3Order ManagementOrder management refers to management of the various activities associated with the order cycleOrder cycle (replenishment cycle or lead time) refers to the time from when a customer places an order to when goods are receivedSome organizations include order to cash cycle in their order management model
4Important Trade-off 1 MARKETING LOGISTICS 5 Place/ customer service levelsProductPromotionPriceOrder processing and information costsWarehousing costsTransportation costsInventory carrying costsLot quantity costsLOGISTICSMARKETINGSource: Adapted from Douglas M. Lambert, The Development of an Inventory Costing Methodology: A Study of the Costs Associated with Holding Inventory (Chicago, IL: National Council of Physical Distribution Management, 1976), p. 7.
5A Customer's Perspective Order Cycle:A Customer's PerspectiveKey:1. Order preparation and transmittal days2. Order received and entered into system day3. Order processed day4. Order picking/production and packing days5. Transit time days6. Warehouse receiving and placing into storage dayTotal order cycle time days1. Customer places order6. Order delivered to customer5. Order shipped to customer2. Order received by supplier3. Order processed4. Order picked and packed
6Order Cycle: A Customer's Perspective 1.ustomer places order6. Order delivered to customer5. Order shipped to customer2. Order received by supplier3. Order processed4. Order picked and packedTotal order cycle timeCustomer satisfaction
7Order Cycle: A Customer's Perspective 1.ustomer places order6. Order delivered to customer5. Order shipped to customer2. Order received by supplier3. Order processed4. Order picked and packedKey:1. Order preparation and transmittal days2. Order received and entered into system day3. Order processed day4. Order picking/production and packing days5. Transit time days6. Warehouse receiving and placing into storage 1 dayTotal order cycle time days7 daysManufacturer’s control
8Order Cycle: A Customer's Perspective 1.ustomer places order6. Order delivered to customer5. Order shipped to customer2. Order received by supplier3. Order processed4. Order picked and packedKey:1. Order preparation and transmittal days2. Order received and entered into system day3. Order processed day4. Order picking/production and packing days5. Transit time days6. Warehouse receiving and placing into storage 1 dayTotal order cycle time days6 daysNot directly under the Manufacturer’s control
9Total Order Cycle with Variability 2. Order entryFrequency:1. Order preparation and transmittal3. Order processing4. Order picking or packing productionTOTAL4.5 days days5. Transit time6. Customer receiving
12Typical Elements of Order Processing Order PreparationRequesting productand servicesOrder TransmissionTransfer order information to supplierOrder EntryStock checkingAccuracy checkingCredit checkingBack ordering/order cancellingTranscriptingBillingOrder FillingProduct retrieval, production or purchasePackingScheduling for deliveryShipping document preparationOrder ShipmentOrder Status ReportingTracing and trackingCommunicating withcustomer on order status.Order Delivery12
15Order Preparation Products and services information Determining vendor Filling out an order formDetermining stock availabilityCommunicating order information15
16Order TransmissionTransfering the order request from origin to the destination.Order transmission is the series of events that occur between the time a customer places or sends an order and the time the seller receives the orderMethods of order transmittal (manually or electronically)In person, Mail, Telephone, FAX, EDI16
17Order Entry Checking the accuracy of the order information Checking the availability of the requested itemsPreparing back-order or cancellation orderChecking customer’s credit statusBilling17
18Order Picking and Assembly Order picking and assembly includes all activities from when an appropriate location is authorized to fill the order until goods are loaded aboard an outbound carrierOften represents the best opportunity to improve the effectiveness and efficiency of an order cycleCan account for up to 2/3 of a facility’s operating cost and timeExamples of Order Picking and Assembly technology: Handheld scanners, RFID, Voice-based order picking, pick-to-light
19The 800,000 sq ft DC is one the largest of Amazon's six in the UK Amazon distribution center in Swansea, south Wales
20Monday will be the UK's busiest online shopping day of the year with over 2 million orders expected to be made
21Order Status Reporting Ensures good customer servicesCustomer informated of any delay or delivery of the orderTracing and tracking the orderCommunicating with the customer about where the order may be in the order cycle and when it may be delivered.21
23Order DeliveryOrder delivery is the time from when a carrier picks up the shipment until it is received by the customer.
