Int. J.

Production Economics 127 (2010) 278–291

Contents lists available at ScienceDirect

Int. J. Production Economics

journal homepage: www.elsevier.com/locate/ijpe

Case study: Optimizing order fulfillment in a global retail

supply chain
Yousef Amer , Lee Luong, Sang-Heon Lee
School of Advanced Manufacturing and Mechanical Engineering, University of South Australia, Mawson Lakes, SA 5095, Australia

a r t i c l e i n f o abstract

Article history: This paper demonstrates a model which uses an adaption of Design for six sigma and fuzzy
Received 31 December 2008 logic to optimize, monitor and control the order fulfillment process in the supply chain of a
Accepted 12 August 2009 global retail firm. Even though the firm has advanced SCM practices in place retail stores
Available online 27 August 2009
suffer from stock outs of popular items and excessive stock of lower selling items. The
Keywords: order fulfillment optimization model presented enhances supply chain integration and
Supply chain management collaboration across supply chain partners through effective monitoring and controlling of
Performance measurement supply chain variables. It considers the critical to customer requirements at the supply
Process control chain design onset making it a useful model for dealing with customer differentiation and
Order fulfillment
channel separation. With 47% of firms only focusing on developing smooth internal
Design for six sigma
processes this model offers opportunities for external supply chain improvements and
Fuzzy logic
partial integration across the chain to improve business outcomes.
& 2009 Elsevier B.V. All rights reserved.

1. Introduction approaches that encourage greater uptake of supply chain

A key issue facing companies today is how to monitor
and control performance across the supply chain. Taking
incremental steps towards supply chain integration can
lead to competitive gains and focusing on key supply
chain processes can be a starting point for improved
performance and collaboration between chain members
(Aryee and Naim, 2008; Lummus et al., 2008; Bask and
Juga, 2001; Lambert et al., 1998). However, there is a lack
of managerial techniques and tools for SCM which may be
inhibiting the uptake of SCM amongst firms. Branch
(2009) states that most companies, 47% of them, are
working to create seamless processes within their own
organization only, 34% of companies focus on integration
with first tier suppliers, 11% of companies focus on
integration with key customers and only 9% integrating
logistics up and down stream between customers and
suppliers. Hence there is great scope to develop new
 Corresponding author.
E-mail address: Yousef.amer@unisa.edu.au (Y. Amer).
management, integration and process improvement
(Branch, 2009; Xu et al., 2009).
One of the difficulties in managing a supply chain is
their complexity, having to deal with multiple market
segments (McKay, 2003) with each segment a system in
itself, but having to closely interconnect with dependant
subsystems. Supply chain models such as the global
supply chain forum (GSCF) model (Croxton et al., 2001;
Croxton, 2003), the supply chain operational reference
(SCOR) model (Supply-Chain Council, 2009) and the
Collaborative Supply Chain Framework (CSCF) (Simatupang
and Sridharan, 2005) take an holistic approach to SCM but
remain generic in nature and one size does often not fit all.
Another consideration is that while these models refer to
the development of supply chain metrics they do not
describe how to determine specific metrics for individual
company circumstances. The SCOR, relies on benchmark-
ing and has recommended level one metrics but there is
some criticism that the model is too manufacturing
centric (source, make, deliver, return), that there is not
enough emphasis on process control (Bolstorff, 2003a–c)
and an overreliance on benchmarking which can inhibit

