1. Chapter 4 Order Processing and Information Systems
Marketing Logistics

2. 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.

3. Six Components of the Order Cycle
Customer prepares order and transmits it.

4. Six Components of the Order Cycle
Customer prepares order and transmits it.

5. Six Components of the Order Cycle
Order receipt and order entry

6. Six Components of the Order Cycle
Order processing.

7. Six Components of the Order Cycle
Warehouse picking and packing

8. Six Components of the Order Cycle
Warehouse picking and packing

9. Six Components of the Order Cycle
Order transportation

10. Six Components of the Order Cycle
Customer delivery and unloading

11. D A Y 1

12. Prepare, transmit orderY 1

13. D A Y 3 D A Y 1 D A Y 2 D A Y 3
Receive, process order

14. D A Y 3 D A Y 4 D A Y 1 D A Y 2
Pick and pack order.

15. D A Y 3 D A Y 4 D A Y 1 D A Y 2 D A Y 5 D A Y 6 D A Y 7
Transportation

16. D A Y 3 D A Y 4 D A Y 1 D A Y 2 D A Y 5 D A Y 6 D A Y 7 D A Y 8
Customer receives and unloads order

17. Actual order cycle = eight days3 D A Y 4 D A Y 1 D A Y 2 D A Y 5 D A Y 6 D A Y 7 D A Y 8

18. Actual order cycle = eight days
Receive, process
Pick, pack D A Y 3 D A Y 4 D A Y 1 D A Y 2 D A Y 5 D A Y 6 D A Y 7 D A Y 8
The sending organization’s actual processing.

19. Actual order cycle = eight days
Receive, process
Pick, pack D A Y 3 D A Y 4 D A Y 2
What the sending organization sometimes sees.

20. ? ? ? ? ? ? ? ? ? ? Actual order cycle = eight days Receive,
unload order.
Prepare, transmit order D A Y 1 D A Y 8
? ? ? ? ? ? ? ? ? ?
What the receiving organization sometimes sees.

21. 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.

22. Total Order Cycle with Variability
2. Order entry
and processing
Frequency:
1. Order preparation and transmittal
3. Order picking
or production
TOTAL
3.5 days days
5. Transportation
6. Customer receiving
Instructional material from “Strategic Logistics Management,” by Stock and Lambert (2001).

23. 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).

24. Traditional Supply Chain Flows
Demand flow
Product flow
Supplier
Retailer
Distributor
Manufacturer
Instructional material from “Strategic Logistics Management,” by Stock and Lambert (2001).

25. Traditional Supply Chain Flows
Demand flow
Product flow
Supplier
Retailer
Distributor
Manufacturer
Barriers because
individual orders
are required.
Instructional material from “Strategic Logistics Management,” by Stock and Lambert (2001).

26. 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).

27. End of Program.