Ballou 05

Order Processing and Information Systems
The difference between mediocre and excellent logistics is often the firms information technology capabilities. Dale S. Rogers Richard L. Dawe Patrick Guerra
Chapter 5
CR (2004) Prentice Hall, Inc.
5-1
Order Processing and Information Systems in Planning Triangle

Inventory Strategy Forecasting Inventory decisions Purchasing and supply Customer scheduling decisions service goals Storage fundamentals The product Storage decisions Logistics service Ord. proc. Proc. & info. sys sys. Ord. . Transport Strategy Transport fundamentals Transport decisions
Location Strategy Location decisions The network planning process
CONTROLLING
5-2
ORGANIZING
PLANNING
Typical Elements of Order Processing

Sales order
Order Preparation Requesting products or services
Order Transmittal Transferring order information
Order Entry Stock checking Accuracy checking Credit checking Back ordering/ order canceling Transcription Billing
Order Status Reporting Tracing and tracking Communicating with customer on order status
Order Filling Product retrieval, production, or purchase Packing for shipment Scheduling for delivery Shipping document preparation
5-3
Order Filling
Processing rules affect order filling speed First-received, first-processed Shortest processing time first Specified priority number Smaller, less complicated orders first Earliest promised delivery date Orders having the least time before promised delivery date Order fill rate lower than item fill rate FR nP i where n number of item on order P in - stock probability of item i i
5-4
Order Filling (Contd)

Question Suppose that an order contains five items, each having a stocking probability of 93%. What is the probability that the order will be filled complete? Answer
FR (.93)(.93)(.93)(.93)(.93) 0.70, or 70%
5-5
Commerce Through the Internet

COMMUNICATION NETWORK - INFORMATION SUPERHIGHWAY
Orders: Confirmation Shipment notice Shipment status
Logistics provider Distributor
Orders: Confirmation Shipment arrival Shipment status
Suppliers
Products
Customers
5-6
Factors Affecting Order Processing Time
Processing priorities Parallel versus sequential

processing Order-filling accuracy Order batching Lot sizing Shipment consolidation
5-7
The Logistics Information System

LOGISTICS INFORMATION SYSTEM INTERNAL Finance/Accounting Marketing Logistics Manufacturing Purchasing OMS Stock availability Credit checking Invoicing Product allocation to customers Fulfillment location WMS Stock level management Order picking Picker routing Picker assignments and work loading Product availability estimating
EXTERNAL Customers Vendors Carriers Supply chain partners
TMS Shipment consolidation Vehicle routing Mode selection Claims Tracking Bill payment Freight bill auditing
5-8
Order Management System Module

Elements Stock availability Credit checking Invoicing Product allocation to customers Fulfillment location
5-9
Warehouse Management System Module

Elements Receiving Putaway Inventory management Order processing and retrieving Shipment preparation
5-10
Transportation Management System Module

Elements Mode selection Freight consolidation Routing and scheduling shipments Claims processing Shipment tracking Bill payment and auditing
5-11
Operating Components of the LIS

Environment Data input Data base activities 1. Data storage Filing Retrieval File maintenance 2. Data transformation Basic data processing operations Data analysis using statistical and mathematical techniques
Decisions
Output communications
Logistics manager (Decision maker) Limits of the information system
5-12
Exploded View of the LIS

Input Customer data Company records Published information Data Base Data base manager Data analysis Computer files Manual records Management data
Data retrieval
Data processing
Summary reports Output Prepared documents: purchase orders, bills of lading, etc.
Status reports Results of analysis
Exception reports Action reports
5-13
Information System Examples
A retail system Vendor managed inventory E-commerce A decision support system
5-14
Item sold
Bar code item at store Customer credit verification
Manual register input
Bar code scanning
Deliveries from supplier
In -store computer Credit data Payroll Accounting Merchandising
Transmission
Regional center main computer Corporate payroll Corporate accounting Corporate credit Inventory management
Corporate sales report
Purchase order
Supplier -- Coffee makers
EDI
Department manager review
LIS for a Large Retailer

5-15
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Order Processing and Information Systems

Order Processing and Information Systems in Planning Triangle

Location Strategy Location decisions The network planning process

CR (2004) Prentice Hall, Inc.

Typical Elements of Order Processing

Order Preparation Requesting products or services

Order Transmittal Transferring order information

Order Filling (Contd)

CR (2004) Prentice Hall, Inc.

Commerce Through the Internet

Orders: Confirmation Shipment notice Shipment status

Logistics provider Distributor

Orders: Confirmation Shipment arrival Shipment status

Factors Affecting Order Processing Time

Processing priorities Parallel versus sequential

The Logistics Information System

EXTERNAL Customers Vendors Carriers Supply chain partners

Order Management System Module

CR (2004) Prentice Hall, Inc.

Warehouse Management System Module

CR (2004) Prentice Hall, Inc.

Transportation Management System Module

Operating Components of the LIS

Logistics manager (Decision maker) Limits of the information system

CR (2004) Prentice Hall, Inc.

Exploded View of the LIS

Status reports Results of analysis

Exception reports Action reports

CR (2004) Prentice Hall, Inc.

Information System Examples

A retail system Vendor managed inventory E-commerce A decision support system

CR (2004) Prentice Hall, Inc.

Bar code item at store Customer credit verification

Manual register input

Bar code scanning

Deliveries from supplier

In -store computer Credit data Payroll Accounting Merchandising

Corporate sales report

Supplier -- Coffee makers

Department manager review

LIS for a Large Retailer

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