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Total Order Cycle: A Customer's Perspective
Key: 1. Order preparation and transmittal 2 days2. Order received and entered into system 1 day3. Order processed 1 day4. Order picking/production and packing 5 days5. Transit time 3 days6. Warehouse receiving and placing into storage 1 day
Total order cycle time 13 days
1. Customerplaces order
6. Orderdelivered to
customer
5. Ordershipped tocustomer
2. Orderreceived by
supplier
3. Orderprocessed
4. Order pickedand packed
3
Total Order Cycle: A Customer's Perspective
1.ustomerplaces order
6. Orderdelivered tocustomer
5. Ordershipped tocustomer
2. Orderreceived by
supplier
3. Orderprocessed
4. Order picked
and packed
Total order cycle time
Customer satisfaction
4
Total Order Cycle: A Customer's Perspective
1.ustomerplaces order
6. Orderdelivered tocustomer
5. Ordershipped tocustomer
2. Orderreceived by
supplier
3. Orderprocessed
4. Order picked
and packed
Key: 1. Order preparation and transmittal 2 days2. Order received and entered into system 1 day3. Order processed 1 day4. Order picking/production and packing 5 days5. Transit time 3 days6. Warehouse receiving and placing into storage 1 day
Total order cycle time 13 days
7 days
Manufacturer’s control
5
Total Order Cycle: A Customer's Perspective
1.ustomerplaces order
6. Orderdelivered tocustomer
5. Ordershipped tocustomer
2. Orderreceived by
supplier
3. Orderprocessed
4. Order picked
and packed
Not directly under the Manufacturer’s control
Key: 1. Order preparation and transmittal 2 days2. Order received and entered into system 1 day3. Order processed 1 day4. Order picking/production and packing 5 days5. Transit time 3 days6. Warehouse receiving and placing into storage 1 day
Total order cycle time 13 days
6 days
6
Total Order Cycle with Variability
2. Order entry
Frequency:
.5 1 1.5
1. Order preparation and transmittal
Frequency:
1 2 3
3. Order processing
Frequency:
.5 1 1.5
4. Order picking or packing production
Frequency:
1 5 9
Frequency:
TOTAL
4.5 days 13 21.5 days
5. Transit time
Frequency:
1 3 5
6. Customer receiving
Frequency:
.5 1 1.5
Typical Elements of Order Processing
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Order Preparation• Requesting product and services
Order Transmission• Transfer order information to supplier
Order Entry• Stock checking• Accuracy checking• Credit checking• Back ordering/order cancelling• Transcripting• Billing
Order Filling• Product retrieval, production or purchase• Packing• Scheduling for delivery• Shipping document preparation
Order ShipmentOrder Status Reporting• Tracing and tracking• Communicating with customer on order status.
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Order Preparation
Products and services information Determining vendor Filling out an order form Determining stock availability Communicating order information
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Order Transmission
Transfering the order request from origin to the destination.
Manually Mailing, physical carrying
Electronically Tool free phone, data phones, internet, EDI, fax,
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Order Entry
Checking the accuracy of the order information Checking the availability of the requested items Preparing back-order or cancellation order Checking customer’s credit status Billing
12
Order Filling
Physical activities Acquire the items through stock retrieval,
production, or purchasing Pack the items for shipment Schedule the shipment for delivery Prepare the shipment documentation
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Order Status Reporting
Ensures good customer services Customer informated of any delay or delivery
of the order Tracing and tracking the order Communicating with the customer about where
the order may be in the order cycle and when it may be delivered.
The Five Major Supply Chain Drivers
1.PRODUCTION
What, how, and when to produce
4.TRANSPORTATIONHow, and when to move
product
3.LOCATION
Where best to do what activity
2.INVENTORY
How much to make and how much to store
5.INFORMATIONThe bests for making
these decisions.
15
Logistics Information System
An interacting structure of people, equipment, and procedures which together make relevant information available to the logistics manager for the purposes of planing, implementing and control.
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Information flow makes a logistical system Information flow makes a logistical system dynamicdynamic.. Quality Quality and and timeliness of informationtimeliness of information are key factors are key factors in logistical operations.in logistical operations.
Bowersox and ClossBowersox and Closs
How Information Systems Facilitate Logistics Management
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• Decide when, what to produce, store, move• Rapidly communicate orders • Communicate orders, track order status• Check inventory availability, monitor levels• Track shipments • Plan production based on actual demand • Rapidly communicate product design change• Provide product specifications• Share information about defect rates, returns
Logistics Information System
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ComputersServersInternet technologiesInput and output devicesCommunication channelsBarcode, RF, storage media
System and application programs
LIS combine hardware and software to manage, control, and measure logistics activities.
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Logistics Information System LIS Benefits
Increased product visibility and control Improved knowledge of key logistics network
component capabilities and capacity Enhanced economic value
Cost reductions Sales increases
Creation of competitive advantage Direct linkages to customers Major application categories of information systems
include: Operations Support Systems; Management Support Systems
Overview of Logistics Information System
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LIS
InternalFinance/AccountingMarketingLogisticsManufacturingPurchasing
ExternalCustomersVendorsCarriersSupply chain partners
Order ManagementSystem• Contact with customer• Stock availability• Crediting checking• Invoicing• Product allocation to customer• Fulfillment location
Warehouse Management SystemStock level managementOrder pickingPicker routingPicker assignments and work loadingProduct availability estimating
TransportationManagement SystemShipment consolidationRouting and schedulingClaimsTrackingBill paymentFreight bill auditing
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Order processing system• Customer location• Order history• Salesperson• Revenues• Order status
Industry/external data• Market share• Product offering• Demographic trends• Economic trends
Management• Competitive reactions• Sales forecasts• Future trends• New markets
Company records• Cost of capital• Cost of logistics activities• Standart costs
Operating data• Freight payment• Transportation history• Inventory• Credit files• Product movement
Report generation• Order performance• Shipment performance• Damages and returns
Logistics Database
• Product traking and forecasting• Performace and cost reports
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Bar Coding
barcodes stored data in series of parallel black and white bars of various widths and spacing. They can be read by optical scanners called barcode readers or scanned from an image by special software.
