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Order Processing & Information Systems
Prepared by DeepaChandrasekar IIPM Gurgaon
Order Processing
Order processing includes the following activities Order Preparation Order Transmittal Order Entry Order Filling Order Status Reporting
Order Preparation
Order Preparation refers to the activities of gathering information needed about the products and services desired and formally requesting the products to be purchased.
Order Processing involves
Selecting vendor Filling order form Checking stock availability Communicating order information
Latest trend in Order Preparation
Bar code technology used to get the complete information of product
Web portals used for selecting standard products and order placement
Electronic Data Interchange (EDI) connects the buyer to the seller via computer, where the order is placed automatically as the stock depletes.
RFID (Radio Frequency Identification) are latest technology that helps in reducing order preparation
Order Transmittal
Transferring the order request from its point of origin to the place where the order entry can be handled; either manually of electronically
Order Transmittal Methods Electronic
Transmission Toll free telephone Internet EDI Facsimile machines Satellite
communications
Manual Transmission Mailing of orders Physical carrying of
orders by staff
Order Transmittal
Electronic transmission of order is more reliable, accurate, reduces cost and has replaced the manual order transmittal methods
Advantages & Disadvantages of EDI in Order Transmittal
ADVANTAGES
Dedicated electronic link between the computers of buyers and sellers and hence the chance of fraud is less
Message delivery is instantaneous and secure
DISADVANTAGES
Transmission cost is high compared Internet
Advantages & Disadvantages of Internet in Order Transmittal
ADVANTAGES
Low-cost, widely available, uses standard network of telephone system
Message delivery is instantaneous and secure
DISADVANTAGES
Security of data Message delivery
not guaranteed
Improving internet technology will help in overcoming the security issue
Oder Entry
Activities that take place before the order filling is done
Checking the accuracy of the order information, such
as item description and number, quantity & price
Checking the availability of the requested items
Preparing back-order or cancellation documentation
Checking customer credit status
Transcribing the order information as necessary
billing
Oder Entry - II
Order Entry has benefited from technological improvements like Bar Codes Optical Scanners Computers
This has increased the productivity of this activity
Oder Entry Method of Data Entry
Characteristic Keyboard Entry Bar Code
Speed 6 seconds for 12 character 0.3 to 2 seconds
Substitution error rate
1 character error in 300 characters entered
1 character error in 15 thousand to 36 trillion characters entered
Encoding Costs High Low
Reading Costs Low Low
Advantages
Human Low error rate
Low cost
High speed
Can be read at a distance
Disadvantages Human Requires education of the user community
High Cost Equipment cost
High Error rate Dealing with missing or damaged images
Low speed
Order Filling
Order filling involves the following activities: Acquire the items through stock
retrieval, production, or purchasing Pack the items for shipments Schedule the shipment for delivery Prepared the shipping documentation
Order Filling Priorities in order filling
Priorities for processing orders may affect the speed with which all orders are processed or the speed with which the more important orders are handled.
First-received, first-processed Shortest processing time Specified priority number Smaller, less-complicated orders first Orders having the least time before promised delivery date
The priority rule depends upon such criteria as fairness to all customers, the differentiated importance among orders, and the overall speed of processing that can be achieved
Order Status Reporting
This activity ensures that good customer service is provided by keeping the customer informed of any delays in order processing or delivery of order.
Tracing and tracking the order throughout the entire order cycle
Communicating with the customer about where the order may be in the order cycle and when it may be delivered
The monitoring activity does not affect the over all time to process an order
Barcode, RFID, GPRS technology are used
Observations FedEx , UPS , DHL
Laser beam bar coding and specially designed software.
Truck mounted device eLogistics Private Limited offers a patented e-tracking product based on the global system for mobile communication.
Factors affecting Order-Processing Time
Processing Priorities
FIFO – First In First Out
Small orders first
More Profitable orders first
Parallel versus Sequential Processing
When activities are performed simultaneously (parallel) time can be saved.
Example : Credit check of the buyer and the availability of the stocks can be done simultaneously.
Order Filling Accuracy
If the order filling is done accurately the order processing time will be minimized.
Order Batching
Collecting orders from multiple customers into groups for batch processing may reduce processing cost.
Holding orders until the batch size is realized will likely add to processing time.
Lot Sizing
When the customer places a huge order , instead of waiting to complete the manufacturing of the entire order , the small batches should be delivered at regular intervals.
