Logistics- Chapter 7- Demand Management, Order Management and Customer Service

demand management
the creation across the supply chain and its markets of a coordinated flow of demand
-demand (sale) forecasting- project future demand
make to stock
when finished goods are produced prior to receiving a custom order
make to order
when finished goods are produced after receiving a customer order
three types of demand forecasting models
1. judgmental
2. time series- simple moving averages and weighted moving averages
3. cause and effect
judgmental forecasting
-uses judgment or intuition and is preferred where there is limited or no historical data
-used with new product introduction
-uses surveys and analog time –> similar item compares
time series
-future demand is solely dependent on past demand
simple weighted average
sum demand across different time periods and divide by number of time periods
weight moving average
recent upturns or downturns in demand
cause and effect (associative) forecasting
assumes one or more factors are related to demand and the relationship between cause and effect can estimate future demand
forecasting accuracy
relationship between actual and forecasted demand
CPFR (collaborative planning, forecasting, and replenishing)
supply chain partners share planning and forecasting data to better match up supply and demand
-not all have been successful
-significant challenges associated with getting supply chain partners to share relevant data to develop forecast
-emphasis on computer software
Order Management
various activities associated with order cycle
order cycle
when customer places order and when order is received
order to cash cycle
length of time it takes organization to receive payment for an order
-cycle time variability and advances in information systems affect this
order transmittal
when customer places an order until seller receives order
five forms: in person, telephone, by mail, by fax machine and electronically
order processing
time from when seller receives order until an appropriate location (such as warehouse) is authorized to fill the order
order triage
classifying orders according to reestablished guidelines so company can prioritize how orders should be filled
order picking and assembly
all activities from when appropriate location is authorized to fill order until goods are loaded aboard outbound carrier
voice based order picking
use of speech to guide order picking activities
pick-to-light technology
orders to be picked are identified by lights placed on shelve’s racks
order delivery
time from when transportation carrier picks up shipment until received by customer
customer service
ability of logistics management to satisfy users in terms of time, dependability, communications and convenience
order fill rate
percentage of orders that can be completely and immediately filled from existing stock- one way of measuring completeness of delivery
multichannel marketing systems
separate marketing channels to serve customers
ex: buy online, pick up in store
process that continually identifies, understands and adapts outstanding processes found inside and outside organization
performance benchmarking
compares quantitative performance
process benchmarking
qualitative in nature and compares specific processes
customer profitability analysis (CPA)
allocation of revenues and costs to customer segments or individual customers to calculate the profitability of segments or customers
-uses grouping
-ABC analysis (high rev/high costs, high rev/low costs, etc)
service recovery
a process for returning a customer to state of satisfaction after a service or product has failed expectations