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Chapter 4 Order Processing and Information Systems Marketing Logistics.

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Presentation on theme: "Chapter 4 Order Processing and Information Systems Marketing Logistics."— Presentation transcript:

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 DAY1DAY1

12 DAY1DAY1 Prepare, transmit order

13 DAY1DAY1 DAY2DAY2 DAY3DAY3 DAY3DAY3 Receive, process order

14 DAY1DAY1 DAY2DAY2 DAY3DAY3 DAY4DAY4 Pick and pack order.

15 DAY1DAY1 DAY2DAY2 DAY3DAY3 DAY4DAY4 DAY5DAY5 DAY6DAY6 DAY7DAY7 Transportation

16 DAY1DAY1 DAY2DAY2 DAY3DAY3 DAY4DAY4 DAY5DAY5 DAY6DAY6 DAY7DAY7 DAY8DAY8 Customer receives and unloads order

17 Actual order cycle = eight days DAY1DAY1 DAY2DAY2 DAY3DAY3 DAY4DAY4 DAY5DAY5 DAY6DAY6 DAY7DAY7 DAY8DAY8

18 DAY1DAY1 DAY2DAY2 DAY3DAY3 DAY4DAY4 DAY5DAY5 DAY6DAY6 DAY7DAY7 DAY8DAY8 The sending organizations actual processing. Receive, process Pick, pack

19 Actual order cycle = eight days DAY2DAY2 DAY3DAY3 DAY4DAY4 What the sending organization sometimes sees. Receive, process Pick, pack

20 Actual order cycle = eight days DAY1DAY1 DAY8DAY8 What the receiving organization sometimes sees. Prepare, transmit order Receive, unload order. ? ? ? ? ?

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: Order preparation and transmittal Frequency: Order picking or production Frequency: 1 9 Frequency: TOTAL 3.5 days 8 20 days 5. Transportation Frequency: Customer receiving Frequency: 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.


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