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Order Processing

The document discusses order processing and the key activities involved, including order preparation, transmittal, entry, filling, and status reporting. It explains that order processing represents 50-70% of the total order cycle time for most industries and that short and consistent order times generate high customer service. The document also analyzes the different methods used for order entry, order filling priorities, and factors that can affect overall order processing time.

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sidra khan
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Download as PDF, TXT or read online on Scribd
102 views

Order Processing

The document discusses order processing and the key activities involved, including order preparation, transmittal, entry, filling, and status reporting. It explains that order processing represents 50-70% of the total order cycle time for most industries and that short and consistent order times generate high customer service. The document also analyzes the different methods used for order entry, order filling priorities, and factors that can affect overall order processing time.

Uploaded by

sidra khan
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Order Processing

FAISAL SHABBIR
Order vs. Replenishment Cycles
• Order Cycle
– Outbound-to-Customer shipments
• Replenishment Cycle
– Acquisition of additional inventory, as in materials
management
• One firm’s order cycle is another firm’s
replenishment cycle
Importance of Order Processing
• Time to complete the activities of the order cycle
is the very heart of customer service
• Order prep, transmittal, entry & filling represent
50% to 70% of total order cycle time in most
industries
• Short & consistent order cycle times generate high
levels of customer service
Activities in Order Processing
1. Order Preparation
2. Order Transmittal
3. Order Entry
4. Order Filling
5. Order Status Reporting

Time needed to complete each activity depends on


type of ordering involved.

Speed & Accuracy affect costs and customer service


levels
Order Preparation
• The activities of:
– gathering information needed about products desired &
– formally requesting the products to be purchased
• May involve:
– Determining the appropriate vendor
– Filling out an order form by the customer or a
salesperson
– Determining stock availability
– Voice communication of the order
– Making selections from a computer menu
Order Transmittal
• Involves transferring the order request from its
point of origin to the place where the order entry
can be handled
• Accomplished in 2 fundamental ways:
– Manually
• Mailing the order or physically carrying the order
• Slow, but relatively inexpensive
– Electronically
• Toll-free numbers, Internet, facsimiles, satellite
communications
• Almost instantaneous transfer of order information
• Highly reliable & accurate
• Can be expensive
Order Placement Technologies Used
30%

25%

20%

15%
Tech Used

10%

5%

0%
Extranets Phone/Fax EDI Internet E-mail
Order Entry
• Tasks that take place prior to actual filling of order
– Checking order information accuracy
• Item descriptions, item numbers, quantity, price
– Checking availability of requested items
– Preparing back order or order canceling documentation
if necessary
– Checking customer’s credit status
– Transcribing order information as necessary
– Billing
Comparison of Data Entry Techniques
Method of Data Entry

Characteristic Keyboard Entry Bar Code Entry

Speed 6 seconds 0.3 to 2 seconds


1 error per 300 characters 1 error in 15K to 36 trillion
Error Rate
entered characters entered
Encoding Costs High Low

Reading Costs High Low


Low error rate
Advantages Human High speed
Can be read at a distance
Human Requires education of user
High cost community
Disadvantages
High error rate Equipment cost
Low speed Missing/damaged images
Order Filling
• Physical activities required to
– Acquire the items through stock retrieval, production or
purchasing
– Packing the items for shipment
– Scheduling the shipment for delivery
– Preparing the shipping documentation
Order Filling
• Priorities for processing orders can affect the speed
at which all orders are processed
• Alternative priority rules
– First-received, First-processed
– Shortest processing time
– Prespecified priority number
– Smaller, less-complicated orders first
– Earliest promised delivery date
– Orders having the least time before promised delivery
date
Order Status Reporting
• Assures that good customer service is provided by
keeping the customer informed of any delays in
order processing or the delivery of the order
• Includes
– Tracing & tracking the order throughout the entire
order cycle
– Communicating with the customer as to where the
order may be in the order cycle & when it may be
delivered
Factors Affecting Order-Processing Time
• Processing Priorities
• Parallel vs. Sequential Processing
– Longest processing times occur when all tasks are
completed in sequence
• Order-Filling Accuracy
• Order Batching
– Processing order in groups or batches may reduce
processing costs, but may delay order filling
• Shipment Consolidation
– Holding orders for consolidation reduces costs, but
extends order processing time
Info System for a Large Merchandise
Retailer
Sales Counter

Bar code item Coffee pot sold


at store to customer Manual register input or
Bar code scanning

In-store computer
Credit data
Delivery from
Payroll
supplier Transmission Regional center main computer
Accounting
Corporate Payroll
Merchandising
Corporate Accounting
Corporate Credit
Inventory Management

Coffee maker Purchase Order Corporate Annual


Dept. Mgr. Review Report
supplier

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