Order Processing and

Information Systems
(Logistics & Supply Chain)
By
Dr. Rahul Sharma

Order Processing
The nerve center of a logistics system.
In marketing and business in general:
nothing happens until somebody sells
something.
In logistics: nothing happens until
somebody orders something.

Six Components of the Order Cycle

Customer prepares order and transmits it.

Six Components of the Order Cycle

Customer prepares order and transmits it.

Six Components of the Order Cycle

Order receipt and order entry

Six Components of the Order Cycle

Order processing.

Six Components of the Order Cycle

Warehouse picking and packing

Six Components of the Order Cycle

Warehouse picking and packing

Six Components of the Order Cycle

Order transportation

Six Components of the Order Cycle

Customer delivery and unloading

D
A
Y
1

Prepare, transmit order

D
A
Y
1

D
A
Y

D
A
Y

DD
AA
YY

33

Receive, process order

D
A
Y

D
A
Y

D
A
Y

D
A
Y

Pick and pack order.

D
A
Y

D
A
Y

D
A
Y

D
A
Y

D
A
Y

D
A
Y

D
A
Y

Transportation

D
A
Y

D
A
Y

D
A
Y

D
A
Y

D
A
Y

D
A
Y

D
A
Y

D
A
Y

Customer receives and unloads order

Actual order cycle = eight days

D
A
Y

D
A
Y

D
A
Y

D
A
Y

D
A
Y

D
A
Y

D
A
Y

D
A
Y

Actual order cycle = eight days

Receive, process

Pick, pack

D
A
Y

D
A
Y

D
A
Y

D
A
Y

D
A
Y

D
A
Y

D
A
Y

D
A
Y

The sending organizations actual processing.

Actual order cycle = eight days

Receive, process

Pick, pack

D
A
Y

D
A
Y

D
A
Y

What the sending organization sometimes sees.

Actual order cycle = eight days

Prepare, transmit order

D
A
Y
1

??????????

Receive,
unload order.

D
A
Y
8

What the receiving organization sometimes sees.

Improving the 8-day order cycle

The three-days in-house may be too
expensive to shorten.
Better selection/monitoring of carriers may
be a more cost-effective way to reduce the
order cycle.
Also, the 8-day order cycle may be an
average. The cycle may range from 4 to 20
days.

Total Order Cycle with Variability

2. Order entry
and processing

1. Order preparation
and transmittal
Frequency:

5. Transportation

6. Customer
receiving

Frequency:

Frequency:

Frequency:

Frequency:

.5

3. Order picking
or production

TOTAL
Frequency:

1.5

3.5 days

Instructional material from Strategic Logistics Management, by Stock and Lambert (2001).

20 days

Improving the 8-day order cycle

The three-days in-house may be too expensive to
shorten.
Better selection/monitoring of carriers may be a
more cost-effective way to reduce the order cycle.
Also, the 8-day order cycle may be an average.
The cycle may range from 4 to 20 days.
To cover variability, customer should carry 12
days safety stock (average of 8 days plus stock to
cover maximum of 20-day order cycle).

Traditional
Supply Chain Flows
Demand flow

Supplier

Manufacturer

Distributor

Product flow

Instructional material from Strategic Logistics Management, by Stock and Lambert (2001).

Retailer

Traditional
Supply Chain Flows
Demand flow
Supplier

Manufacturer

Distributor

Product flow

Barriers because
individual orders
are required.
Instructional material from Strategic Logistics Management, by Stock and Lambert (2001).

Retailer

Information-based
Supply Chain Flows
Timely, accurate information flow

Supplier

Manufacturer

Distributor

Smooth, continual product flow

matched to demand

Instructional material from Strategic Logistics Management, by Stock and Lambert (2001).

Retailer

Thank You