Chapter 5 Information Slides Only

8/12/2019 Chapter 5 Information Slides Only

http://slidepdf.com/reader/full/chapter-5-information-slides-only 1/26

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.



Six Components of the Order Cycle

Customer prepares order and transmits it.




Customer prepares order and transmits it.




Order receipt and order entry




Order processing.




Warehouse picking and packing




Order transportation



D

AY

1



D

AY

1

Prepare, transmit order



D

AY

1

D

AY

2

D

AY

3

D

A

Y

3

Receive, process order



D

AY

1

D

AY

2

D

AY

3

D

AY

4

Pick and pack order.



D

AY

1

D

AY

2

D

AY

3

D

AY

4

D

AY

5

D

AY

6

D

AY

7

Transportation



D

AY

1

D

AY

2

D

AY

3

D

AY

4

D

AY

5

D

AY

6

D

AY

7

D

AY

8

Customer receives and unloads order



Actual order cycle = eight days

D

AY

1

D

AY

2

D

AY

3

D

AY

4

D

AY

5

D

AY

6

D

AY

7

D

AY

8




D

AY

1

D

AY

2

D

AY

3

D

AY

4

D

AY

5

D

AY

6

D

AY

7

D

AY

8

The sending organization’s actual processing.

Receive, process

Pick, pack




D

AY

2

D

AY

3

D

AY

4

What the sending organization sometimes sees.

Receive, process

Pick, pack




D

AY

1

D

AY

8

What the receiving organization sometimes sees.

Prepare, transmit order

Receive,

unload order.

? ? ? ? ? ? ? ? ? ?



Improving the 8-day order cycle

• The three-days in-house may be tooexpensive to shorten.

• Better selection/monitoring of carriers may be a more cost-effective way to reduce theorder cycle.

• Also, the 8-day order cycle may be anaverage. The cycle may range from 4 to 20days.

T l O d C l i h V i bili



Total Order Cycle with Variability

2. Order entryand processing

Frequency:

1 2 3

1. Order preparationand transmittal

Frequency:

1 2 3

3. Order pickingor production

Frequency:

1 9

Frequency:

TOTAL

3.5 days 8 20 days

5. Transportation

Frequency:

1 3 5

6. Customerreceiving

Frequency:

.5 1 1.5

Instructional material from “Strategic Logistics Management,” by Stock and Lambert (2001).



Improving the 8-day order cycle

• The three-days in-house may be too expensive toshorten.

• Better selection/monitoring of carriers may be amore 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 12days safety stock (average of 8 days plus stock tocover maximum of 20-day order cycle).

T diti l



TraditionalSupply Chain Flows

Demand flow

Product flow

Supplier RetailerDistributorManufacturer




Traditional

Supply Chain Flows

Demand flow

Product flow

Supplier RetailerDistributorManufacturer

Barriers because

individual orders

are required.


I f i b d



Information-basedSupply Chain Flows

Timely, accurate information flow

Supplier Manufacturer Distributor Retailer

Smooth, continual product flow

matched to demand




End of Program.

Chapter 5 Information Slides Only

Documents

Transcript of Chapter 5 Information Slides Only