Contemporary Logistics Information Technologies
The Universal Product Code (UPC) is a specific type of barcode, that is widely used in the United States and Canada for tracking trade items in stores.
Turkey code: 869 Code 128, Code 39 EAN Code(International Article Number)-
Europe and Turkey TOBB, Milli Mal Numaralandırma Merkezi
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Bar Coding
LO
GIS
TIC
S MA
NA
GE
ME
NT
Fu
nd
amen
tals of
Lambert
Stock
Ellram25
Barcode Types
Country code Firm code Product code Control digit
3 digits4 digits (can
change)5 digits(can
change)1 digit
Exp:
869 9567 90009 4
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Point of Sales Data
Technology that allows firms, in real time, to know what and where an item is being sold through scanning of individual barcodes when an item purchased at the retail level.
Using this information, product forecasting, make better purchase decision and customization, and reduce the chance that an item will be out of stock.
Zara-POS usage
Contemporary Logistics Information Technologies
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RFID
RFID system consists of an antenna and a transceiver, which read the radio frequency and transfer the information to a processing device, and a transponder, or tag, which is an integrated circuit containing the RF circuitry and information to be transmitted.
RFID systems can be used just about anywhere, from clothing tags to missiles to pet tags to food -- anywhere that a unique identification system is needed.
29
Radio Frequency Identification (RFID)
Contemporary Logistics Information Technologies
Yard, Warehouse & Factory Management, Transportation Management
Item-level tracking Automatic Non-Line-of-Sight Scanning
30
RFID tags come in three general varieties: passive, active, or semi-passive (also known as battery-assisted).
Passive tags require no internal power source-only active when a reader is nearby to power them, whereas semi-passive and active tags require a power source, usually a small battery.
Passive tags have practical read distances ranging from about 10 cm (4 in.)
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Active Tags Active tags typically have much longer range and
larger memories than passive tags, as well as the ability to store additional information sent by the transceiver.
Some active RFID tags include sensors such as temperature logging which have been used to monitor the temperature of fresh produce or certain pharmaceutical products.
Other sensors that have been married with active RFID include humidity, shock/vibration, light, radiation, temperature, and atmospherics like ethylene.
32
Semi-passive Tags Semi-passive tags are similar to active tags in that
they have their own power source, but the battery only powers the microchip and does not broadcast a signal.
The RF energy is reflected back to the reader like a passive tag. An alternative use for the battery is to store energy from the reader to emit a response in the future.
Greater sensitivity than passive tags, typically 100 times more.
33
Radio Frequency (RF)
Relay information via electromagnetic energy waves from a terminal to a base station, which is linked in turn to a host computer.
Contemporary Logistics Information Technologies
Typically used in a warehouse or distribution center, RF technologies provide the communications capability between operating personel (e.g. Fork lift drivers, loading dock personnel, etc.) and centralized computer capabilities.
34
Definition of EDI Inter organizational, computer-to-
computer exchange of business data in a standard, machine-processable format.
Unstructured Structured
Fax EDIE-Mail Order entryPerson-to-person Computer-to-computer
35
The purpose of EDI is to eliminate dublicate data entry and to improve thespeed and accuracy of information flow
by linking computer applications between companies.
Definition of EDI
Levi’s-integrated its customer order processing system using a
QR(quick response)-EDI: LeviLink
Transfer of structured data, by agreed message standards from one computer system to another without human intervention.
Cheques, bill of lading
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Definition of EDI
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Types of EDIs
Proprietary Systems (One to Many) involve an EDI system which is owned, managed, and maintained by a single company
Value-added Networks (Many to Many) includes a third party firm that acts as a central clearinghouse
Industry Associations have their own EDI standards
38
For EDI to function properly, computer language compatibility is required.
Users must have common communication standards.
Trading partners must have common definition words, codes and symbols; and a common format and order of transmission.
EDI Standarts
39
EDI Versus Traditional Methods
PURCHASING
COMPUTER
Source: Margaret A. Emmelhainz, Electronic Data Interchange: A Total Management Guide (New York: Van Nostrand Reinhold, 1990), p. 5.
BUYER'S PURCHASINGAPPLICATION
SELLER'S ORDERENTRY APPLICATION
PURCHASING
POST OFFICEBUYER'S
EDI FLOW
PO POSELLER'S
COMPUTER
ORDERENTRY
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The Benefits of EDIComparing with non-electronic communication
Quick access to information, Better customer services, Reduced paperwork, Better communications, Increased productivity, Improved tracing and tracing, Cost efficiency, Competitive advantage, Improved billing.
41
Decision Support Systems (DSS) in Logistics
assist logistics executives in their decision process.
support, but not replace, managerial judgment.
improve the effectiveness of logistics decision.
an integrative system of subsystems that has the purpose of providing information to