DHL Logbook - in cooperation with Technical University Darmstadt

Order-processing tasks Information flow from the order to delivery

An order forms the basis for the information flow in a logistics system. It has three principal functions - it creates a flow of information that precedes the goods, accompanies them and follows them. The tasks of order processing are divided into six phases: order transmission, preparation, routing, picking, shipment and invoicing

Order processing tasks

The order and its impact

The transmission of the customers order triggers the logistics processes within the company. On the information-flow level, order processing addresses the handling and monitoring of an order - from the time it is placed by the customer to the delivery of the shipment documents and invoice to the customer. The time required for order processing makes up a substantial amount of the total delivery time .

Order transmission
Order transmission can be done by mail, fax, telephone, e-mail or electronic data exchange (web-)EDI . To avoid uneven capacity use of a logistics system, the appropriate means of transmission should be selected in each case [1].

Preparation
Preparation adjusts the order to meet internal company requirements and integrates the order into the logistics systems planning. This includes obtaining missing information, and checking pricing conditions, delivery conditions and customer creditworthiness as well as the availability of the material in the warehouse [1].

Routing
Order preparation is usually followed by order routing, a process that includes order confirmation and the generation of internal job orders - manually, mechanically or electronically. For example, a delivery notification containing all related shipping documents is prepared and tells the storage point to process the shipment. As the integration of electronic data processing expands, the routing process is becoming increasingly automated, reducing paperwork associated with the information flow [1].

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Picking
Based on prepared and processed orders, goods are picked in the warehouse. Picking is organized according to factors such as order size, urgency and orders that have to be delivered simultaneously. In this phase, order processing provides information to the warehouse and inventories that can be used for tasks such as management of storage and retrieval equipment or for inventory book keeping [1].

Shipment
Picking is followed by preparation of shipping documents. When options are available, this phase includes selecting the optimal means of transport and route for delivery. This information is closely linked to transportation because both loading and movement of goods are initiated in this phase [1].

Invoicing
Invoicing of orders may be done at various points - either as post-invoicing after shipping has been arranged or as pre-invoicing before or while compilation and shipping are being done. The strength of post-invoicing is that an order can smoothly proceed to the warehouse. The strength of pre-invoicing is that as much paperwork as possible can be completed in one phase [1].

Functions of order processing

Order processing serves to plan, manage and monitor the flow of goods. This requires an information flow that precedes, accompanies and follows the flow of goods.

Advance information flow

Once the customer has placed his order, the manufacturer or retailer sends the customer an order confirmation specifying the scheduled delivery time. All parties involved in the flow of goods also receive prompt notification about the scheduled delivery. As a result, these parties have the time they need to plan and schedule, two necessary conditions for optimally executing the flow of goods in terms of costs and services [1].

Accompanying information flow

The information flow that accompanies the flow of goods is designed to provide all parties with operational information needed on site to carry out transport, handling and storage activities. This information includes proper handling of hazardous goods. In addition, tracking of the flow of goods through the logistics network is to be supported. An RFID tag, for example, can be used in the information flow accompanying the flow of goods. A special sensor monitors and documents the temperature of the shipment throughout the transport. The measured data are available at each monitoring point, a feature that enables the shipper, recipient and controller to continually check the condition of the products. This is especially important for pharmaceutical products like vaccines whose effectiveness can

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be harmed by temperature fluctuations outside the recommended range [1].

Follow-up information flow

The information flow that follows the flow of goods consists of information that is available only after the flow of goods has been completed. A case in point is an invoice that the recipient receives a few days after a delivery. However, information can also flow in the opposite direction of the flow of goods. This involves a status report on the execution of the order - including information that is reported to the dispatching point about matters such as the time when the flow of goods passed critical stations in the transport chain . These stations can include borders in international shipments. This information is also part of the follow-up information flow [1].

Recommended reading
Strategic Logistics Management | Stock / Lambert 2001 Information Logistics in Supply Chain Networks. Concept, Empirical Analysis, and Design | Fricke 2007

References
[1] Logistiksysteme | Pfohl 2004

Related articles
Communication technologies in logistics

URL
http://www.dhldiscoverlogistics.com/cms/en/course/tasks_functions/order_processing/tasks.j sp

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