0925-5273/$ - see front matter & 2009 Elsevier B.V. All rights reserved.
doi:10.1016/j.ijpe.2009.08.020
 Y. Amer et al. / Int. J. Production Economics 127 (2010) 278–291
innovation. Gunasekaran et al. (2004) defines supply
chain metrics as strategic, tactical, and operational and
gives generic measures, but the task still remains for
managers to determine what the most appropriate
measures for their specific circumstances are. This often
depends on the configuration of the chain and the position
of the firm within the chain. The model presented
provides a means for creating specific targeted metrics
and a way of isolating where process and quality
improvement efforts should be focused from any position
within the chain and is not reliant on any specific supply
chain configuration to implement.
The purpose of this paper is to demonstrate a real case
application of the order fulfillment model which uses an
adaption of design for six sigma (DFSS) (Amer et al.,
2007a) and fuzzy logic (Amer et al., 2008). In the case
study the model was applied at a large international retail
firm which has an extensive supply chain. Through the
application of the model by a cross functional supply
chain design team the order fulfillment subprocesses and
key performance indicators (KPIs) are identified and the
order fulfillment variables as key process input variables
(KPIVs) and key process output variable (KPOV) is
identified, showing the ‘‘perfect order’’ as one of the
critical to customer requirements (CCRs). A transfer
function was then developed for the perfect order and a
membership function assigned to measure the gap
between the current performance and the perfect order.
The presented transfer function of ‘‘perfect order’’ was
formulized and refined using fuzzy logic. A greater
understanding of the global supply chain was grasped by
participants and a response was triggered across the chain
which aided further collaboration for process control and
improvement in supply chain outcomes. The demon-
strated model can be applied to any supply chain process
(Amer et al., 2007b) and from any position within the
supply chain making it a very flexible model for supply
chain management.
The paper is organized as follows. A literature review of
six sigma and DFSS is given to develop an understanding
of the approach taken. The order fulfillment model is
described followed by the research methodology, a brief
description of the case firm and the application of the
model. In conclusion the results and findings are dis-
cussed and recommendations made for further research.
2. Literature review
There are two major improvement methodologies
under six sigma umbrella. Define, measure, analyse,
improve and control (DMAIC) is used for continuous
improvement of already existing products/processes and
DFSS is used for designing new product/processes. Six
sigma is a highly disciplined, data-oriented, top-down
approach to quality management that brings together
elements from past quality initiatives and aims to reduce
variability, focus on what the customer wants and
improve core processes (Klefsjö, et al. 2001; Summers,
2007). A key feature of six sigma is the use of statistical
techniques in a systematic way to reduce variation and
279
improve processes with a strong focus on results. To
increase system reliability and reduce failure rates, the
components utilized in the complex system and products
have to have individual failure rates approaching zero
(Summers, 2007).
Six sigma stands for a measure of customer quality as
well as a philosophy of giving customers what they want
each and every time i.e. zero defects. Anything less than
ideal is an opportunity for improvement; defects costs
money and understanding processes and improving them
is the most efficient way to achieve lasting and cost
effective results (Summers, 2007; Brusse, 2006; El Haik
and Roy, 2005). It is also a methodology that can be used
to change processes and company culture. It is based on
the premise that all actions are a process. Each process has
a start, a stop, inputs i.e. from supplier and outputs i.e. to
customers, and actions that happen during the process
steps, i.e. subprocesses. Each process has measurable
characteristics as each other processes change entities and
this change can be measured. Measurements can be of
input or output characteristics such as number, weight, or
type. They can also be process characteristics at various
stages such as count and time taken. Measurements can
be of continuous data items such as time, money, size or
they can be of discrete data items such as integer counts.
The process itself will have requirements for the inputs,
and the customer will have requirements of the outputs.
Measures follow a frequency distribution showing how
many measures fall within a given range of data such as in
a frequency histogram. Under DMAIC the problem is first
defined, and quantified, measurement data are collected
though root cause analysis and solutions to the root causes
are determined. Finally improvements undergo monitor-
ing and control to prevent reoccurrence.
A key limitation of the six sigma DMAIC methodology is
that it is focused on defect correction and is a reactive
methodology. It is often used when the existing processes
do not satisfy the customers or are not able to achieve
strategic business objectives (Eckes, 2001). DMAIC is
increasingly being applied in supply chain improvement
projects for this purpose (Yang et al., 2007; Zhang et al.,
2007) and there is interest in combining DMAIC with lean
techniques termed ‘‘lean six sigma’’ (Martin, 2007;
Bolstorff and Rosenbaum, 2007; El Haik and Al Aomar,
2006; George, 2003). It has also been incorporated with
SCOR to address the lack of root cause analysis and process
improvement in that model (Bolstorff and Rosenbaum,
2007; Bolstorff, 2003a–c, 2004). However, these remain as
quality improvement initiatives. The reality is even if zero
defects are achieved, it does not mean the product or
service will satisfy the customer’s requirements. For
example if you are producing the perfect product i.e.
water bottles with pure and high quality water but if the
customer perceived a scratch on the water bottle as a
defects then the product is not going to sell well.
In contrast, the second six sigma methodology, DFSS, is
proactive as it focuses on getting things right the first time
and continuing to do them right all the time. El Haik and
Roy (2005) state DFSS is the same whether it is used to
accommodate high customer satisfaction externally or
whether it is focusing on an internal process facing the
280 Y. Amer et al. / Int. J. Production Economics 127 (2010) 278–291
employees, it can proactively produce highly consistent
processes with very low variation in performance. Given
the limited uptake of supply chain frameworks and
models amongst firms the design of supply chains in
many industries exhibit deficiencies like modest levels of
quality, unawareness of what the customer really wants,
and too much complexity. Such shortcomings add a
considerable amount of non-value added activities to
SCM and can mainly be attributed to the lack of a systems
design methodology.
Implementation of DFSS has successfully delivered
quality products to customer satisfaction for many indus-
tries. DFSS has successfully been implemented for product
design in a number of leading manufacturing firms such as
Motorola, GE, Allied Signals, Honeywell, and Seagate, and
now there is increasing interest in designing a service such
as a supply chain through DFSS (Amer et al., 2007a, 2008;
El Haik and Al Aomar, 2006; El Haik and Roy, 2005).
3. Order fulfillment model using DFSS and fuzzy logic
While DFSS is an open methodology with numerous
interpretations suiting varying situations (El Haik and Roy,
Fig. 1. Order fulfillment model showing IDOV phases of DFSS.
2005; Brue and Launsby, 2003; Yang and El Haik, 2003), a
generalized DFSS flow follows the steps of identify, define,
design, optimize and verify or validate (IDDOV). The
inputs can be customer needs, business needs, raw
materials, constraints and so on. The outputs can be
quality products, processes or services designed to reach
six sigma levels. Going through these phases each CCR is
presented as a function (transfer function) of a number of
KPIVs, which can be used to predict the performance level
of the CCR. The following sections present a brief
introduction to the sequence of major activities covered
under IDOV phases of DFSS in the order fulfillment model
as shown in Fig. 1.
3.1. Identify
The major activity in this phase is the collection and
translation of often vague and abstract customer require-
ments also known as voice of the customer (VOC). The
supply chain design team identifies the customers
potential needs, enlists and prioritizes their expectations
through data collected from customer interviews, focus
groups, surveys, complaint data and enhancement request
 Y. Amer et al. / Int. J. Production Economics 127 (2010) 278–291
or through market research. Using tools like quality
function deployment (QFD), VOC is translated into design
specifications termed as CCRs, comprehendible to the
supply chain design team (Buss and Ivey, 2001). While
QFD is the major tool in identify phase, there are other
tools that may be used, such as kano model, pareto
analysis, affinity diagram, brainstorming and benchmark-
ing (Rath and Strong, 2002). QFD is a structured approach
to defining customer needs or requirements and translat-
ing them into specific plans to produce products/services
to meet those needs. This is accomplished by a cross
functional or multidisciplinary ‘‘supply chain design’’
team who can use a series of approaches to deploy the
CCRs throughout the design development (Yang, 2008;
Taguchi et al., 2005). Customer voices are diverse. Hence,
there may be a variety of different needs and there can
even be multiple customer voices within an organization.
This demonstrates the ability of six sigma tools and QFD
to address the needs of complex and variable supply chain
environments. A supplier may be supplying to multiple
firms, each with their own requirements. By applying QFD
to each channel, specific customer needs can be met with
the aim of achieving zero defects through DFSS. Where
benchmarking occurs as in the SCOR model, for example, a
company may benchmark their delivery time as matching
their competitors results of ‘‘zero defect’’. However, their
customers may have different requirements to the
customers of the firm they are benching marking
themselves against. Where benchmarking is used in Six
Sigma, it is combined with QFD (Summers, 2007) which
allows for innovation to occur along with comparison to
competitors.
3.2. Design
After having translated the VOC into engineering terms
as CCRs, the supply chain design team has the task of
proposing and evaluating conceptual solutions to address
the above CCRs. Use of the ‘‘functional design’’ approach of
systems engineering and multiple functional system
models (or conceptual solutions) are proposed in this
phase. Each solution is presented as a hierarchy of
functional subsystems. The functional concept designs
are evaluated to narrow down solution options. Measure-
ment metrics and methods to inspect the design are
verified prior to detail designing. Having narrowed down
the number of conceptual solutions, requirements are
followed down from top to lowest hierarchical level of the
functional system models. As a result of this exercise, the
team is able to translate the high level system CCRs to
lower level KPIVs.
3.3. Optimize
Performance of real world products/services is always
shadowed with variation. DFSS therefore, stresses pre-
dicting and optimizing the probability of the design to
meet the required targets (CCRs) given environmental
variation, manufacturing variation, and usage variation.
Statistical analysis and optimization of the design is
281
necessary to achieve a robust product/service design. A
transfer function is a mathematical representation of the
relationship between the input and output of a system or
a process. It facilitates the DFSS optimization of process
output by defining the true relationship between input
variables and the output. Optimization in this context
means minimizing the requirement variability and shift-
ing its mean to some desired target value specified by the
customer. The transfer function is formulized and refined
with the use of fuzzy logic. Usually transfer functions
resulting from DFSS implementation are expected to have
a mathematical representation. However, in this model
the refined transfer function is presented as sets (se-
quences) of fuzzy logic rules evaluated using the fuzzy
logic toolbox in MATLAB (Amer et al., 2008).
3.4. Validate
At the final stage validations are performed to check
that the process is complete, valid and will meet
requirements in practice. It involves verification of the
design to ensure that it meets the set requirements;
assessment of performance, reliability, capability, etc. At
this stage simulation may be used to test the order
fulfillment design. If this stage suggests that the design
does not or may not meet the required capability, then it is
necessary to retract back through the earlier stages of
design or optimize. If the validation results are satisfac-
tory, development of a process control plan for the mean
and variance of CCRs (Rath and Strong, 2002) are initiated.
4. Case study methodology
A case study application of the model was conducted
over a period of four months at the retail store of Company
A. This involved an initial survey of functional managers to
obtain a picture of the current performance measurement
system and supply chain relationships. Secondly, the stock
control (SC) and goods administration manager, logistics
manager, finance manager and operations manager were
then interviewed to obtain a picture of the supply chain
structure and order fulfillment process. The DFSS and
fuzzy logic model was applied by a small supply chain
design team consisting of the logistics manager, stock
control manager and replenishment manager. The infor-
mation gathered through this process, company docu-
ments and historical data are now presented.
4.1. Description of case Company A
As an international retailer the firm, Company A, in the
fiscal year of 2005, had sales of $17.4 billion. It employs
over 90,000 people in some 44 countries. Company A
owns or franchises approximately 220 stores in 24
countries in Europe, North America, Asia and Australia.
The case retail store is a franchise and employs over 400
people with an annual turnover of approx. $14,500,000.
The company must secure that the customer promises
of lowest price, availability and quality are fulfilled.
Company A is divided into several different companies
282 Y. Amer et al. / Int. J. Production Economics 127 (2010) 278–291

