Purchasing and order management
Customers
Materials flow
Suppliers
Procurement
Operations
Distribution
Requirements information flow
Inbound logistics
Outbound logistics
Purchasing and order management
The objective of purchasing is:
to secure optimal supplier performance
with respect to optimum quality
timely delivery
minimum costs.
Purchase, procure, source, buy
purchasing manager / chief buyer
Situations which can give rise to inter-departmental conflicts
Relationships with other functions
Industrial engineering
Design engineering
Finance
Receiving and stores
Physical distribution
Production control
The purchasing process
Recognize a need
Select suppliers
Issue the order
Track and receive the order
Other important issues
Centralized and decentralized purchasing
Decision-making as to making or buying
(core competency)
Supplier relationship
Supplier selection
Order management
Order cycle
Seller: the time when an order is received from a customer to when the goods arrive at the customer’s receiving dock.
Buyer: from when the order is sent out to when the goods are received.
The shorter and more consistent the order cycle is, the less inventory is needed by one’s customers.
Sales forecasting
There is a link between order management and sales forecasting.
A firm does not simply wait for orders to arrive. Forecasts are made of sales and inventory that must be stocked so that the firm can fill the orders in a satisfactory manner.
Order management
Order planning
Order transmittal
Order processing
Order picking and assembly
Order delivery
Order planning
The problem of bunching happens when a high percentage of customers make their orders at the same time.
If customers’ ordering schedules can be influenced, a firm can balance them out and minimize the peaks and valleys of the workloads.
3 techniques of order planning
Use field (outside) salespeople who take order when they call on customers
Use phone (inside) salespeople
Offer a substantial price discount to customers who place orders on certain dates.
Order transmittal
Phone or fax
Scanners and barcodes (pharmacy)
POS systems (retail chains)
Internet
Order processing steps
Order information is checked for completeness and accuracy
A credit check is made by the credit department
The order is entered into the system (order entry)
The marketing dept credits the salesperson with sales
Order processing steps
5. The accounting dept records the transaction
6. The inventory dept locates the warehouse closest to the customer, advises it to pick the shipment, and updates the firm’s master inventory controls.
7. The transportation dept arranges for the shipment’s transportation from the shipping dock to the buyer.
Order picking and assembly
It starts with producing a document telling a specific warehouse to assemble a given order for a customer.
An order picking list, indicating which items are to be assembled, is given to a warehouse employee.
Refinement with computers
Order picking and assembly
An example
During the peak of shipping season, 60 order pickers select from 13,000 products from 50,000-square-foot picking area and can process over 33,000 orders per day.
Paperless warehouse
Order delivery
We’ll check various transportation alternatives available for order delivery later.
Some customers will pick up orders with their own fleet.