24Main Flows Materials Services Information (Cash-Payment) Not main but supporting)
25Materials and Services Supply ChainManufacturersCustomersRetailersWholesalers/DistributorsSupplierMaterials and ServicesPaymentsInformation25
26The Five Major Supply Chain Drivers 1.PRODUCTIONWhat, how, and when to produce4.TRANSPORTATIONHow, and when to move product3.LOCATIONWhere best to do what activity2.INVENTORYHow much to make and how much to store5.INFORMATIONThe bests for makingthese decisions.26
27all logistical activities Information about ...Purchasing order informationForecast/POS dataAdvance ship noticeBill of ladingShipment statusInvoiceFreight detailsProduction planningCustomersReturn goodsParts, service and supportPackagingTransportationPurchasingall logistical activities27
31IT & Logistics IT will affect the growth and development of logistics Computers are used to support logistics activities
32Data Quality Factors Accuracy Timeliness Consistency Whether the value of each item of data is correctTimelinessWhether the data are up-to-dateConsistencyWhether the data in one part of the database have a common, appropriate set of controls to related concepts stored elsewhere32
33Data Quality Factors Transparency of meaning Availability Whether the context for the data is clearly and commonly understood by all those with a legitimate interestAvailabilityWhether the people who need the data can actually access it33
34InformationData that has been processed or reorganized into a more meaningful form for someone.Information is formed from combinations of data that hopefully have meaning to the recipient.34
36SystemA set of elements considered to act as a single goal-oriented entity.ComponentsBoundaryPurposeEnvironmentInterfacesConstraintsInputOutput36
37The System and Its Environment CustomersVendorsGovermentInputRawmaterialsCostsResourcesProcessesProceduresProgramsToolsActivitiesDecisionsOutputsPerformancesConsequencesFinished productsServices deliveredSupplierWeather ConditionsDecision MakerFeedbackSystemboundaryStockholdersBanksCompetitorsThe System and Its Environment37Turban, Decision Support Systems and Intelligent Systems, 7/E
38Decision Support System (DSS) DSS is an integrative system of subsystems that has the purpose of providing information to aid a decision maker in making better choices than would otherwise possible
39Decision Support Systems in Logistics To assist logistics executives in their decision process.To support, but not replace, managerial judgment.To improve the effectiveness of logistics decision.
40Logistics Information System An interacting structure of people, equipment, and procedures which together make relevant information available to the logistics manager for the purposes of planing, implementing and control.Information flow makes a logistical system dynamic. Quality and timeliness of information are key factors in logistical operations.Bowersox and Closs40
41How Information Systems Facilitate Logistics Management Decide when, what to produce, store, moveRapidly communicate ordersCommunicate orders, track order statusCheck inventory availability, monitor levelsTrack shipmentsPlan production based on actual demandRapidly communicate product design changeProvide product specificationsShare information about defect rates, returns41
42Logistics Information System LIS combine hardware and software to manage, control, and measure logistics activities.ComputersServersInternet technologiesInput and output devicesCommunication channelsBarcode, RF, storage mediaSystem and application programs42
43Logistics Information System LIS perform three vital roles in business firms.Logistics processes and operations,Logistics decision making; andStrategic competitive advantageMajor application categories of information systems include:Operations Support Systems; andManagement Support Systems43
44Logistics Information System LIS BenefitsIncreased product visibility and controlImproved knowledge of key logistics network component capabilities and capacityEnhanced economic valueCost reductionsSales increasesCreation of competitive advantageDirect linkages to customers44
45Overview of Logistics Information System LISInternalFinance/AccountingMarketingLogisticsManufacturingPurchasingExternalCustomersVendorsCarriersSupply chain partnersOrder ManagementSystemContact with customerStock availabilityCrediting checkingInvoicingProduct allocation tocustomerFulfillment locationWarehouse ManagementStock level managementOrder pickingPicker routingPicker assignments andwork loadingProduct availabilityestimatingTransportationManagement SystemShipment consolidationRouting and schedulingClaimsTrackingBill paymentFreight bill auditing45
46Logistics Database Order processing system Customer location Order historySalespersonRevenuesOrder statusIndustry/external dataMarket shareProduct offeringDemographic trendsEconomic trendsManagementCompetitive reactionsSales forecastsFuture trendsNew marketsCompany recordsCost of capitalCost of logisticsactivitiesStandart costsOperating dataFreight paymentTransportation historyInventoryCredit filesProduct movementReport generationOrder performanceShipment performanceDamages and returnsLogistics DatabaseProduct traking andforecastingPerformace and costreports
47Technologies in LISBar codePoint-of-Sale ( POS)EDIRF-RFID
48Contemporary Logistics Information Technologies Bar Codingbarcodes stored data in series of parallel black and white bars of various widths and spacing. They can be read by optical scanners called barcode readers or scanned from an image by special software.48
49Bar CodingThe Universal Product Code (UPC) is a specific type of barcode, that is widely used in the United States and Canada for tracking trade items in stores.Turkey code: 869Code 128, Code 39EAN Code(International Article Number)-Europe and TurkeyTOBB, Milli Mal Numaralandırma Merkezi
52Contemporary Logistics Information Technologies Point of Sales DataTechnology that allows firms, in real time, to know what and where an item is being sold through scanning of individual barcodes when an item purchased at the retail level.Using this information, product forecasting, make better purchase decision and customization, and reduce the chance that an item will be out of stock.Zara-POS usage52
53RFIDRFID system consists of an antenna and a transceiver, which read the radio frequency and transfer the information to a processing device, and a transponder, or tag, which is an integrated circuit containing the RF circuitry and information to be transmitted.RFID systems can be used just about anywhere, from clothing tags to missiles to pet tags to food -- anywhere that a unique identification system is needed.