and divisions worldwide. Fig. 2 shows the firms supply
chain structure with distribution methods.
The Head Company is the core of the organization and
is situated in Europe. The supply process commences here
consisting of forecasting future demand, ordering, produ-
cing and delivering the offer to the sale floor (retail) and
ultimately to the customer. The head company has the top
responsibility of sourcing and contracting suppliers. It is
also responsible for setting correct maximum and mini-
mum level of inventory of the distribution centres (DCs).
The Trading Company is responsible for all the trading
done by the Head Company. The trading company is
divided into 16 different trading areas worldwide. The
trading company works with over 1500 suppliers in over
55 countries. Each trading area is responsible for a
geographic area and the suppliers within that area. They
are in daily contact with the suppliers. They ensure that
the supplier is able to produce the products in terms of
best quality and function at the lowest price. The Trading
Company office for the case retail store is in Singapore.
The DCs stock the entire product on the stock list with the
Headquarters,
design and
marketing
Trading
Company
VMI
Supplier
Direct Delivery (DD)
Customer Retailer Distribution
Centre
Fig. 2. Company A’s supply chain structure with distribution methods.
strategy to provide a high service to the stores simulta-
neously with low transportation costs. The DCs work with
the retail stores to shorten lead times and make them
stable. The DC is responsible for keeping track of the
inventory level at the DC therefore their inventory level is
sent to the database. Good communication is essential to
enable the distribution of the required volume of products
at the right time to the right store. The DC for the case
retail store is in Singapore. Company A is using other
different types of distribution systems; order point
distribution centres (OPDC) and direct delivery (DD) as
well as VMI. The case retail store is focused on selling
products. The information that is sent by the store to the
Head Company database is the inventory level and sales.
4.2. Current KPIs of Company A
The current KPIs are indicated in Fig. 3. Once the
delivery is received order quality, quantity are checked;
however, bad quality product are still accepted and
transferred to the recovery department where the team
tries to assemble the product for it to be sent to the
discount department to be sold as a defect product.
Whether the order quantity is over or under the requested
order the delivery will still be accepted and no action is
taken. The delivery time is often late and even if on the
other hand it arrives earlier than requested, it is still
accepted and no action is taken. Finally most of the orders
received are missing high demand requested product
whilst carrying excess of the low demand products.
The lead time goal is that 95% of all orders are
delivered within the agreed lead time of six weeks with
a window of 74 days. The total lead time is the lead-time
measured from the date the order is created until date it is
received in the store. Lead-time takes into consideration
of retailer conditions, handling time at wholesaler, filling
rate of transports and transport structure. Manifest

