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by Laurus Nobilis
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Supply Chain

Supply Chain Management:

Order Processing (E)

Supply Chain Management


What was the evolution history of supply chain management? What are the main components of supply chain? How big is the importance of supply chain integration?


Posted: Jul 2011

Large companies have a huge number of customers. Every of these customers have stock of hundreds or thousands of different products. Customers are ordering products at different cycles in different amounts. So, how can company keep all of this information correct? The answer fro this question is effective order processing. The DIFOTAI greatly depends on correct invoicing.
Supply Chain Management

Order processing is related with three main components of the supply chain: manufacturers, distributors, and retailers. The retailers are placing orders, manufacturers and distributors work in collaboration with one another in order to fulfill these orders.

Order processing involves the following steps:

  • Customer is placing order

  • Order is received by manufacturer

  • Order is processed

  • Credit checked ( credit department ) and verified

  • Order is picked and loaded to truck

  • Order is shipped to the customer

  • Order is received by customer and added to the customer's inventory

Order Processing

Supply chain management plays a very important role within the company. The supply chain generate most of the costs of the company, due to the width and complexity of the function (manufacturing, warehouse, distribution). Any inefficiency can create tremendous negative impact to the company. On the other hand, good supply chain management can bring huge benefits and competitive advantage to the company.

The order cycle time is the time necessary for order to be fulfilled. Reducing the order cycle time for all order cycle steps can contribute to the effectiveness of the whole supply chain. A customer's order is the trigger for the whole process within the supply chain. Slow and inaccurate ordering processing can impact every segment of the supply chain and result in lost sales, revenue and eventually loss of customers.

The different technologies are used in order processing is Electronic Data Interchange (EDI). This technology is defined by Coyle, Bardi, and Langley (1996) as "The computer-to-computer communication between two or more companies that such companies can use to generate bills of lading, purchase orders, and invoices. It also enables firms to access the information systems of suppliers, customers, and carriers and to determine the up-to-the minute status of inventory, orders, and shipments.” Examples of information transmitted through EDI include bills of lading, purchase orders, invoices, etc. They are process in different enterprise management software, such as SAP. These systems enable the access of companies to the information systems of suppliers, customers, and 3PLs in order to determine current status of inventory, orders, and shipments. These systems eliminate or reduce paperwork, while giving faster and more accurate tracking of status on the order.


Continue Reading:

Overview of Supply Chain Components
Historical Development of Supply Chain
Traditional and Modern View to Supply Chain
Supply Chain Activities
Order Processing
Demand and Supply Planning
Inventory Management
Customer Care
Integrated Supply Chain
Financial Resources
Integration vs. Non-Integration

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