Order  

Processing  
and  Information  
Systems  

Dr.  Niniet  Indah  Arvitrida

Reference

n Ballou,  Ronald.  H.  (2004)    Business  

Logistics  Management,  Prentice  Hall  
International,  Inc.,  USA
n Chapter 5  (Order  Processing  and  
Information  system)

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 Topics
a.  Order  processing and logistics information system in  the Planning Triangle
b.  Elements in  order  processing:
p Order  Preparation
p Order  Transmittal
p Order  Entry
p Order  Filling
p Order  Status  Reporting
c.  Factors that affect the order  processing time :
p Processing  priorities
p Parallel  versus  sequential  processing
p Order-­filling  accuracy
p Order  batching
p Lot  sizing
p Shipment  consolidation
d.  Order  Processing  Management  Systems  (OMS),  Warehouse Management  
Systems  (WMS),  Transportation Management  Systems  (TMS)

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Order  Processing  and  Information  

Systems  in  Planning  Triangle

Inventory  Strategy
• Forecasting Transport  Strategy
• Inventory  decisions • Transport  fundamentals
CONTROLLING
ORGANIZING

• Purchasing  and  supply   • Transport  decisions

Customer  
PLANNING

scheduling  decisions
• Storage  fundamentals service  goals
• Storage  decisions • The  product
• Logistics  service
• Ord.  Proc.  &  info.  sys.
Ord.  proc.  &  info.  sys..

Location  Strategy
• Location  decisions
• The  network  planning  process

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 Elemen-­Elemen  Order  Processing
Sales  
order

Order  Preparation Order  Transmittal Order  Entry

• Requesting   • Transferring   • Stock  checking
products  or   order  information • Accuracy  checking
services • Credit  checking
• Back  ordering/  
order  canceling
• Transcription
• Billing

Order  Status  Reporting Order  Filling

• Tracing  and  tracking • Product  retrieval,  production,  or  purchase
• Communicating  with   • Packing  for  shipment
customer  on  order   • Scheduling  for  delivery
status • Shipping  document  preparation
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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
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 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%

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Commerce  Through  the  Internet

COMMUNICATION  NETWORK  -­  INFORMATION  SUPERHIGHWAY

Orders: Logistics Orders:

Confirmation provider Confirmation
Shipment  notice Shipment  arrival
Distributor
Shipment  status Shipment  status

Suppliers Products Customers

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 Factors  Affecting
Order  Processing  Time
•Processing  priorities
•Parallel  versus  sequential  
processing
•Order-­filling  accuracy
•Order  batching
•Lot  sizing
•Shipment  consolidation
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The  Logistics  Information  System

LOGISTICS  
INFORMATION  
SYSTEM

INTERNAL EXTERNAL
Finance/Accounting Customers
Marketing Vendors
Logistics Carriers
Manufacturing Supply  chain    partners
Purchasing

OMS WMS TMS

•Stock  availability •Stock  level   •Shipment  
management consolidation
•Credit  checking
•Order  picking •Vehicle  routing
•Invoicing
•Picker  routing •Mode  selection
•Product  allocation  to  
customers •Picker  assignments   •Claims
and  work  loading
•Fulfillment  location •Tracking
•Product  availability  
•Bill  payment
estimating
•Freight  bill  auditing

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 Order  Management  System  Module

Elements
•Stock  availability
•Credit  checking
•Invoicing
•Product  allocation  to  customers
•Fulfillment  location

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Warehouse  Management  System  

Module

Elements
•Receiving
•Putaway
•Inventory  management
•Order  processing  and  retrieving
•Shipment  preparation

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 Transportation  Management  
System  Module

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

Environment

Data  input

Data  base  activities

1. Data  storage
• Filing
• Retrieval
• File  maintenance
2. Data  transformation
Decisions
• Basic  data  
processing        
operations
• Data  analysis  using  
statistical  and  
mathematical  
techniques

Output  
communications

Logistics  manager
(Decision  maker)
Limits  of  the  information  system
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 Exploded  View  of  the  LIS
Customer Company Published Management
Input data records information data

Data  Base

Data  base Computer Manual

manager files records

Data Data Data

analysis retrieval processing

Summary Status Exception

reports reports reports

Output Results  of Action

Prepared
documents: analysis reports
purchase
orders,  bills  of
lading,  etc.