KPI’s Goals Responsible Freq.

1 Service levels in S1 min 99% Sales weekly

retail store S2 min 95% Manager
S3 min 90%

2 Lead times 95% Business weekly

(6 week lead time) 95% Support weekly
-DC delivery +- 4 days Manager
-DD deliveries

3 Load quality <1% Logistic monthly

Managers

4 Load quantity 5% either way Logistics monthly

of order Manager
quantity

5 Manifest accuracy ≤1% Logistics Each

Manager order

Fig. 3. Current KPIs Company A.

 Y. Amer et al. / Int. J. Production Economics 127 (2010) 278–291 283

accuracy consists of delivered quantities to be equal to the
notified quantities on the delivery note (manifest) r1%.
Exceptions to the order quantity are the ‘‘rounding up’’
parameter. If the order quantity is more or equal to 70% of a
full pallet, a full pallet will be delivered. The minimum order
quantity is always a multi-pack. If the ordered quantity is
less than a multi-pack a full pallet will be delivered.
5. Implementing the order fulfillment model
5.1. Identify
The supply chain design team identified the current
problems at the retail store that need to be considered as
1. Excess inventory of low demand product.
2. Stock outs occur on many top selling product lines.
3. Whilst KPIs are in place there are not acted upon.
4. There is no continuous improvement focus.
5.2. Translation of VOC
The goal of Company A is that the ‘‘range offer’’ has to be
available at all times in all stores and to all customers, with
the lowest total supply cost at point of sale. The primary
concern of the team is to meet their customer needs by
reducing/eliminating the stock outs. The KPIs for customer
satisfaction for product availability have been averaging 66%,
with product quality at 70%. The store manager has requested
everyone work towards improving these figures but has not
given any direction as to how this can occur. The other
concern is that there is an over abundance of low demand
product. The team chose to initially focus on the internal and
external aspects of order fulfillment. Internally, the store
customer wants to be able to walk into the store and
purchase their chosen product, take it home on the day in
perfect condition at the right price. The store wants to receive,
from an external source, in this case from the DC, a perfect
order, arriving on time, in good quality and in the correct
quantity. The team proceeded to develop a QFD. Also known
as ‘‘house of quality’’, QFD is a matrix based tool that takes
customer ‘‘whats’’ as input and transforms them into design
team’s ‘‘hows’’. The prioritized list of ‘‘whats’’ is correlated
with the proposed list of ‘‘hows’’, while each relation is scored
on the basis of relation strength. The cumulative score of
‘‘hows’’ covers their mutual interactions and delivers a
prioritized list of ‘‘hows’’, which can be used as the input
for a next QFD iteration. The final outcome of a QFD exercise
should be a prioritized list of CCRs as mentioned above (Rath
and Strong, 2002). Indeed the technical knowledge, experi-
ence and innovativeness of the design team cannot be
overlooked as they would form the basis of ‘‘hows’’. Fig. 4
depicts a first level QFD output translating the subjective VOC
into meaningful ‘‘hows’’ for supply chain designers. In the
QFD matrix, the relation intensity (Rij) of ‘‘whats’’ with
potential ‘‘hows’’ is indicated with numbers 1, 3 and 9, where
1 shows a very low, 3 a moderate and 9 indicates a significant
relation. A blank relation entry depicts no existing relation of
corresponding ‘‘whats’’ and ‘‘hows’’. The cumulative weight
(CWj) for each ‘‘how’’ is indicated as ‘‘importance of hows’’ in
Fig. 4 and is calculated using the relation depicted in Eq. (1).
Where Wi indicate the importance assigned to each ‘‘what’’
on the scale of 5–1 (5 being highest):
X
n
CWj ¼ Wi Rij ; j ¼ 1; . . . ; m ð1Þ
i¼1

