need 3 pages

Enhanced Order and Demand Management Systems

Prateek Gupto

Harrisburg University

My current CPT assignment is with the Global IT consulting firm, HCL Americas Inc. HCL America was established in 1989, headquartered in Sunnyvale, California. Based on a in depth assessment of the market and customer insights, HCL follows comprehensive services and portfolio that establishes it as one of the most reliable IT companies in the US.

“HCL uses its Integrated Infrastructure and Operations Management (IOMC) model to improve the supply chain and logistics for its customers which significantly reduces the vendor management overheads via improved strategic partnerships, and thus, greatly increases IT operations through the induction of frameworks and technology solutions, metrics that are constrained to Service Level Agreements and last but not the least a service request automation and support. Through HCL’s “managed services” model, operations became more flexible and agile, helping the company optimize costs and increase profitability.” (Nowicki M, 2016)

Highlights of Proposed Research.

The thesis will focus mainly on why an advanced and improved Order and Purchase Management framework is required from a supply chain standpoint. The thesis will explain the complexities which revolves around purchase and order management system specially when the orders are in bulk and the quantities vary in thousands or more. So, inventory management is something which I will be primarily focusing on as it is essential for supporting other domains of the supply chain, including demand and supply planning, order promising and order fulfillment. Anticipating and managing exceptions to order fulfillment is made possible by having a comprehensive and accurate visibility to inventory.

I have been working as a SC-PMO consultant focusing on the client’s business strategy, objectives, processes and operations in Retail/ Supply Chain space. Thus, providing the clients to incorporate advanced, automated and streamlined processes in Supply Chain - Order and Delivery Management to maximize their customer satisfaction and help them in optimal use of their inventory.

As a supply chain delivery and process management specialist, I need to understand the business objectives clearly and work on such supply chain systems, conduct data scrubbing and reporting (mostly generating reports and automating the sheets to reduce manual effort), develop workflows and implement and improve centralized process and monitor the End-to-End impact.

Information Systems play a crucial role in Supply Chain system. It webs a network of supply chain networks in which the firms use to sell, distribute and acquire goods and products anywhere in the world. Information system helps to create meaningful relation between the core flow functions that contains buying, manufacturing, delivering and returning to the planning aspects such as customer relation, post-sale support, managing orders and delivery, and new product launches and design. This is widely used in service sector that includes consulting, retailing, and health care industries and also by manufacturing sector that includes aerospace, pharma, electronics, electrical, chemical, auto, food, petroleum, computers and consumer products industries

Background

The Supply Chain system covers six areas: Plan, Source, Make, Deliver, Return, Enable.  Any given business, and even a specific supply chain within a business, will require support from products in each of the areas, although the precise configuration will vary from business to business and from supply chain to supply chain.  

The inventory is managed efficiently by controlling the transfer in of units to prevent overstocking, or to prevent inventory from reaching low levels that could affect the operations of the business. Various aspects of inventory require attention to manage inventory efficiently, including processing lead times, buffer stock, finished goods, and refurbished goods. (Yang Liu, 2016)

In the professional environment, the Retail Operations team sells hardware devices to its consumers and retailers all over the country and world. Now, the consumers want their orders to be delivered as soon as possible, and this puts a premium on the company’s ability to locate, manage, and ship its inventory with a quick turnaround time. When the orders are at bulk, one should have the ability to expose the right Order and Logistics metrics and reports that highlight potential issues and risks to the business. Along with that, an interface - that allows for the ability for end users to create their own reports and dashboards facilitating a quick navigation and “drill-downs” to investigate and identify problem areas. Reporting of Freight and related accessory charges by specified dimensions with the ability for partners to edit exceptions as needed to categorize and measure order and shipment exceptions correctly. This affects several internal groups within the supply chain, including Retail and store Operations, Logistics, Marketing and Finance. Thus, leads to the efficient utilization of scarce resources - human capital and inventory - enabled by automated processes. (Hakan Karaosman, 2015)

Taking a step back, the Supply Chain Engineering can focus on a system which is an integrated, automated Inventory and Order management system that will give Retail Operations the extra boost it needs to maximize customer satisfaction. (Tan KC, 1998)Encircling inventory management, order management, and order promising, the system can offer a diverse solution by making optimal use of available inventory across all regions and retail channels.

