

way.

1. The customers tell the distributor how much of which products are

wanted & where via EDI.

2. The distributor tells the suppliers how much of which products must be

shipped via EDI.

3. The distributor tells the logistics provider where to pick up the product &

how much via EDI.

4. The distributor tells the logistics provider how much of which products to

be delivered where & when via EDI.

5. The supplier prepares the product for shipment.

6. The logistics provider picks up the product, and sorts and segregates theproduct to the Distributors specification.

7. The logistics provider delivers the products to the customers.


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5-14

Factors Affecting Order Processing TimeProcessing priorities Some firms prioritize their customer list on

most profitable orders . In this they will alter order processing priorityorders will be given preferential treatment while low order times. Low

priority orders may be held for later processing.

Parallel versus sequential processing By doing the activitiessimultaneously processing time can be reduced.

Order-filling accuracyCompleting order processing cycle withouterror reduces processing time.

Order batching Collecting orders from multiple customers for batchprocessing reduces processing cost.

Lot sizing Customer order may be too large to be filled from thestocks immediately on hand. Rather than waiting for the order to be

completely produced small lot sizes of the total order qty may beproduced & shipped. Transportation cost are likely to be higher due to

shipping several orders of smaller size.

Shipment consolidation Consolidating several small orders to builda larger shipping volume reduces transportation costs. Processing

time may be increased at the cost of decrease transportation cost.


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5-15

The Logistics Information System

INTERNAL

Finance/Accounting

Marketing

Logistics

ManufacturingPurchasing

EXTERNAL

Customers

Vendors

Carriers

Supply chain partners

LOGISTICS

INFORMATION

SYSTEM

OMS

Stock availability

Credit checking

Invoicing

Product allocation to

customers

Fulfillment location

WMS

Stock level

management

Order pickingPicker routing

Picker assignments

and work loading

Product availability

estimating

TMS

Shipment

consolidation

Vehicle routingMode selection

Claims

Tracking

Bill payment

Freight bill auditing

INTERNAL

Finance/Accounting

Marketing

Logistics

ManufacturingPurchasing

EXTERNAL

Customers

Vendors

Carriers

Supply chain partners

LOGISTICS

INFORMATION

SYSTEM

OMS

Stock availability

Credit checking

Invoicing

Product allocation to

customers


WMS

Stock level

management

Order pickingPicker routing

Picker assignments

and work loading

Product availability

estimating

TMS

Shipment

consolidation

Vehicle routingMode selection

Claims

Tracking

Bill payment

Freight bill auditing


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The logistics Information system can be described in terms of itsFunctionality & internal operations.

Function The main purpose of collecting , retaining & manipulatingthe data within a firm is to make decisions , ranging from strategic tooperational & to facilitate the transaction of business. Largecomputer memory space , faster computing, increase access toinformation throughout the organization from ERP systems such asSAP,BANN & improved platforms from transmitting information such

as EDI & INTERNET have created opportunity for firms to shareinformation continently & inexpensively throughout the supply chain.

LIS should be capable & comprehensive enough to allow forcommunication not only between functional area of firm (Marketing ,production , finance , logistics ) but also between the members ofsupply chain (vendors & customers) . Sharing selected information

about sales , shipments , production schedule , stock availability,order status with vendors & buyers has the value to reduceuncertainties through out the supply chain as users find ways ofbenefiting from information availability.



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With LIS major systems are

Order Management System (OMS)

Warehouse Management system ( WMS)

Transportation Management system (TMS)

Each system contains information for transactional purpose but also

decision support tools that assist in planning particular activity.

Information flows between them as well as between LIS & firms otherinformation system t create an integrated system. The information

systems are typically expressed in the form of computer software

packages.



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Order Management System Module

Elements

Stock availabilityCredit checkingInvoicingProduct allocation to customers



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OMS manages the initial contact with the customer at the time of product

inquires & order placement. It is front end of system of LIS. OMS

communicates with WMS to check product availability , either from

inventories or from production schedule. This provides the information

about location of the product in supply chain network ,quantity available ,

& estimated time for delivery. Once product availability is accepted by

customer credit checking can be done by OMS communicating with

companys financial information system. Once the order is accepted , the

OMS will allocate the product to the customer order , assign it to the

production location ,decrement the inventory & when shipping is

confirmed ,prepare the invoice.

There is similar OMS for the purchased orders. OMS will maintain the data

of purchase orders. Purchase based OMS will concentrate on vendors ,their delivery ratings , costs & terms of sales , capabilities ,availabilities

,financial strength.