HOWs / Outputs
Undamaged deliveries

Meet demand quantity

Meet urgent demands
Kano Classification

Accurate invoices
Importance (1-5)

Delivery on time

Order flexibility
No extra costs

Transport

WHATs / Inputs

Direction of Improvement
Order Fulfillment 5 9 9 3 1 3 9 3
Cost 4 3 3 9 1 3 3
Product Quality 3 1 9 1 3
Quality Service 2 3 3 9 3 1
Environment friendly 1 9

Importance of the HOWs 66 63 51 36 18 21 62 45

% Weight 18 17 14 10 5 6 17 12
Importance in next level 5 5 4 3 1 2 5 3

Fig. 4. Supply chain design teams QFD.

284 Y. Amer et al. / Int. J. Production Economics 127 (2010) 278–291

For DD
supplier
fills order

Purchase Authorize Place Order

TC receive TC process
suggestion order order received
order order
order warehouse

DC fills
order

Fig. 5. Order fulfillment process flow, moving externally.

Fishbone analysis of making order

Purchase
suggestion order Direct Delivery (DD)
(PSO) from supplier

Place order
SC places PSO 2
Fulfill vol.,
weight, order Authorize order
window
Navision
parameters Create order
Check Navision
Order ordering
quantities parameters
alignment
Perfect order
Stock control/admin
CFO authorizes Sends order SC orders using
1
order ordering routine
SC obtains
with wish list
LM reviews and confirmation
signs off order from CRS
SC notifies Logistics SC evaluates the forecasted
manager (LM) and Chief quantity increase
Stock controller (SC) financial Officer (CFO),
Creates order, SC Receives and completes
internal transaction
form from Sales
Placing order Promotional 3
product ordering
(PPO)

Fig. 6. Fishbone of making an order with actions noted.

Through the QFD the team determined order fulfillment as
CCR and delivery time, product quality, quantity of delivered
goods and manifest (invoice) accuracy as the key aspects as to
how this will be achieved.
5.3. Design order fulfillment system structure
order. The order fulfillment process which moves exter-
nally was then mapped see Fig. 5.
As the major involvement internally in this process
flow was making the order it was further analysed
through a fishbone structure, see Fig. 6. The areas for
action were identified as

The team then considered process flow maps and

fishbone arrangements to determine where improvement 1. placing order;
efforts should be focused and what are the KPIVs. The 2. placing direct delivery (DD) order and
initial flow was of the order fulfillment system segment 3. promotional product ordering.
 Y. Amer et al. / Int. J. Production Economics 127 (2010) 278–291 285

Action Responsible Timeframe KPIV

1 Review placing order Logistics 2 weeks Order dwell

procedures to ascertain if Manager time
procedure time could be Order
reduced processing
time
2 Navision parameters to be Operations 1 month %Navision
reviewed with Head office Manager parameter
and Trading centre accuracy
%Order
Quantity
accuracy
3 Evaluation of forecasted Stock controller 4 weeks % order
quantity increase, review and Sales and quantity
current practise Marketing accuracy
Manager

Fig. 7. Actions determined by design team for making order.

Scrap

Defect product Repair ASIS Customer

picks order

Goods Replenishment Pick location

Buffer
Receiving Orders replenishment

Customer pick
order

Fig. 8. Internal order fulfillment process flow.

