Order Processing & Transportation,

S.C Performance
The Customer Order Cycle
All the elapsed time from the customer’s placement of order to the receipt of the product in an acceptable
condition and its placement in the customer’s inventory.

Elements
1. Order Preparation
2. Order Transmittal
3. Order Entry
4. Order Filling
5.Order status reporting
6. Order transportation
7. Customer delivery and unloading
 Internal order cycle time
 The elapsed time from receipt of the customer order until it is packed and shipped is known as internal order
cycle time.

Order Management System

 The order management system represents the principal means by which buyers and sellers communicate
information relating to orders.
 Effective order management is crucial for a firm to achieve operational efficiency and customer satisfaction.
Order management functions

 1. Receive order  11. Identify shipping point

 2. Enter order
 12. Generate packing docs
 3. Verify order accuracy
 13. Originate shipment
 4. Check credit
 14. Inquire order status
 5. Check inventory availability
 15. Deliver order
 6. process back order ,if any
 16. Measure service level
 7. Acknowledge order receipt
 17. Measure quality of service
 8. Modify order
 18. Assume continuous improvement
 9.Suspend order
 19. Handle product returns
 10.Check pricing and promotion
Order Processing Categories

 Order processing refers to the activities associated with filing customer orders. Three categories of order
processing are;
 1. Industrial order processing
 2. Retail order processing
 3. Customer order processing
Factors affecting order processing time

 1. Processing priorities
 2. Parallel vs. Sequential processing
 3. Order filling accuracy
 4. Order batching
 5. Lot sizing
 6. Shipment consolidation
The Logistics Information System

 - refers to an interacting structure of people , equipment and procedures which together make relevant
information available to the logistics manager for the purpose of planning , implementation and control.
 Sub-systems of LIS
 A) Order Management System ;- A principal means by which buyers and sellers communicate information
relating to individual orders of product.

 B) Warehouse Management System ;- key elements are 1) receiving, 2)put-away, 3)inventory management,
4) order processing and retrieving and 5)shipment preparation
 C) Transportation Management System -1) transport mode selection, 2)Freight consolidation, 3) routing and
scheduling shipments 4) Claims processing 5)Tracking shipments 6) Freight bill payments and auditing
Order Management System (OMS)

 A principal means by which buyers and sellers communicate information relating to individual orders of
product.
Types of LIS

 The types of Logistics information system are;

 1. Retail system
 2. Vendor Managed Inventory (VMI)
 3. E-commerce
 4. Decision Support System( DSS)
The position of Transportation on Logistics Activities

 Transportation plays a connective role among the several steps that result in the conversion of
resources into useful goods in the name of the ultimate consumer. It is the planning of all
these functions and sub-functions into a system of goods movement in order to minimize cost
maximize service to the customers that constitutes the concept of business logistics. The
system, once put in place, must be effectively managed.
Traditionally these steps involved separate companies for production, storage, transportation,
wholesaling, and retail sale, however basically, production/manufacturing plants, warehousing
services, merchandising establishments are all about doing transportation. Production or
manufacturing plants required the assembly of materials, components, and supplies, with or
without storage, processing and material handling within the plant and plant inventory
Warehousing services between plants and marketing outlets involved separate transport.
Merchandising establishments completed the chain with delivery to the consumers. The
manufacturers limited themselves to the production of goods, leaving marketing and
distribution to other firms. Warehousing and storage can be considered in terms of services for
the production process and for product distribution. There have been major changes in the
number and location of facilities with the closure of many single-user warehouses and an
expansion of consolidation facilities and distribution centres. These developments reflect
factors such as better transport services and pressures to improve logistics performance
Elements of Transportation Cost

The four basic costs are as follows:

 Line haul
 Pickup and delivery
 Terminal handling
 Billing and collecting
 Line-haul costs
When goods are shipped, they are sent in a moving container that has a weight and volume capacity. The
carrier, private or for hire, has basic costs to move this container, which exist whether the container is full or not.
For a truck, these include such items as the driver’s wages and depreciation due to usage. These costs vary with
the distance travelled, not the weight carried. The carrier has essentially the same basic costs whether the truck
moves full or empty. If it is half full, the basic costs must be spread over only those goods in the truck.
 Pickup and delivery costs
Pickup and delivery costs are similar to line-haul costs except that the cost depends more on the time spent
than on the distance travelled. The carrier will charge for each pickup and the weight picked up. If a shipper is
making several shipments, it will be less expensive if they are consolidated and picked up on the trip.
 Terminal handling
Terminal handling costs depend on the number of times a shipment must be loaded, handled, and
unloaded. If full truck loads are shipped, the goods do not need to be handled in the terminal but can go
directly to the consignee. If part loads are shipped, they must be taken to the terminal, unloaded, sorted,
and loaded onto a highway vehicle. At the destination, the goods must be unloaded, sorted, and loaded
onto a local delivery vehicle.
Each individual parcel must be handled. A shipper who has many customers, each ordering small
quantities, will expect the terminal handling costs to be high because there will be a handling charge for
each package. The basic rule for reducing terminal handling costs is to reduce handling effort by
consolidating shipments into fewer parcels.
 Billing and collecting
Every time a shipment is made, paperwork must be done and an invoice made out. Billing and collecting
costs can be reduced by consolidating shipments and reducing the pickup frequency.
SCM Performance Measures
 SCOR model definition
 The supply chain operations reference (SCOR) model is designed to evaluate your supply chain for
effectiveness and efficiency of sales and operational planning (S&OP). The supply chain operations reference
(SCOR) model helps businesses evaluate and perfect supply chain management for reliability, consistency, and
efficiency

 Process Model
 As a process model it follows the supply chain through five functional areas.
 Plan
 Source
 Make
 Deliver
 Return
Balanced Scorecard

 Balanced Scorecard is a tool that closely intertwines the strategy and mission of an organization with a series
of measures to be carried out by measuring the performance company from four perspectives balanced:
finance, customers, internal processes, and the formation and growth perspective