Order Management System Module


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5-20

Warehouse Management System

Module

Elements

ReceivingPutawayInventory managementOrder processing and retrieving

Shipment preparation


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WMS system may contain OMS or it may be treated as separate

entity within the LIS. WMS must at least tie back to the OMS so that

sales department knows what is available for sales. It is informationsubsystem assisting in the management of product flowing through &

stored in the facilities of the logistics network. The key elements

indentified as receiving , put way , inventory management , order

processing , & retrieving , shipment preparation. All these elements

will appear in the WMS of atypical distribution warehouse. Receiving This is entry point for the information into the WMS.

Product is off-loaded from receiving carrier at warehouse's inbound

dock and identified by product code & quantity. Data about the

product is entered into the WMS using bar code scanners , radio

frequency data communication terminals or manual keyboards ,weight , cube , & package configuration of the product are known by

matching product code against an internal product file.

Warehouse Management System Module


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Putway The incoming product needs to be temporally stored within

the warehouse. The WMS retain the space layout within the building

& the inventory stored in the locations. Based upon available space

& stock layout rules the WMS assigns the incoming product to a

specific locations for letter retrieval. If multiple products are to be

stored in multiple locations on same trip , The WMS can specify

putway sequence & route to minimize travel time.

Inventory Management WMS monitors stock level at each stocking

location in warehouse. If inventory levels are under control of

warehouse then the replenishment quantities & timing are

suggested according to the specific rules. The request for

replenishment is transmitted to the purchasing department or

directly to the vendors or company plants through EDI or internet.

Order processing & retrieving Picking the items requested on an

order is most laborious & expensive part of warehouse operations.



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Shipment preparation Among all the orders a subset will be

processed at one time. Orders for customers located within the sameproximity are picked simultaneously to arrive at shipment dock &

truck stall at same time. Estimates are made for volume & weight of

multiple customers orders to be place on trucks ,container , or rail

car. In case of retail merchandise price tags may be affixed so that

items may be placed on the shelves without further handling.



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5-24

Transportation Management System

Module

Elements

Mode selection

Freight consolidationRouting and scheduling shipmentsClaims processing

Shipment trackingBill payment and auditing

T i M S M d l


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TMS focuses on inbound & outbound transpiration of a firm & is integralpart of LIS. It shares information with other LIS components such as ordercontent , item weight & cube , quantity , promised delivery date & vendor

shipping schedules. It purpose is to assist planning & controlling firmstransportation activity. It involves following Mode Selection

Freight consolidation

Routing & scheduling shipments

Claims processing

Tracking shipments

Freight bill payment & auditing Mode Selection It typically include airfreight, ground package carriers,ocean containers , rail carload movement.TMS can match shipment sizewith transport service cost & performance requirements. A good TMS willstore data on multiple modes , freight rates , expected shipments times ,mode availability , service frequency & will suggest best carrier for eachshipment.

.Freight consolidation TMS suggests the pattern of consolidating smallshipments into larger ones.TMS can keep track of shipment sizes ,destinations , promised delivery dates , From this information & usinginternal decision rules , economical loads can be built while considering ,delivery service goals.

Transportation Management System Module

T i M S M d l


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Routing & scheduling shipments when firm owns or lease fleet of vehicles carefulmanagement is required to ensure fleet is operated efficiently. With order informationfrom the OMS and order-processing information from WMS,the TMS assigns loads tothe vehicles & suggest the sequence in which vehicle stops should be made, pick upof returning the merchandise from the stop offs points, planning for back hauls , driverrestrictions on length of driving & rest breaks , and utilization of the fleets acrossmultiple time periods all need to be considered. The TMS retains the data on stoplocations , vehicle type ,number & capacity, stop loading /unloading times, stop linewindows & other restrictions on the route.

Claims processing in transportation some shipments are damaged. By retaininginformation such as shipment content ,product value , carrier used , origin &destination , liability limits ,many claims can be processed automatically or withminimum human intervention.

Tracking shipments IT has played major role tracking the progress of shipment onceit is transferred to transport carriers. Bar coding , radio transmission en route , globalpositioning systems & on board computers are key information system elements thatallows the location of shipments to be known in real time. The small shipment carrierssuch as DHL , Airborne express , Fedex uses such information system to satisfy theircustomers.

Freight Bill payment & auditing It is labor intensive activity due to large no. of routes

& rate combinations. The computer based TMS can quickly search the minimum costrouting & compare the cost with freight bill. Freight bill payment can also be facilited inthe TMS.Here the TMS records the shipments has been made & request the financialsystem to execute the payment to the carrier often electronically.