54Contemporary Logistics Information Technologies Radio Frequency Identification(RFID)Yard, Warehouse & Factory Management, Transportation ManagementItem-level trackingAutomatic Non-Line-of-Sight Scanning54
55RFID tags come in three general varieties: passive, active, or semi-passive (also known as battery-assisted).Passive tags require no internal power source-only active when a reader is nearby to power them, whereas semi-passive and active tags require a power source, usually a small battery.Passive tags have practical read distances ranging from about 10 cm (4 in.)
56Active TagsActive tags typically have much longer range and larger memories than passive tags, as well as the ability to store additional information sent by the transceiver.Some active RFID tags include sensors such as temperature logging which have been used to monitor the temperature of fresh produce or certain pharmaceutical products.Other sensors that have been married with active RFID include humidity, shock/vibration, light, radiation, temperature, and atmospherics like ethylene.
57Semi-passive TagsSemi-passive tags are similar to active tags in that they have their own power source, but the battery only powers the microchip and does not broadcast a signal.The RF energy is reflected back to the reader like a passive tag. An alternative use for the battery is to store energy from the reader to emit a response in the future.Greater sensitivity than passive tags, typically 100 times more.
58Contemporary Logistics Information Technologies Radio Frequency (RF)Relay information via electromagnetic energy waves from a terminal to a base station, which is linked in turn to a host computer.Typically used in a warehouse or distribution center, RF technologies provide the communications capability between operating personel (e.g. Fork lift drivers, loading dock personnel, etc.) and centralized computer capabilities.58
59Definition of EDIInter organizational, computer-to-computer exchange of business data in a standard, machine-processable format.UnstructuredStructuredFax EDIOrder entryPerson-to-person Computer-to-computer
60Definition of EDI The purpose of EDI is to eliminate dublicate data entry and to improve thespeed and accuracy of information flowby linking computer applicationsbetween companies.Levi’s-integrated its customer order processing system using a QR(quick response)-EDI: LeviLink
61Definition of EDITransfer of structured data, by agreed message standards from one computer system to another without human intervention.Cheques, bill of lading
62Types of EDIsProprietary Systems (One to Many) involve an EDI system which is owned, managed, and maintained by a single companyValue-added Networks (Many to Many) includes a third party firm that acts as a central clearinghouseIndustry Associations have their own EDI standards
63EDI StandartsFor EDI to function properly, computer language compatibility is required.Users must have common communication standards.Trading partners must have common definition words, codes and symbols; and a common format and order of transmission.
64EDI Versus Traditional Methods BUYER'S PURCHASINGAPPLICATIONSELLER'S ORDERENTRY APPLICATIONPURCHASINGPOST OFFICEBUYER'SEDI FLOWPOSELLER'SCOMPUTERORDERENTRYCOMPUTERPURCHASINGSource: Margaret A. Emmelhainz, Electronic Data Interchange: A Total Management Guide (New York: Van Nostrand Reinhold, 1990), p. 5.
65Comparing with non-electronic communication The Benefits of EDIComparing with non-electronic communicationQuick access to information,Better customer services,Reduced paperwork,Better communications,Increased productivity,Improved tracing and tracing,Cost efficiency,Competitive advantage,Improved billing.65
66DSS Modeling-simulation( what if games) Artificial intelligence(AI): an comprehensive term that involves voice synthesis and recognition, game playing systems, robotics, natural language translators and expert systems(ES)Benetton-POS-EDI-AI
67Expert SystemsNatural language recognitionNeural networks