Our main goal here will be to reduce stock-outs, upsurge customer satisfaction while reducing inventory on hand, and enable the business to scale to sell a larger range of devices in a greater set of regions. The system will provide key capabilities in setting safety stock, setting allocation rules across channels (B2B, B2C) and customers (BestBuy, Amazon, Marketing giveaways), setting up customer priorities etc. And also, surfacing exceptions about inventory accuracy, order fulfillment, on-time SLA, etc.

Following definitions and terms will commonly be used in this research paper:

Order Management - The collection of actions and processes for capturing orders, promising, change management and successful fulfillment of customer orders according to business strategies (e.g. direct to consumer, business to business).

Inventory - The supervision of non-capitalized assets and stock items and the tracking of goods from suppliers/manufacturers to warehouses and point of sale.

Inventory Management - Keeping a detailed record of each new or returned product as it enters or leaves any node in the supply chain system.

Logistics -   Logistics refers to the movement of materials between the various locations and parties in our supply chain network.

Logistics System -  The systems that create and deliver execution instructions to the partners and then monitors the network and resolves problems. These overall focus is on the “7 rights” (right product, customer/supplier/etc., quantity, condition, place, time, and cost).

Warehouse Management - A warehouse management system allows a warehouse (or other facility) to receive inventory, put it on a shelf, track its location, pick it, pack it and ship it back out.  It also sends out information about its current state and transactions and receives instructions.

Macros This is primarily the recording of a series of tasks. This is the simplest form of automation and show the software all the steps you follow to get something done, and the software will follow along. Macros help in saving hours of time by automating repetitive tasks.

Problem Statement

Manual effort and lack of visibility are frequent problems throughout the supply chain space. For the short term, the manual work means redundant latency and the potential for errors. Longer term, our reliance on manual effort will prevent the businesses from scaling, either because of direct headcount cost or because the coordination challenges will become so severe that operations will possibly break down.

As for visibility, the businesses can’t easily see or know what’s going on.  For instance, it’s too hard to determine which inventory is physically present in which locations or which shipments are showing up on time. (Cigolini R, 2004)

Problem Justification

Today, we face numerous challenges that inhibit our ability to execute order management that contribute to supply chain inefficiencies and higher order fulfillment costs. The order management processes are very manual, fragmented across multiple disparate. It takes several human touch points in multiple systems to provide customers accurate promise dates or answer basic customer queries like “where is my order?”. Further, we also lack the key core capabilities to support fast growing business needs across various process areas. This has forced to switch and opt for alternate inefficient processes to support their immediate needs. For example, managing Bundles, orders, Vendor Consigned Inventory, etc.

Now, the inventory is tracked in as the source of truth, but additional systems are used to track specific channels of inventory. Keeping the systems in sync has been a manual process that can lead to discrepancies in on-hand values. Inventory inaccuracies can have a major direct impact on the on-time delivery of orders and create a lack of a complete picture. This lack of a complete picture of inventory can inhibit proper resolution of these inventory exceptions. Additionally, visibility to partner inventories is lacking or is provided sporadically, which prevents a fully automated replenishment supply chain. So, to simplify we are looking into a better supply chain system which will help us to manage customer orders in an efficient way, and the process can be used to get much improved reports about inventory, warehouses, shipments, delivery and delivery.