Order accuracy on low demand product was ques-
tioned. Given the ‘‘rounding up’’ parameter the design
team considered if this was what was leading to increased
inventory of these products. Given the stock outs of high
demand products forecast accuracy from the retail end
was in question, along with internal order fulfillment and
the supplier’s ability to meet demand. Actions to be taken
to further investigate these areas were agreed. KPIVs were
determined and goals set as seen in Fig. 7.
The team then reviewed the internal order fulfillment
process flow, see Fig. 8, identifying that considerable
internal problems were occurring at goods receiving
which could be affecting access to received stock.
Further fishbone analysis highlighted several areas that
were targeted for action and KPIVs were noted.
5.4. CCR flow down of perfect order
As depicted in Fig. 9 the order fulfillment process was
described by a sequence of subprocesses, such as purchase
suggestion order, authorize/place order, trading centre, direct
delivery/distribution centre, receiving and de-stuffing, AQIS
and stock control, buffer and DR, pick up and returns. DFSS
was used to develop performance targets related to CCRs of
these subprocesses. Through brainstorming, the supply chain
design team listed the KPIVs shown under each process step.
KPOVs for each subprocess are also determined and listed on
top of the process flow. This process enabled a merging of
both the internal and external aspects of the order fulfillment
process.
The overall KPOV for the order fulfillment process was
best described as the ‘‘perfect order’’. Its elements, on-
time delivery, quantity of delivered order, quality of
delivered order, and manifest accuracy as identified in
the KPIVs, make the ‘‘perfect order’’ the key metric for
monitoring the order fulfillment variables.
The perfect order for Company A is represented as
Perfect order
¼ f ½delivery time ðDTÞ; quality ðQualÞ;
quantity delivered; ðQtyÞ; manifest accuracy ðMAÞ ð2Þ
286 Y. Amer et al. / Int. J. Production Economics 127 (2010) 278–291
Fig. 9. Order fulfillment process flow with KPIVs/KPOV.
A marginally short or over order or a slight decline in the
delivered quantity, or slight delayed/early delivery may
raise alarm if the factors are measured in specific metrics.
In real world metrics to measure the performance or
customer’s level of satisfaction from the ‘‘perfect order’’,
DT, Qty, Qual and MA is a subjective matter. Therefore the
above equation (transfer function relating perfect order to
DT, Qty, Qual, MA) is optimized with use of fuzzy logic.
5.5. Transfer function
The transfer function presented in Eq. (2) of ‘‘perfect
order’’ was formulized and refined with the use of fuzzy logic.
The refined transfer function is presented as sets (sequences)
of fuzzy logic rules evaluated using the fuzzy logic toolbox in
MATLAB (Amer et al., 2008). The steps for assessing the
‘‘perfect order’’ using the fuzzy inference system were
fuzzification, rule evaluation and defuzzification.
5.5.1. Fuzzification
The fuzzification process was performed during run
time and consists of assigning membership degrees
between 0 and 1 to the crisp inputs of delivery time,
quantity and quality and manifest accuracy.
5.5.2. Rule evaluation
The rule evaluation process consisted of using the
fuzzy value obtained during fuzzification and evaluating
Table 1
Ranges for ‘‘order’’ output and linguistic value.
Linguistic value Scores
Optimum 0.90–1.00
Satisfied 0.70–0.89
Acceptable 0.50–0.69
Poor 0.30–0.49
Reject 0.00–0.29
them via the rule base in order to obtain a fuzzy value for
the output. The rule evaluation followed the form of if
(condition x) and (condition y) then (result z) rules are
applied. Basically the use of linguistic variables and fuzzy
IF–THEN-rules utilize the tolerance for imprecision and
uncertainty mimicking the ability of the human mind to
summarize data and focus on decision-relevant informa-
tion and are generated from expert knowledge.
5.5.3. Defuzzification
The fuzzy inference system using Mamdani’s fuzzy
implication rule determined the appropriate fuzzy member-
ship value. The defuzzification process consisted of combin-
ing the fuzzy values obtained from the rule evaluation step
and calculating the reciprocal in order to get one and only
one crisp value that the output should be equal to. The
output ‘‘order’’ was evaluated in relation to the crisp value
and translated into linguistic terms (see Table 1).
 Y. Amer et al. / Int. J. Production Economics 127 (2010) 278–291 287

Fig. 10. Graphic layout of transfer function in fuzzy format.

Table 2 gap from the optimum and the processes and perfor-
Manifest accuracy. mance needs significant improvement. Order value be-
tween 0.70 and 0.89 indicates a low level of satisfaction
Fuzzy set Linguistic term Range (% of defects)
aiming to close the gap towards optimum. An order
1 Poor Below 4% output value between 0.90 and 1 indicates that the order
2 Acceptable From 1.5% to 3.5% is fulfilling the requirements and requires the processes to
3 Optimum Above 1% be monitored and maintained as shown in Table 1.

