The coronavirus pandemic has affected virtually every part of the world, adversely impacting businesses of all sizes and the communities in which those businesses operate. Social distancing and other measures to break the virus’ spread is also bringing significant challenges to the front-line workforce in every industry, but particularly in healthcare, retail, and consumer products. To serve both communities and customers effectively in these conditions requires highly coordinated efforts, integrating data across the value chain for timely and effective supply chain decisions. In particular, the focus is on one critical business function, the order fulfillment process.
Organizations are under tremendous pressure to understand and evaluate every detail of their order fulfillment process. Our recommendations are to stay focused on this function by:
- Developing a “virtual command center” with data integration from various operational systems for effective information flow and decision making
- Integrating data from various operational systems, reverse engineering with a “last-mile delivery to shop floor and sourcing”mindset, coordinating supply chain between retailers and manufacturers
- Introducing a real-time view of the data and information across the supply chain is critical to serving customers with the right products at the right time in the right place
- Improving order in-take processes, minimizing or eliminating process inefficiencies
- Processing orders in quickest possible time, anticipating the demand for SKUs by customer (classifying customers into very large, large, medium and small) with the right inventory levels at the right time and the right place
- Securing cost-effective freight shipments from third-party (3PL) and fourth-party logistics (4PL) for timely deliveries and confirmation from clients
- Continuously monitoring the order fulfillment process making real time decisions to improve customer service and transparency of the delivery with anticipated delivery timelines.
Reverse Engineering from “Last-Mile Delivery To Shop Floor/Source” for Predictable Restocking
Reviewing and paying closer attention to delivery times, from the time the order is placed to stocking the shelves, requires both an understanding of the entire supply chain and transparency of the information. Sharing the information with customers on a real-time basis will allow reverse engineer distribution lead times and provide highly predictable restocking of the shelves. It will also provide visibility into “on-time-delivery” metrics, which are monitored very closely to avoid last minute surprises. Core processes of order fulfillment are:
Step 1: Order Intake Management
Order intake management is a complex process for large manufacturing companies serving retail customers nationwide. These complexities are primarily due to:
- Incorrect SKU numbers on purchase orders or EDI orders received from the customers
- Pricing conditions and determination by SKU, customers and regions
- Credit blocks due to the rapid growth of the business and outdated credit monitoring and review processes
- Delivery blocks due to incorrect quantities, pallet sizes, etc.
It is critical to focus on these areas by customer and each purchase order to resolve conflicts and process orders as quickly as possible, clearing the way for subsequent steps of the fulfillment process.
Step 2: Check Product Availability and Coordinate With Production Planning and Sourcing
Most ERP systems will automatically allocate available stock to orders and will update the available to promise (ATP) category. When stock is not available to fulfill an order, the order backlog will be forwarded to the production planning team, who will coordinate and update the master production schedule of back ordered SKUs. This includes:
- Automated outbound delivery confirmation and creation of transfer documents
- Ensuring accurate storage location and picking the quantity and shipping location for warehouse processing
- Identifying sources of materials (ingredients, finished products, etc.) and prioritizing sourcing vendors depending on their past performance and ability to scale to the new situation
The most critical step in this process is to provide accurate delivery confirmation to the warehouse so that team may fulfill backorders and provide communication to retailers.
Step 3: Outbound Delivery and Warehouse Management
Once stock is available to fulfill and completion of ATP, the warehouse will be ready to pick, pack and ship the products. Considering COVID-19 has caused reduced availability of resources at fulfillment and distribution centers, it is critical to prioritize SKUs and customer orders to serve the areas most affected. Possible steps to do this include:
- Coordinating with 3PL freight providers for timely loading and dispatching
- Avoiding wait times at customer distribution centers by reverse calculating the transit period from delivery confirmation date
- Participating in freight auctions securing low cost, off-peak wholesale blocks for cost-effective transportation methods
Step 4: Third-Party Logistics (3PL) and Shipment Delivery Confirmation
Track the shipment route and inform the customer if any unexpected delays are slowing down the shipment or impacting the delivery timelines. Once delivered, process the shipment confirmation notice and calculate on-time delivery performance by customer and by region.
All the above seem to be a straightforward, simple process already in practice at many companies. However, most organizations’ supply chain function is extremely complex with data flowing across multiple systems. These complexities multiply for companies with multiple production facilities, distribution centers and sourcing locations. Data sourcing and processing the transformation from these systems can provide only a limited view of an organization’s order fulfillment processing impacting their ability to serve their customers on time.
A process mining solution, for example, focuses on improvement opportunities, bottlenecks, automation and order management workflow. We often recommend process mining solutions for end-to-end visibility of order fulfillment process performance. As challenges continue to multiply as the supply chain disruptions persist with the ongoing coronavirus crisis, now is an optimum time for companies to build more resilient operational processes that will withstand future disruptions while keeping a laser focus on serving valued customers and communities served.
To learn more about process mining, contact us.
Join our April 14 webinar with Celonis, Applying Digital Tools and Process Analytics to Drive Insight During COVID-19 and Recovery, part of our special, ongoing Enterprise Resilience Webinar Series.
About the Author
Director, Technology Consulting