The Supply Chain system covers six areas: Plan, Source, Make, Deliver, Return, Enable.  Any given business, and even a specific supply chain within a business, will require support from products in each of the areas, although the specific configuration will vary from business to business and from supply chain to supply chain. (Wątróbski., Jarosław, 2016)

Key idea here is to provide a point-in-time inventory management system that provides visibility to all inventories and their locations, including transaction history, and discrepancies. Provides an accurate picture of current and future inventory for consumption by users and other products, such as order management and planning. Includes visibility to what is on hand in our warehouses, how much is reserved for shipments, what is pristine versus the damaged stock, what is in-transit between warehouses or from suppliers, extending to how much inventory is at supplier or customer locations. (Cooper, 1997) It accomplishes this by accurately tracking all inflows and outflows in the global supply network, so the inventory balances are kept up to date in real-time and provides a view to expected inventory in the future. The order capturing is again workflow Driven. Thus, order capture and fulfillment process is orchestrated by a workflow, which is determined by configurable business rules based on the order attributes e.g. sales channel, products, order types, fulfillment options (e.g. MTS, MTO, dropship, consignment, prepaid, etc.). The workflow determines and controls the sequence of events that occur in further processing of the specific order: (Gligor, 2014)

· Data Derivations: Based on the customer order, necessary order attributes (e.g. product, customer, pricing details, etc.) are derived by invoking respective APIs.

· Order Validations: Re-validate the checks that were imposed on an order during the Order Capture process to ensure that the order still meets the criteria to be shipped. This is to account for potential changes between the time of order capture and shipping, e.g. whether customer still has sufficient credit to cover the shipment. The specific checks that are applied at the time of release can be configurable and appropriate alerts will be raised for orders that fail the checks The specific validations that are applied per order type are configurable for example, e.g.

· Technical validations are performed to ensure the data integrity e.g. mandatory data elements are included and valid.

· Functional validations: Depending on the configuration, applicable functional checks can be performed (e.g. Customer credit could be checked against Accounts Receivables for B2B customers or Wallet/Credit card for B2C customers). Examples of such checks include: Credit Check, Export Compliance check, etc.

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· Order Promising Request: Order management system will interface with Order Promising with information such as item, request date, quantity, or source warehouse etc. The request will specify any customer or demand specific restrictions (e.g. substitutions allowed, partials allowed, multiple shipments allowed, specific source warehouse etc.) that the Order Promising service will respect in trying to provide the promising response (Gligor, 2014). If demand specific restrictions not provided by OMS (e.g. source WH), the order promising will try to find the best possible source WH and shipping mode which can meet the delivery dates at lowest cost.

· Order Promising Response: Order Promising will return availability information such as quantity available on request date, sourcing warehouse, ship method etc. respecting the demand restrictions provided by OMS. The OMS will use the promising information to schedule and processing the orders.

In case of exceptions i.e. If the order cannot be fulfilled on the requested date, the Order promising will provide earliest available date, partial quantity available on the requested date etc and OMS will decide what specific information to use for processing the orders e.g. split the lines to ship the partial quantity and backorder the remaining or reschedule full order quantity to delivery at later date as suggested by promising service. (Gligor, 2014)

In case, there are any changes on the order attributes which impacts the order commits (e.g. quantity, source warehouse etc.), the order will re-invoke order promising service to reconfirm the order.

In order to proceed further, it is essential to know and understand that how the improved version of supply chain systems will look like and how we will get there and how will we know that we’re making progress?  We want to be focused on output (improving the business), so we need to measure things.  The simple plan would be to identify the key performance indicators by discussing them with the major Supply Chain stakeholders and the gathering the data based on identified metrics.

The Key Performance Indicators (KPI) can be a valuable set of metrics to capture this. The KPI’s that will be helpful can be listed in each of the functional domain below.  

· Lead Time. How much time elapses from a customer ordering something to when they receive it?

· On-Time Delivery to Customers.  What percentage of customer orders arrive on or before the promised delivery date?

· Inventory Turns per Year. Amount sold or capitalized in the previous 12 months divided by the total inventory on hand.

· Total Cost of Quality.  Total amount spent answering customer support cases, building and sending replacement devices, maintaining our fleets, replacing spare parts, discarding bad parts and defective products) divided by (Total sales + Total value capitalized)

· Delivery Cost. (Total cost of Logistics + Total cost of transportation) divided by (Total sales + Total value capitalized)

· Supply Chain Management Cost. Total hours of manual work required to make the supply chain operate divided by (Total sales + Total value capitalized)

· Supply Chain System Satisfaction. Are users who use the systems satisfied?  Are the businesses satisfied with the support they’re getting and metrics that are moving?

Inventory