Order Processing &

Information Systems

Prepared by DeepaChandrasekar IIPM Gurgaon

Order Processing

 Order processing includes the following

activities
 Order Preparation
 Order Transmittal
 Order Entry
 Order Filling
 Order Status Reporting
Order Preparation

 Order Preparation refers to the activities of

gathering information needed about the
products and services desired and formally
requesting the products to be purchased.
Order Processing involves

 Selecting vendor
 Filling order form
 Checking stock availability
 Communicating order information
Latest trend in Order Preparation
 Bar code technology used to get the complete
information of product

 Web portals used for selecting standard

products and order placement

 Electronic Data Interchange (EDI) connects the

buyer to the seller via computer, where the
order is placed automatically as the stock
depletes.

 RFID (Radio Frequency Identification) are latest

technology that helps in reducing order
preparation
Order Transmittal

 Transferring the order request from its point

of origin to the place where the order entry
can be handled; either manually of
electronically
Order Transmittal Methods
 Electronic  Manual Transmission
Transmission  Mailing of orders
 Toll free telephone  Physical carrying of
 Internet orders by staff
 EDI
 Facsimile machines
 Satellite
communications
Order Transmittal

 Electronic transmission of order is more

reliable, accurate, reduces cost and has
replaced the manual order transmittal
methods
Advantages & Disadvantages of EDI in
Order Transmittal
ADVANTAGES DISADVANTAGES

 Dedicated electronic link  Transmission cost is high

between the computers compared Internet
of buyers and sellers and
hence the chance of
fraud is less
 Message delivery is
instantaneous and
secure
Advantages & Disadvantages of
Internet in Order Transmittal
ADVANTAGES DISADVANTAGES

 Low-cost, widely  Security of data

available, uses standard  Message delivery not
network of telephone guaranteed
system
 Message delivery is
instantaneous and
secure

Improving internet technology will help in

overcoming the security issue
 Oder Entry
 Activities that take place before the order filling is done

 Checking the accuracy of the order information, such as item

description and number, quantity & price

 Checking the availability of the requested items

 Preparing back-order or cancellation documentation

 Checking customer credit status

 Transcribing the order information as necessary

 billing
Oder Entry - II

 Order Entry has benefited from technological

improvements like
 Bar Codes
 Optical Scanners
 Computers
 This has increased the productivity of this
activity
Oder Entry
Method of Data Entry
Characteristic Keyboard Entry Bar Code
Speed 6 seconds for 12 character 0.3 to 2 seconds
Substitution error rate 1 character error in 300 characters 1 character error in 15 thousand to
entered 36 trillion characters entered

Encoding Costs High Low

Reading Costs Low Low
Human Low error rate
Low cost
Advantages
High speed
Can be read at a distance
Disadvantages Human Requires education of the user
community
High Cost Equipment cost
High Error rate Dealing with missing or damaged
images
Low speed
Order Filling

 Order filling involves the following activities:

 Acquire the items through stock retrieval,
production, or purchasing
 Pack the items for shipments
 Schedule the shipment for delivery
 Prepared the shipping documentation
Order Filling
Priorities in order filling
 Priorities for processing orders may affect the speed with which all
orders are processed or the speed with which the more important
orders are handled.

 First-received, first-processed
 Shortest processing time
 Specified priority number
 Smaller, less-complicated orders first
 Orders having the least time before promised delivery date

 The priority rule depends upon such criteria as fairness to all

customers, the differentiated importance among orders, and the
overall speed of processing that can be achieved
Order Status Reporting
 This activity ensures that good customer
service is provided by keeping the customer
informed of any delays in order processing or
delivery of order.

 Tracing and tracking the order throughout

the entire order cycle
 Communicating with the customer about
where the order may be in the order cycle
and when it may be delivered
 The monitoring activity does not affect the
over all time to process an order
 Barcode, RFID, GPRS technology are used
Observations
 FedEx , UPS , DHL
 Laser beam bar coding and specially designed
software.
 Truck mounted device
eLogistics Private Limited offers a patented
e-tracking product based on the global
system for mobile communication.
Factors affecting
Order-Processing Time
Processing Priorities

 FIFO – First In First Out

 Small orders first

 More Profitable orders first

Parallel versus Sequential Processing

 When activities are performed

simultaneously (parallel) time can be saved.

 Example : Credit check of the buyer and the

availability of the stocks can be done
simultaneously.
Order Filling Accuracy

 If the order filling is done accurately the order

processing time will be minimized.
Order Batching

 Collecting orders from multiple customers

into groups for batch processing may reduce
processing cost.

 Holding orders until the batch size is realized

will likely add to processing time.
Lot Sizing

 When the customer places a huge order ,

instead of waiting to complete the
manufacturing of the entire order , the small
batches should be delivered at regular
intervals.