Transportation Management System Module


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5-27

Operating Components of the LISEnvironment

Data input

Data base activities

1. Data storage

Filing

Retrieval

File maintenance

2. Data transformation

Basic dataprocessing

operations

Data analysis using

statistical and

mathematical

techniques

Outputcommunications

Logistics manager

(Decision maker)

EnvironmentEnvironment

Data inputData input


1. Data storage

Filing

Retrieval

File maintenance



operations

Data analysis using

statistical and

mathematical

techniques


1. Data storage

Filing

Retrieval

File maintenance



operations

Data analysis using

statistical and

mathematical

techniques



Logistics manager

(Decision maker)

Logistics manager

(Decision maker)

DecisionsDecisions

Limits of the information system


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5-28

Exploded View of the LISCustomer

data

Company

records

Published

information

Management

data

Dataanalysis Dataretrieval Dataprocessing

Data base

manager

Input

Output

Data Base

Computer

files

Manual

records

Summary

reports

Status

reports

Exception

reports

Prepared

documents:

purchase

orders, bills of

lading, etc.

Results of

analysis

Action

reports


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Three distinct elements that make up the system are INPUT , THE DATABASE ,THE OUTPUT.

THE INPUT The first activity associated with the information system isacquiring the data that will assist the decision making processes. The data canacquired from many sources like CUSTOMERS , COMPANY RECORDS ,PUBLISHED DATA , MANAGEMENT DATA.

Customers through their sales activity indirectly provides useful data forplanning. During order entry data is captured that is useful for forecasting &

operating decisions such as sales volumes ,its timings , location of sales , ordersize. Similarly data about shipments & transportation costs are obtained fromdeliveries made to customers. Fright bills ,purchase orders, invoices areadditional sources of data.

Company records in the form of accounting reports , status reports ,reportsfrom internal & external studies , & various operating reports provide wealthydata.

Published data from external sources like research sponsored by tradeassociations , data sharing through internet & EDI , Professional journals &trade magazines.

Company personnel also provides valuable data like predictions of future sales, actions of competitors , availability of future materials.

Operating Components of the LIS

O ti C t f th LIS


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Data base Management Converting data to information , portraying itin a manner useful , for decision making , & interfacing the informationwith decision assisting methods is heart of information system.Management of data base involves selection of data to be stored &retrieved , choice of the methods of analysis and choice of the basicdata processing procedures to implement. To decide After determiningthe content of database, the first concern in data base design is todecide what data should be maintained in traditional hard copy form, thedata to be retained in computer memory for quick access. Datamaintenance can be expensive & data retention should be based on 1.

how critical is data for decision making 2. the rapidity of informationretrieval 3. the frequency of data aces 4. the effort required formanipulating the data in the form needed.

Data Processing It is most popular feature of information system.Preparation of purchase orders, bill of ladings, freight bills is commondata processing activity to aid logistician in planning & controllingmaterial flow. Data processing represents conversion of data in the files.

Data analysis It contains any no of mathematical & statistical models.such models convert information into problem solutions that providedecision support. Planning picker routing in high turnover warehouse ,routing , delivery trucks , & allocating customers to warehouse & plants.



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THE OUTPUT This is interface with the user of the system.

Following are few examples of outputs

Summary report of cost or performance statics

Status reports on inventories or order progress

Exception report that compares desired performance with actual performance,

Reports that initiate actions e.g. purchase orders or production orders

Output may be in the form of prepared documents such as transportations bills of

lading , fright bills. Finally output may be the result of data analysis frommathematical & statically models.

The input , a data base management & output are key features of the internal

operation of the LIS . In addition to basic transactional capabilities the major purpose

of system is to be decision support tool for planning & operating system,



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5-32

Information System Examples

A retail systemVendor managed inventoryE-commerce

A decision support system


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5-33

Information System: Indian Examples

Vehicle Tracking Devices (VTDs)

Efficient Consumer Response (ECR)

Tata AutoComp Systems (TACO)

Indian Steel Companies (TISCO & SAIL)

Gati

Taj Group of Hotels

Indian Oil Companies (BPCL and Indian Oil)


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5-34

LISforaLarg

eRetaile

r

Item sold

Department

manager review

Deliveriesfrom

supplier

Supplier -- Coffee

makers

TransmissionRegional center main

computer Corporate payroll

Corporate

accounting

Corporate credit

Inventory

management

Purchaseorder

Corporatesales

report

Sales

counterBar code

item at store

Manual

register

input

Bar code

scanning

In-store computer

Credit data Payroll

Accounting

Merchandising

Customer

creditverification

EDI

Item soldItem sold

Department

manager review

Department

manager review

Deliveriesfrom

supplier

Deliveriesfrom

supplier

Supplier -- Coffee

makers

TransmissionTransmissionRegional center main

computer Corporate payroll

Corporate

accounting

Corporate credit

Inventory

management

Purchaseorder

Purchaseorder

Corporatesales

report

Corporatesales

report

Sales

counter

Sales

counterBar code

item at store

Bar code

item at store

Manual

register

input

Bar code

scanning

In-store computer

Credit data Payroll

Accounting

Merchandising

Customer

creditverification

EDIEDI

order filling.pptx

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