BALLOU05 - Order Processing and Information Systems The...

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Unformatted text preview: Order Processing and Information Systems The difference between mediocre and excellent logistics is often the firm’s information technology capabilities. Dale S. Rogers Richard L. Dawe Patrick Guerra Chapter 5 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. & info. sys. • Ord. proc. & info. sys. 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 (Cont’d) 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 TMS •Shipment consolidation •Vehicle routing •Mode selection •Claims •Tracking •Bill payment •Freight bill auditing EXTERNAL Customers Vendors Carriers Supply chain partners 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 Data retrieval Manual records Data processing Management data 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 Information System: Indian Examples • Vehicle Tracking Devices (VTDs) • Efficient Consumer Response (ECR) • Tata AutoComp Systems (TACO) • Indian Steel Companies (TISCO & SAIL) • Gati • Taj Group of Hotels • Indian Oil Companies (BPCL and Indian Oil) 5-15 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 5-16 Sales counter ...
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