PurchasingandordermanagementCustomersMaterialsflowSuppliersProcurementOperationsDistributionRequirementsinformationflowInboundlogisticsOutboundlogisticsPurchasingandordermanagementTheobjectiveofpurchasingis: tosecureoptimalsupplierperformance withrespecttooptimumquality timelydelivery minimumcosts.Purchase,procure,source,buy purchasingmanager/chiefbuyerSituationswhichcangiverisetointer-departmentalconflictsRelationshipswithotherfunctionsProductioncontrolPhysicaldistributionReceivingandstoresFinanceDesignengineeringIndustrialengineeringThepurchasingprocessRecognizeaneedSelectsuppliersIssuetheorderTrackandreceivetheorderOtherimportantissuesCentralizedanddecentralizedpurchasingDecision-makingastomakingorbuying (corecompetency)SupplierrelationshipSupplierselectionOrdermanagementOrdercycleSeller:thetimewhenanorderisreceivedfromacustomertowhenthegoodsarriveatthecustomer’sreceivingdock.Buyer:fromwhentheorderissentouttowhenthegoodsarereceived.Theshorterandmoreconsistenttheordercycleis,thelessinventoryisneededbyone’scustomers.SalesforecastingThereisalinkbetweenordermanagementandsalesforecasting.Afirmdoesnotsimplywaitfororderstoarrive.Forecastsaremadeofsalesandinventorythatmustbestockedsothatthefirmcanfilltheordersinasatisfactorymanner.OrdermanagementOrderplanningOrdertransmittalOrderprocessingOrderpickingandassemblyOrderdeliveryOrderplanningTheproblemofbunchinghappenswhenahighpercentageofcustomersmaketheirordersatthesametime.Ifcustomers’orderingschedulescanbeinfluenced,afirmcanbalancethemoutandminimizethepeaksandvalleysoftheworkloads.3techniquesoforderplanningUsefield(outside)salespeoplewhotakeorderwhentheycalloncustomersUsephone(inside)salespeopleOfferasubstantialpricediscounttocustomerswhoplaceordersoncertaindates.OrdertransmittalPhoneorfaxScannersandbarcodes(pharmacy)POSsystems(retailchains)InternetOrderprocessingstepsOrderinformationischeckedforcompletenessandaccuracyAcreditcheckismadebythecreditdepartmentTheorderisenteredintothesystem(orderentry)ThemarketingdeptcreditsthesalespersonwithsalesOrderprocessingsteps5.Theaccountingdeptrecordsthetransaction6.Theinventorydeptlocatesthewarehouseclosesttothecustomer,advisesittopicktheshipment,andupdatesthefirm’smasterinventorycontrols.7.Thetransportationdeptarrangesfortheshipment’stransportationfromtheshippingdocktothebuyer.OrderpickingandassemblyItstartswithproducingadocumenttellingaspecificwarehousetoassembleagivenorderforacustomer.Anorderpickinglist,indicatingwhichitemsaretobeassembled,isgiventoawarehouseemployee.RefinementwithcomputersOrderpickingandassemblyAnexample Duringthepeakofshippingseason,60orderpickersselectfrom13,000productsfrom50,000-square-footpickingareaandcanprocessover33,000ordersperday.Paperles