chapter five information technology framework. “order processing.”
TRANSCRIPT
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Chapter Five Information Technology Framework.
“Order Processing.”
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Order Processing
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Order Processing
• The nerve center of a logistics system.
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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.
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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
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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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Six Components of the Order Cycle
Customer delivery and unloading
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DAY
1
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DAY
1
Prepare, transmit order
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DAY
1
DAY
2
DAY
3
DAY
3
Receive, process order
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DAY
1
DAY
2
DAY
3
DAY
4
Pick and pack order.
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DAY
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DAY
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DAY
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DAY
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DAY
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Transportation
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DAY
1
DAY
2
DAY
3
DAY
4
DAY
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DAY
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DAY
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DAY
8
Customer receives and unloads order
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Actual order cycle = eight days
DAY
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DAY
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DAY
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DAY
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DAY
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DAY
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DAY
8
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Actual order cycle = eight days
DAY
1
DAY
2
DAY
3
DAY
4
DAY
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DAY
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DAY
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DAY
8
The sending organization’s actual processing.
Receive, process Pick, pack
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Actual order cycle = eight days
DAY
2
DAY
3
DAY
4
What the sending organization sometimes sees.
Receive, process Pick, pack
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Actual order cycle = eight days
DAY
1
DAY
8
What the receiving organization sometimes sees.
Prepare, transmit order
Receive,unload order.
? ? ? ? ? ? ? ? ? ?
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Improving the 8-day order cycle
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Improving the 8-day order cycle
• The three-days in-house may be too expensive to shorten.
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Improving the 8-day order cycle
• The three-days in-house may be too expensive to shorten.
• Better selection/monitoring of carriers may be a more cost-effective way to reduce the order cycle.
![Page 28: Chapter Five Information Technology Framework. “Order Processing.”](https://reader036.vdocuments.net/reader036/viewer/2022062409/56649d005503460f949d31db/html5/thumbnails/28.jpg)
Improving the 8-day order cycle
• The three-days in-house may be too expensive to shorten.
• Better selection/monitoring of carriers may be a more 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.
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Total Order Cycle with Variability
2. Order entry and processing
Frequency:
1 2 3
1. Order preparation and transmittal
Frequency:
1 2 3
3. Order picking or production
Frequency:
1 9
Frequency:
TOTAL
3.5 days 8 20 days
5. Transportation
Frequency:
1 3 5
6. Customer receiving
Frequency:
.5 1 1.5
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Total Order Cycle with Variability
2. Order entry and processing
Frequency:
1 2 3
1. Order preparation and transmittal
Frequency:
1 2 3
3. Order picking or production
Frequency:
1 9
Frequency:
TOTAL
3.5 days 8 20 days
5. Transportation
Frequency:
1 3 5
6. Customer receiving
Frequency:
.5 1 1.5
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Total Order Cycle with Variability
2. Order entry and processing
Frequency:
1 2 3
1. Order preparation and transmittal
Frequency:
1 2 3
3. Order picking or production
Frequency:
1 9
Frequency:
TOTAL
3.5 days 8 20 days
5. Transportation
Frequency:
1 3 5
6. Customer receiving
Frequency:
.5 1 1.5
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Total Order Cycle with Variability
2. Order entry and processing
Frequency:
1 2 3
1. Order preparation and transmittal
Frequency:
1 2 3
3. Order picking or production
Frequency:
1 9
Frequency:
TOTAL
3.5 days 8 20 days
5. Transportation
Frequency:
1 3 5
6. Customer receiving
Frequency:
.5 1 1.5
![Page 33: Chapter Five Information Technology Framework. “Order Processing.”](https://reader036.vdocuments.net/reader036/viewer/2022062409/56649d005503460f949d31db/html5/thumbnails/33.jpg)
Total Order Cycle with Variability
2. Order entry and processing
Frequency:
1 2 3
1. Order preparation and transmittal
Frequency:
1 2 3
3. Order picking or production
Frequency:
1 9
Frequency:
TOTAL
3.5 days 8 20 days
5. Transportation
Frequency:
1 3 5
6. Customer receiving
Frequency:
.5 1 1.5
![Page 34: Chapter Five Information Technology Framework. “Order Processing.”](https://reader036.vdocuments.net/reader036/viewer/2022062409/56649d005503460f949d31db/html5/thumbnails/34.jpg)
Total Order Cycle with Variability
2. Order entry and processing
Frequency:
1 2 3
1. Order preparation and transmittal
Frequency:
1 2 3
3. Order picking or production
Frequency:
1 9
Frequency:
TOTAL
3.5 days 8 20 days
5. Transportation
Frequency:
1 3 5
6. Customer receiving
Frequency:
.5 1 1.5
![Page 35: Chapter Five Information Technology Framework. “Order Processing.”](https://reader036.vdocuments.net/reader036/viewer/2022062409/56649d005503460f949d31db/html5/thumbnails/35.jpg)
Total Order Cycle with Variability
2. Order entry and processing
Frequency:
1 2 3
1. Order preparation and transmittal
Frequency:
1 2 3
3. Order picking or production
Frequency:
1 9
Frequency:
TOTAL
3.5 days 8 20 days
5. Transportation
Frequency:
1 3 5
6. Customer receiving
Frequency:
.5 1 1.5
![Page 36: Chapter Five Information Technology Framework. “Order Processing.”](https://reader036.vdocuments.net/reader036/viewer/2022062409/56649d005503460f949d31db/html5/thumbnails/36.jpg)
Total Order Cycle with Variability
2. Order entry and processing
Frequency:
1 2 3
1. Order preparation and transmittal
Frequency:
1 2 3
3. Order picking or production
Frequency:
1 9
Frequency:
TOTAL
3.5 days 8 20 days
5. Transportation
Frequency:
1 3 5
6. Customer receiving
Frequency:
.5 1 1.5
![Page 37: Chapter Five Information Technology Framework. “Order Processing.”](https://reader036.vdocuments.net/reader036/viewer/2022062409/56649d005503460f949d31db/html5/thumbnails/37.jpg)
Total Order Cycle with Variability
2. Order entry and processing
Frequency:
1 2 3
1. Order preparation and transmittal
Frequency:
1 2 3
3. Order picking or production
Frequency:
1 9
Frequency:
TOTAL
3.5 days 8 20 days
5. Transportation
Frequency:
1 3 5
6. Customer receiving
Frequency:
.5 1 1.5
![Page 38: Chapter Five Information Technology Framework. “Order Processing.”](https://reader036.vdocuments.net/reader036/viewer/2022062409/56649d005503460f949d31db/html5/thumbnails/38.jpg)
Total Order Cycle with Variability
2. Order entry and processing
Frequency:
1 2 3
1. Order preparation and transmittal
Frequency:
1 2 3
3. Order picking or production
Frequency:
1 9
Frequency:
TOTAL
3.5 days 8 20 days
5. Transportation
Frequency:
1 3 5
6. Customer receiving
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 to shorten.
• Better selection/monitoring of carriers may be a more 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 12 days safety stock (average of 8 days plus stock to cover maximum of 20-day order cycle).
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Traditional Supply 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 becauseindividual orders are required.
Instructional material from “Strategic Logistics Management,” by Stock and Lambert (2001).
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Information-based Supply 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.