5.6.3. Fuzzy evaluation rules

Table 3 demonstrates examples from the 441 rules
5.6. Optimize—fuzzification of perfect order transfer
which follow the format ‘‘if (condition x) and (condition y)
function
then (result z)’’ corresponding to the combinations of
input conditions. For example: if manifest accuracy is
Fig. 10 depicts the empirical transfer function from
‘‘poor’’, if quality is ‘‘poor’’, if delivery time is ‘‘very early’’
Eq. (2) as a fuzzy logic system with inputs and output
and if quantity is ‘‘low’’ then order is ‘‘reject’’. The rules
being fuzzified using appropriate membership functions.
are determined through the expert knowledge of the
The following sections narrate the component of manifest
design team and are further refined following real life
accuracy as an example.
application and reappraisal which will either confirm
them or require them to be modified.
5.6.1. Manifest accuracy
Manifest accuracy value was measured based on the
5.6.4. Fuzzy solution results
delivered quantities being equal to the notified quantities on
A continuum of fuzzy solutions for Eq. (1) is presented
the delivery note (manifest). There are three categories of the
in Fig. 11 using the fuzzy tool box of Matlab. The four
manifest accuracy, namely, ‘‘poor’’, ‘‘acceptable’’, and ‘‘opti-
inputs can be set within the upper and lower specification
mum’’ as shown in Table 2. Any defect rate equal or below
limits and the output response is calculated as a score that
4% is considered ‘‘poor’’ and rejected. Any order defect rate
can be translated into linguistic terms as per Table 1 i.e. an
from 1.5% to 3.5% is considered acceptable. Any defect rate
order output of 0.818 indicates ‘‘satisfied’’ linguistically.
above 1% to 0 is optimum. The range between ‘‘optimum’’
A further graphical representation example as re-
and ‘‘poor’’ is considered ‘‘acceptable’’. ‘‘Acceptable’’, shows
sponse surface for the order is presented in Fig. 12.
that the manifest accuracy needs to be improved aiming
However, given the limitation of Cartesian axes only two
towards achieving ‘‘optimum’’. For the ‘‘poor’’ standard, the
of the four input variables can be selected to map the
degree of membership is zero, while the ‘‘optimum’’ standard
resulting variations in the output (order).
has a degree of membership of one. The rest of the standard is
Fig. 12 illustrates the order resulting from the interac-
presented within the range 0–1 degree of membership. The
tion of delivery time and quality. Again an early delivery
boundaries between the standards are graded which provides
time is better than late, however, the best score is
the fuzzy set sensitivity to the membership function by
corresponding to on target delivery. Moreover, it can be
providing degrees of closeness to the required value of the
seen that quality represents a much higher influence on
perfect order.
deciding a score for the order.
The above example surface was developed based on the
5.6.2. Order output set of 441 fuzzy relational rules corresponding to the setting
Any value for order output between the values of 0 and of the fuzzy membership function of each input/output
0.29 will cause the order to be rejected, between 0.30 and variable. As described earlier the rules can be adjusted in
0.49 indicates that the order is poor and needs major accordance to their suitability or appropriateness. The
attention and action. Although the order value from 0.50 plotted surfaces are intended to give an overall picture of
to 0.69 indicates acceptance of the order it shows a high the order performance rather than discrete values.
288 Y. Amer et al. / Int. J. Production Economics 127 (2010) 278–291

Table 3
Fuzzy evaluation rules for manifest accuracy ‘‘poor’’.

Manifest accuracy ‘‘optimum’’

Quantity Delivery time

Very early Early Acceptable early Optimum Acceptable late Late Very late

Quality ‘‘poor’’
Very low Poor Poor Poor Poor Poor Reject Reject
Low Poor Poor Poor Poor Poor Reject Reject
Acceptable low Poor Poor Poor Poor Poor Reject Reject
Optimum Poor Poor Poor Poor Poor Reject Reject
Acceptable high Poor Poor Poor Poor Poor Reject Reject
High Poor Poor Poor Poor Poor Reject Reject
Very high Reject Reject Reject Reject Reject Reject Reject

Quality ‘‘good’’
Very low Poor Poor Poor Poor Poor Poor Reject
Low Poor Acceptable Acceptable Acceptable Acceptable Poor Poor
Acceptable low Poor Acceptable Acceptable Acceptable Acceptable Poor Reject
Optimum Poor Poor Acceptable Satisfied Acceptable Poor Reject
Acceptable high Poor Acceptable Acceptable Acceptable Acceptable Poor Reject
High Poor Poor Acceptable Satisfied Acceptable Poor Reject
Very high Poor Poor Poor Acceptable Poor Poor Reject

Quality ‘‘excellent’’
Very low Reject Poor Poor Acceptable Poor Poor Reject
Low Poor Poor Acceptable Acceptable Acceptable Poor Poor
Acceptable low Poor Poor Acceptable Acceptable Acceptable Poor Poor
Optimum Acceptable Acceptable Acceptable Optimum Acceptable Acceptable Poor
Acceptable high Acceptable Acceptable Acceptable Acceptable Acceptable Poor Poor
High Poor Poor Poor Acceptable Poor Poor Poor
Very high Poor Poor Poor Poor Poor Poor Poor