Department  of Industrial  Engineering 15

Information  System  Examples

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

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 Item  sold

LIS  for  a  Large  Retailer

Sales  
Bar  code   counter
item  at  store
Customer  
credit   Manual   Bar  code  
verification register   scanning
input

Transmission
In -­store  computer Regional  center  main  
• Credit  data computer
Deliveries  from  

• Payroll • Corporate  payroll

• Accounting • Corporate  
supplier

• Merchandising accounting
• Corporate  credit
• Inventory  
management

Corporate   Purchase  
sales   order
report

Department  
manager  review
Supplier -­-­ Coffee   EDI
makers

Department  of Industrial  Engineering 17

RFID-­based  Logistics  
Environment
o Logistics  Environment

nPhysical  flow  of  products

nInformation  (about  products,  shipment,  business  transaction,  etc)

Manufacturer
Shop

Shipment

Products

Packaging Shipment Retailer

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 RFID-­based  Logistics  
Environment
n Case  :  Baggage  transit  (airplane)
o Attaching  barcode  to  the  baggage

o And  then  ?

Request Information ?

Jakarta Singapore London

Send baggage Transfer Not Arrived
(Code:KE3xxxx) (1 baggage transit) (Where’s my
baggage?/Lost?)

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RFID-­based  Logistics  
Environment
o Management  Logistics
n Managing  physical  flow
p Manage  and  control  movement  of  products
p Movement  of  products
n From  manufacturer  to  manufacturer  distribution  center
n From  manufacturer  distribution  center  to  retail  distribution  center
n etc
p Logistics  companies  are  looking  for  lowest-­cost  or  fastest  path/method  
n Managing  logistics  information
p Information  of  products,  and  movements  of  products
n Ex:  “Is  the  product  valid  for  sale?”
n Ex:  “Where  the  product  is  now?”
n Ex:  “When  the  products  arrive  at  the  destination?”

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 RFID-­based  Logistics  
Environment
o RFID  technology
n RFID  (Radio  Frequency  Identification)
p Means  of  automatically  identifying  objects
p Alternative  technologies
n Barcodes
n Magnetic  strips

n Being  applied  to  many  areas

p Warehouses
p Supermarkets
p Production  floors

Department  of Industrial  Engineering 21

RFID-­based  Logistics  Environment

Physical Flow

Information

Shipment Retail Store

Retail Distribution
Center

Product

Reader

RFID Tag

Manufacture
Information Services
Product
Specification
“Managing Logistics Information” Application
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 Elements  of  RFID-­based  Logistics  System
o RFID  &  RFID  reader

n RFID  Middleware
o Application  Level  Event  :  Filtering  Event

n Information  Service  
o Manage  EPC-­related  data  &  product  data
n Discovery  Service  of  Information  Service
o Handle  Which  information  services
Application
have  observation  data  of  a  product  
n Naming  Service  
o Provide  location  of  Products’ Information

ONS

Discovery
Reader ALE Service
Information
Service
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RFID-­based  Logistics  
Information  Service
o Logistics  Information
n Observation  data
p RFID  sensed  data  by  RFID  reader
p Time-­stamped  data
p {  EPC,  Sensed-­Location,  Sensed-­Time  }  +  {  additional  info  }

n Attribute  data
p Information  of  product  (instance  level)
n Information  of  each  product  
p Information  of  product  type  (class  level)
n Information  of  a  product  model  

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 RFID-­based  Logistics  
Information  Service
o Logistics  Information  (Cont.)
n Containment  data
p Information  of  Packaging
n Ex:  10  cellular  phones  are  packed  in  a  box  
p Relation  of  container  and  contents
n Container  loads  products  without  data  conflict

n Transaction  data
p Business  transaction  
n order,  shipment,  delivery,  etc
n Information  Relation  of  business  transaction  and  products

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RFID-­based  Logistics  Information  Service

o Data  Constraint  Check
n Type  Checking Temperature : 10~25
n Validity  of  product  in  certain  condition

Container

Temperature : 5 ~ 20

Valid  
EPC  Code Product
Temperature
01.203D2A.916E8B.8719BAE03A Electronics   12  ~  30
01.203D2A.916E8B.8719BAE03B Disc 10  ~  25
01.203D2A.916E8B.8719BAE03C Clothes 5  ~  20
01.203D2A.916E8B.8719BAE03D Snack 0  ~  15
12 ~ 15 Ok!
Department  of Industrial  Engineering 26
RI1507  -­ Manajemen  
Logistik  

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 RFID-­based  Logistics  Information  Service

o Data  Constraint  Check  (Cont’)

n Containment  Data
p For  instance
n Container  CA
o Contains  product  P1  and  product  P2
n Product  P1
o Food-­stuff  with  moisture
n Product  P2
o Electronics
o Cannot  be  loaded  with  something  moisture

=>  P1  and  P2  cannot  be  in  the  same  container

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Examples  of  current  uses  of  

technology  in  logistics

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 Connect  Smart  Glasses  and  SAP

Department  of Industrial  Engineering

RFID  in  Logistics

Department  of Industrial  Engineering

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