Order fulfillment

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Order fulfillment (in English order fulfillment ) is in the most general sense, a complete process from the point of sale inquiry to the delivery of the product to the customer. Sometimes order fulfillment is used to describe narrower distribution actions or logistics functions, but, in a broader sense, this refers to the way companies respond to customer orders.

Video Order fulfillment

Classification

The first study in determining the order fulfillment strategy was published by Hans Wortmann, and continued by Hal Mather in his discussion of the P: D ratio, where P is defined as the production time, ie how long it takes to produce a product. , and D is the waiting time of the request. D can be seen as:

1. Waiting time quoted by company to customer
2. The waiting time the customer wants is
3. Competitive wait time

Based on comparisons of P and D, firms have several basic strategic order fulfillment options:

• Engineer-to-order (ETO) - (D & gt; P) Here, the product is designed and built to customer specifications; this approach is most common for large construction projects and one-time products, such as Formula 1 cars.
• Build-to-order (BTO); syn: Make-to-Order (MTO) - (D & gt; P) Here, the product is based on standard design, but the component production and manufacture of the final product is related to the order placed by the end customer specification; this strategy is typical for motor vehicles and high-end aircraft.
• Assemble-to-order (ATO); syn: Assemble-to-request - (D & lt; P) Here, the product is built to customer specifications from the stock of existing components. This assumes a modular product architecture that allows for the final product to be configured in this way; a common example for this approach is Dell's approach to customizing its computers.
• Make-to-stock (MTS); syn: Build-to-Forecast (BTF) - (D = 0) Here, the product builds on sales forecasts, and is sold to customers from the stock of finished goods; This approach is common in the wholesale and retail sectors.
• Digital copy (DC) - (D = 0, P = 0) Where product is a digital asset and inventory is maintained with a single digital master. Copies are made on demand, downloaded, and stored on customer storage devices, such as research papers.

Maps Order fulfillment

Process

In a broader sense, the possible processes in a logistic-production system are:

1. Product requests - Initial queries on bidding, website visits, catalog requests
2. Sales quote - Budget or availability quote
3. Order configuration - Where order items need option selection or command line must be compatible with each other
4. Order order - Placement of a formal order or closing of a transaction (issued by Customer of Purchase Order)
5. Confirmation of order/Confirmation - Confirm that order has been ordered and/or received
6. Invoices/billing - Presentation of billing/commercial bill to customers
7. Order source/Planning - Specify the source/location of the items to be sent
8. Order changes - Order changes, if required
9. Order processing - The step in which the distribution center or warehouse is responsible for filling orders (receiving and stock inventory, selecting, packing, and dispatching orders).
10. Shipping - Delivery and delivery of goods
11. Track and track - Specify the location of current and previous items during transit
12. Shipping - Delivery of goods to recipient of goods/customer
13. Completion - Payment of fees for goods/services/shipments
14. Returns - If items are unacceptable/not required

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The importance of strategy

The order fulfillment strategy also determines the de-coupling point in the supply chain, which describes the point in the system where the "push" (or driven by forecast) and "drag" (or demand-driven-see Demand Chain Management) elements of the supply chain meet. The point of separation is always the necessary inventory buffer to meet the difference between the estimated sales and the actual demand (i.e., the estimation error). Typically, the higher the P: D ratio, the more companies rely on estimates and inventory. Hal Mather suggests three ways to overcome this "planning dilemma":

1. Increase the approximate accuracy
2. Provide flexibility
3. Create a process to identify forecast errors and quickly improve production planning

It has become increasingly important to move the de-coupling point in the supply chain to minimize dependence on forecasts and to maximize reactionary or demand-driven supply chain elements. The initiative in this supply chain distribution element is consistent with Toyota's Just-in-time initiative pioneered by Toyota.

Order fulfillment strategies also have strong implications on how companies adapt their products and handle product variations. Strategies that can be used to reduce the impact of various products include modularity, option bundling, late configuration, and build for ordering (BTO) strategies - all of which are commonly referred to as mass customization strategies. Decoupling points can place a stronger emphasis on the supply chain based on the process as well as the nature of the supply chain configuration.

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References

Source of the article : Wikipedia