 This will increase the transportation cost but

can reduce the waiting time of the customer.
Shipment Consolidation

 Orders may be held to create an economical

shipment size.

 Consolidating several small orders to build a

larger shipping volume reduces
transportation.

 Processing time may be increased but the

transportation cost is reduced.
The Logistics Information System

 Function
 Internal Operation
 Logistics
Information
System

Internal External

Financial Customers
Accounting Vendors
Marketing Carriers
Logistics Supply Chain
Manufacturing Partners
Purchasing

OMS WMS TMS

•Stock Availability •Stock Level Management •Shipment consolidation
•Crediting Checking •Order Picking •Vehicle routing
•Invoicing • Picker Routing •Mode Selection
•Product Allocation to •Picker Assignment & •Claims
Customers work loading •Bill Auditing
•Fulfillment Location •Product availability •Tracking
estimating •Bill Payment
Order Management System
 OMS  Manages the initial
• Stock Availability contact with the
• Crediting Checking customer at the time of
• Invoicing product inquiries and
• Product Allocation to order placements.
Customers
• Fulfillment Location
Order Management System

Checks Product Availability Warehouse

OMS Management
System
Order Management System

Warehouse
Management
System

Checks Credit Status Of the Customer Financial

OMS Information
System
Order Management System

Warehouse
Management
System

Financial
Information
System

Tracks the order Transport

OMS Management
System
Warehouse Management

 It is the information subsystem assisting in

the management of product flowing through
and stored in the facilities of the logistics
network.
▪ The key elements can be identified as
▪ Receiving
▪ Put away
▪ Inventory management
▪ Order processing and retrieving
▪ Shipment preparation
Warehouse Management
 Receiving  Entry / Check in point
 Put away  Data about the product
 Inventory are entered into the
management WMS using bar code
 Order processing and scanners, radio
retrieving frequency RF data
 Shipment preparation communication
terminals, or manual
key boards.
Warehouse Management
 Receiving  Based on the available
 Put away space and stock layout
 Inventory rules , the WMS assigns
management the incoming product
 Order processing and to a specific location
retrieving for later retrieval.
 Shipment preparation
Warehouse Management
 Receiving  Monitors the product
 Put away levels at each stocking
 Inventory management location in the
 Order processing and warehouse.
retrieving  Replenishment
 Shipment preparation quantities
 Timing
Warehouse Management
 Receiving  Entry / Check in point
 Put away  Data about the product
 Inventory management are entered into the
 Order processing and WMS using bar code
retrieving scanners, radio
 Shipment preparation frequency RF data
communication
terminals, or manual key
boards.
Warehouse Management
 Receiving  Packing
 Put away  Bar codes
 Inventory management  Necessary documents
 Order processing and
retrieving
 Shipment preparation
Transport Management System

 Its purpose is to assist in the planning and

controlling of the firms transportation
activity.
▪ Mode Selection
▪ Freight Consolidation
▪ Routing
▪ Claims Processing
▪ Tracking Shipments
▪ Freight Bill Payments and Auditing
Transport Management System

 Mode Selection
Transport Management System

 Freight Consolidation
 Unit Shipping costs drop
disproportionately as shipment
size increases, shipment
consolidation can result in
substantial transport savings.

 Suggests the patterns for

consolidating small shipments
into larger ones.
 Transport Management System

 Routing
 Ensure the fleet is operated
efficiently
 Assigns loads to vehicles
 Suggests the sequence in which
the stops should be made.
 Pickup of returning merchandise
 Length of driving and rest breaks
Transport Management System

 Claims Processing
 Some shipments will be
damaged.
 By retaining the information of
the shipment value , content ,
carrier used , origin ,
destination and liability limits
many claims can be processed
automatically
Transport Management System

 Tracking Shipments
 Bar coding , radio
transmission en route,
global positioning systems
and on –boards computers .
 Information regarding the
shipments are provided to
the receiver through
internet
Freight bill payment & Auditing
 Determining the freight charges for
shipments can be complicated
because of the many that can be
placed on the freight rates.

 When a rating error occurs , the

shipper can make a claim on the
carrier for the difference between
the actual charges and lowest
charges.
Internal Operations Environment

Data Input
 Input
Database activities
 Database and 1.Data Storage
Filing
its Decisions Retrieval
manipulation File Maintenance
2.Data Transformation
 Output Basic Data Processing
operations
Data Analysis using
statistical and
mathematical
techniques

Output Communications

Logistics Manager
 Exploded View of the logistics
Information Systems

Input Published
Customer data Customer Records Management Data
Information

Computer Files Manual Records

Database
Manager

Output
Thank you …..

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