SCM Customer Service Operations LB 3 The Order Process

Learning Block Objectives Demonstrate knowledge of the overall order management process Understand how order management and order processing are accomplished Recognize how firms track and monitor orders throughout the supply chain Execute the steps in the order fulfillment process Implement key aspects of using different technologies, systems, and tools in the order process Evaluate the impact of effective customer service, especially in issue resolution Create good practices for the order process LO1

Systems and Technologies The order management process starts with customer request/arrival Customers call, write, email, or ask-in-person questions regarding the following: Product specifications Price Availability Potential discounts LO1

Order Management Systems (OMS) OMS supports the order process through automation OMS provides constantly updated information on: Inventory Vendor database Customer database Database of customer refunds and returns Information about billing and payments Order processing records General ledger information Quality OMS improves sales visibility, better customer relations, and efficient order processing with minimal delays and backorders LO1

Ecommerce Order Management E-commerce involves selling and buying goods and services using the internet to transmit information and transfer funds E-commerce and retail OMS help companies: Improve order processing Track inventory Sell online Most online retail businesses have some kind of OMS LO2

Order Management Technology Technology supports the entire order process, ensure effective and efficient return process The following technologies support the order management process: Telephone, Fax, Mail Internet Electronic Data Interchange (EDI) Barcoding Point of Sale (POS) technology OMS LO2

Order Management Technology Internet - Used for placing & tracking orders. Its use varies based on industry, products, and services EDI – Electronic Data Interchange – Direct exchange of information between computers EDI has replaced faxing and mailing. Examples of EDI transactions include: Buying company transmits order specifications to a seller Selling company transmits order invoice information to a buying company, e.g. cost of payment terms LO3

Barcoding Barcodes provide information in visual patterns that machines can read Barcodes are used throughout the supply chain for: Vehicle manufacturing Document tracking Time control Security access LO4

Point of Sale (POS) POS or checkout is where sales transactions are completed Businesses use Weigh scales Scanners Electronic cash registers with this technology Information from the POS appears on a screen at the register and print out receipt Modern POS systems updates inventory immediately LO4

Customer Orders Customer order process begins when customer interacts with a retailer or wholesaler Key steps in the customer order process are: Customer request/arrival Customer order entry Customer order fulfillment Customer order receipt Customer order invoice LO5

Customer Request/Arrival B2C – Order process starts when customer arrives. Customer service focuses on product selection…variety, prices, specifications. Same process for phone or website inquiries B2B – The order process starts with a sales call or site visit Customer may also access supplier’s website LO5

Customer Order Entry Involves customer informing retailers and suppliers of goods about the products they wish to purchase The main aim of the order entry process is to ensure accuracy, timeliness, and clear communication throughout the supply chain Customer Order Fulfillment includes the steps in ensuring customers receive: The correct products In the right quantities At the scheduled time At an appropriate level of quality

Customer Order Fulfillment Order fulfillment includes Entering orders Filling orders Invoicing Shipping Tracking Handling returns Providing after-sale services

Customer Order Receipt Involves customers receiving and accepting orders Customers check product quantity and quality If product is deficient, supplier is notified and payment withheld When corrective action is taken, customer confirm receipt

Customer Order Invoices (B2C) When customers place an order, they receive an invoice When orders are shipped to customers, they are accompanied with an invoice which states: The amount owed and payment terms The number of days customers have to pay the invoice Any discounts for paying early Penalties for late payment Form of payment required

Customer Order Invoices (B2B) Companies use Purchasing Cards (Pcards). Pcards are company charge cards used to purchase goods and services without using traditional purchasing processes and eliminate the need to issue invoices Used for goods and services with low product value

Order Tracking and Monitoring It is the responsibility of the company receiving the order to ensure they are filled on time, in full and at the highest quality Steps to fulfilling customer orders: Customer initiates order Orders are validated for correctness Orders are entered in the system Inventory management confirms availability Picking slips are initiated See Page 34

Customer Service Representatives (CSR) CSR – responsible for order tracking and management Correct issues in the order process as they arise These issues may require: Returning orders Refunding customer fees Replacing shipments Expediting shipments for delayed items

Order Process Improvements and Metrics Successful companies in order fulfillment minimize activities that are wasteful and add little or no value Information Systems & Order Fulfillment Technology supports order fulfillment by providing record integrity Record integrity ensures that the amount of material on hand equals the amount of material recorded in the computer system

Order Fulfillment Performance Metrics Perfect order is delivering the product to the right place, at the right time, in the right condition, in the right package, in the right quantity, with the right documentation and the right invoice Indicators which provide guidance on fulfilling the perfect order are: Order Fill Rate, Order Cycle Time, On-time Delivery, Inventory Accuracy Indicators, and Order-to-cash cycle time

Metrics: Key Performance Indicators (KPI’s) Metrics should focus on customer needs and expectations Order-picking errors Product shipping errors Standard or planned order cycle time Average time to complete an order Number of orders returned Order costs

Best Practices in Order Management OMS can reduce cost and improve customer satisfaction. An effective OMS speeds up the order & fulfillment process. Best practices in order management include: Communication with customers Consolidation of orders Inventory Management Automation of the process