Fig. 11. Shows the rule viewer of the fuzzy inference system for an order output=0.818 indicating ‘‘satisfied’’ from Table 1.
 Y. Amer et al. / Int. J. Production Economics 127 (2010) 278–291
Fig. 12. Output surface of the fuzzy inference system for delivery time and quality.
6. Validate
Due to time constraints and staff turnover the validate
phase was not able to be undertaken in the cases study.
Simulation may be a good option to consider. A pilot trial is
run in as realistic circumstances as possible being subjected
to as much ‘‘noise’’ as possible to determine if any
adjustments need to be made. If this stage suggests that the
supply chain design does not or may not meet the required
capability, then it is necessary to retract back through to
earlier stages of design or optimize (Peplinski, 2004).
7. Conclusion and discussion
The case application of the order fulfillment model
presented in this paper contributes to the qualitative
understanding of supply chain management and perfor-
mance measurement. By developing a greater under-
standing of their own internal processes through a cross
functional approach the design team were able to see
where their processes intercept with the processes of their
supply chain partners’, the trading company and distribu-
tion centre. The case application highlighted areas for
linkages across the chain in forecast evaluation and the
‘‘rounding up’’ parameter which called for a mutual
review and closer monitoring to determine if these are
the areas impacting on stock outs of top selling items and
excessive inventory of low selling items.
The order fulfillment model enabled the development
of KPIVs and KPOVs of order fulfillment to be determined
which added depth and focus to Company A’s perfor-
mance measurement system building supply chain inte-
gration through focusing on customer requirements,
process monitoring and control and the application of
internal and external order fulfillment process perfor-
289
mance measurement. It provides useful managerial
techniques for global SCM and is a practical quantitative
model for operations managers to redesign/design, moni-
tor and control the supply chain order fulfillment process
using DFSS and fuzzy logic. There is potential for the
model to design, monitor and control other supply chain
processes with Amer et al. (2007b) approaching the
demand management process. Hence there are wider
implications for the model to provide further innovative
approaches to supply chain management.
This paper has highlighted fundamental problems with
current supply chain models which refer to the impor-
tance of a performance measurement systems to achieve
supply chain strategy and business outcomes but do not
elaborate on how to determine specific targeted measures
for individual circumstances. The DFSS approach meant
that the case company’s strategy of satisfying their
customer was at the forefront of order fulfillment design
due to the identification of CCRs through the VOC. By
considering this at the design onset the focus on designing
to meet those requirements meant that they were
optimized and the appropriate performance measures
were matched to the supply chain strategy and the
particular order fulfillment process structure.
As 47% of firms are currently only focusing on
developing a seamless flow of internal processes the order
fulfillment model presented holds great potential for
these firms to develop SCM and extend their focus across
the chain. Partial integration was advocated as an
alternative to the more holistic approaches of the SCOR
and GSCF models in the literature. One of the inhibiting
factors to such holistic approaches is the cost, and time to
implement such organizational changes which many
SMEs may not be able to bare. This model provides a
good alternative. It could be used to build a new supply
chain as in the case of axiomatic design, to redesign an
290 Y. Amer et al. / Int. J. Production Economics 127 (2010) 278–291
existing one, or just to analyse, understand and improve
the existing chain as was demonstrated in the case
application and the partial illustration of the model being
adapted to the demand management process.
The SCOR model analysed the ‘‘as is’’ state, and then
through the application of the SCOR template, the ‘‘to be’’
state was benchmarked with other firms. The GSCF
model is a comprehensive model but has limited uptake
amongst firms probably due to its comprehensiveness
and depth making its implementation time consuming
and expensive. The model presented in this thesis has
the potential for supply chain design innovation that is
adaptive to changing circumstances. It can be applied to
different channels, addressing issues raised by Bask and
Juga (2001) that supply chains can be obsolete by the time
holistic frameworks are in place and they therefore need
to deal with multiple goals and strategies within a supply
chain. The order fulfillment model presented makes a
considerable contribution to improving supply chain
integration through an appropriate performance measure-
ment system. The approach of DFSS allows for targeted
metrics that are relevant to the process performed and the
order fulfillment model can accommodate varying order
fulfillment structures thereby making the metrics relevant
to that structure.
The application of fuzzy logic to the transfer function
also addresses the variability of the four elements of the
perfect order namely delivery time, quantity, quality and
manifest accuracy. The input of the expert design team
makes the measures relevant to their specific circum-
stances as the rules are determined from the common
sense, human thinking and judgment of the design team
members. The fuzzy transfer function enables a clearer
look at the relationships between the variables which can
provide more robust information for determining the
supply chain improvement focus.
The flexibility of the model lies in that it can
accommodate the many varieties and degrees of supply
chain integration by providing a means to target some
aspect of processes relationships or channels that is being
examined and therefore provides a means for incremental
steps for supply chain improvement.
8. Recommendations and further research opportunities
It is recommended that further research opportunities
exist by the application of the presented order fulfillment
model in the following ways to further contribute to the
understanding of its usefulness and validity:
 The model be applied in small to medium sized
enterprises that do not have advanced supply chain
management practices in place.
 That the model be used in different positions within a
supply chain and its use be extended further across a
chain.
 That the model be used in further research to other
supply chain processes.
 As the use of the model could necessitate the use of
specific software, research could develop suitable
platforms for the methodology which could make it
more accessible for commercial application.
 Consideration of the use of DOE to optimize process
parameters and process structures in the optimize phase.
 Using discrete event analysis and simulation in the
verification phase to verify the final design.
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