Supply Chain and Order Fulfillment Solutions
The minute a customer places an order, the order fulfillment process begins, and soon after that point the supply chain becomes involved in the sourcing, transformation, storage, and delivery of that product, either to an end customer or to a distribution warehouse. In between that first step and the delivery of goods, a great many activities and processes have to happen smoothly and efficiently, or there could be problems with delivering a high quality product to the destination, at the appointed time.
Order Fulfillment Options
Most manufacturing companies adopt either a single methodology for order fulfillment, or some kind of hybrid system which is made necessary by the way customer demand comes in. Here are the basic order fulfillment options, with a brief description of what they are best suited for:
- Make-to-stock: products are built to a level that is based on forecasting, and forecasting is largely based on historical demand. Customers are sold product which comes directly from warehoused stock.
- Make-to-order – products are based on a design which is standard, but final assembly is not done until customer demand with specifications is triggered.
- Assemble-to-order – products are built from existing components, based on customer demand.
- Engineer-to-order – products are completely designed and manufactured according to customer specifications.
Order Fulfillment Processes
The actual processes involved in order fulfillment include all of the following, and sometimes some additional steps which need to be incorporated:
- Sales quote – a customer service rep will quote a specific date on which the order can be delivered to the customer, based on availability
- Order booking/acknowledgment – the formal placement of an order
- Invoicing – customer is billed for the order
- Sourcing – planning for how the customer order goods will be acquired
- Order changes – can change quantities or cancel the order altogether
- Shipping – goods are transported to customer destination
- Delivery – customer receives in the ordered goods.
Supply Chain Organizations
The organizations involved in a supply chain are all those which must contribute to supplying materials needed for manufacture, e.g. raw material vendors, transporting goods to a destination, and either selling those goods from a retail outlet, and then storing them in a warehouse or distribution center. The most interesting aspect of a supply chain however, is how the best ones pool their efforts to form a mutually-supportive network, in order to gain efficiencies, and to provide the best service to end customers.
Supply chain companies tend to be tightly-knit groups, with partnerships formed, and either formal or informal agreements made for the benefit of all within the group. In some cases, upper level organizations have contractual agreements with lower-level suppliers or contractors to perform services or supply specific components. The more cooperation there is between supply chain member organizations, the better it is for all members, and the better it is for the customer, who sees the end result as a high-quality product, delivered on time, and with outstanding customer service.