This will increase the transportation cost but can reduce the waiting time of the customer.
Shipment Consolidation
Orders may be held to create an economical shipment size.
Consolidating several small orders to build a larger shipping volume reduces transportation.
Processing time may be increased but the transportation cost is reduced.
The Logistics Information System
Function Internal Operation
Logistics Information
System
OMS•Stock Availability•Crediting Checking•Invoicing•Product Allocation to Customers•Fulfillment Location
WMS•Stock Level Management•Order Picking• Picker Routing•Picker Assignment & work loading•Product availability estimating
TMS•Shipment consolidation•Vehicle routing•Mode Selection•Claims•Bill Auditing•Tracking•Bill Payment
Internal
Financial AccountingMarketingLogistics
Manufacturing
Purchasing
External
CustomersVendorsCarriersSupply Chain
Partners
Order Management System OMS• Stock Availability• Crediting Checking• Invoicing• Product Allocation
to Customers• Fulfillment
Location
Manages the initial contact with the customer at the time of product inquiries and order placements.
Order Management System
OMS
WarehouseManageme
ntSystem
Checks Product Availability
Order Management System
OMS
WarehouseManageme
ntSystem
Financial Information System
Checks Credit Status Of the Customer
Order Management System
OMS
WarehouseManageme
ntSystem
Financial Information System
Transport Management System
Tracks the order
Warehouse Management
It is the information subsystem assisting in the management of product flowing through and stored in the facilities of the logistics network.▪ The key elements can be identified as▪ Receiving▪ Put away▪ Inventory management▪ Order processing and retrieving ▪ Shipment preparation
Warehouse Management
Receiving Put away Inventory
management Order processing
and retrieving Shipment
preparation
Entry / Check in point Data about the
product are entered into the WMS using bar code scanners, radio frequency RF data communication terminals, or manual key boards.
Warehouse Management
Receiving Put away Inventory
management Order processing
and retrieving Shipment
preparation
Based on the available space and stock layoutrules , the WMS assigns the incoming product to a specific location for later retrieval.
Warehouse Management
Receiving Put away Inventory
management Order processing
and retrieving Shipment
preparation
Monitors the product levels at each stocking location in the warehouse.
Replenishment quantities
Timing
Warehouse Management
Receiving Put away Inventory
management Order processing
and retrieving Shipment
preparation
Entry / Check in point
Data about the product are entered into the WMS using bar code scanners, radio frequency RF data communication terminals, or manual key boards.
Warehouse Management
Receiving Put away Inventory
management Order processing
and retrieving Shipment
preparation
Packing Bar codes Necessary
documents
Transport Management System
Its purpose is to assist in the planning and controlling of the firms transportation activity.▪ Mode Selection▪ Freight Consolidation▪ Routing▪ Claims Processing▪ Tracking Shipments▪ Freight Bill Payments and Auditing
Transport Management System
Mode Selection
Transport Management System Freight Consolidation
Unit Shipping costs drop disproportionately as shipment size increases, shipment consolidation can result in substantial transport savings.
Suggests the patterns for consolidating small shipments into larger ones.
Transport Management System
Routing Ensure the fleet is operated
efficiently Assigns loads to vehicles Suggests the sequence in
which the stops should be made.
Pickup of returning merchandise
Length of driving and rest breaks
Transport Management System
Claims Processing Some shipments will be
damaged. By retaining the
information of the shipment value , content , carrier used , origin , destination and liability limits many claims can be processed automatically
Transport Management System
Tracking Shipments Bar coding , radio
transmission en route, global positioning systems and on –boards computers .
Information regarding the shipments are provided to the receiver through internet
Freight bill payment & Auditing Determining the freight
charges for shipments can be complicated because of the many that can be placed on the freight rates.
When a rating error occurs , the shipper can make a claim on the carrier for the difference between the actual charges and lowest charges.
Internal Operations
Input Database
and its manipulation
Output
Environment
Data Input
Database activities1.Data Storage
FilingRetrieval
File Maintenance2.Data
TransformationBasic Data Processing operations
Data Analysis using statistical and mathematical
techniquesOutput
Communications
Logistics Manager
Decisions
Exploded View of the logistics Information Systems
Customer data
Computer Files
Data Analysi
s
Manual Records
Data Processing
Summary Reports
Purchase Orders
Status Reports
Result of Analysis
Exception Reports
Action
Reports
Customer Records
Published Information
Management DataInput
DatabaseManager
Output
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