Term Paper on "Distributed Order Management Systems"

Term Paper 11 pages (4856 words) Sources: 1+

[EXCERPT] . . . .

Management

Distributed Order Management Systems

Theoretical or Conceptual framework

Questions addressed

Data analysis, discussion and results

Including discussion of any limitation(s))

DDSN Characteristics

SPSS Regression Statistics on DOM Investment by Velocity of Pricing

Common Order Management Module Functions

Overlaying Business Process steps with order management components

Distributed Order Management Hierarchical Model

Distributed Order Management (DOM) Conceptual Framework

Distributed Order Management (DOM) Conceptual Framework Specifics

ATP

Available to Promise; is a measure of a supply chain's ability to report back when a product can be built

APS

Automated Planning and Schedule - a type of application used for planning production.

BTO

Build-to-order; a product strategy aimed at creating customized products where 30% of product content is custom. Appendix IV defines this concept graphically.

Configurator software application that is typically included in more complex ordering systems that is a constraint engine that makes it possible to create customized products automatically, based on selections from users configuring products on the website for potential purchase.

DOM

Distributed Order Management

Electronic Data Interchange

ERP

Enterprise Resource Planning System. Typically used for managing the production of products in factories.

ETO

Engineer-to-order; a product strategy aimed at creating customized products where 70% of product content is custom. Appendix IV defines this concept graphically.

MTS

Make-to-stock, which refers to products built specifically to mass customer requirements and are the majority of a company's inventory

OMS

Order Management System

Quote-to-order

The process that encompasses quoting through order fulfillment. This quote-to-order process is typically combined with BTO and ETO processes to create quotes for customized products tailored to specific user's needs. This is particularly relevant for Blueberry as they pursue the launch of new PDAs customizable by users online.

VMI

Vendor Managed Inventory, which is the coordination of inventory demand across a supplier and distributor most often - it is a method of ensuring lean manufacturing efficiencies

Part 1: Executive Summary

Order management functionality was first added to manufacturing resource planning (MRP II) systems in the form of order entry modules. As its name indicates, this module was designed to enter customer demand into the system to close the materials requirements planning (MRP) netting loop. Generally, order entry modules were designed for manufacturing, not for customer service support. As a result, most early order entry modules were cumbersome. These modules enforced a rigid process that required order numbers, customer IDs, item numbers, address IDs, remit-to addresses, etc. all to be predefined before an order could be entered. Although it inflicted all of these prerequisites on the customer order entry process in the name of completeness and integrity, the module was unable to provide customer service reps any real support for product information, pricing, or delivery dates. As if this was not bad enough, most order entry modules were created without any specific vertical industry application in mind. Over the last 15 years, software developers have attempted to add pieces of functionality to address a wider range of industry-specific issues. This has resulted in bloated and complex enterprise resource planning (ERP) order management modules that are still far from becoming the hub of the order management and customer service process. Nevertheless, the demand drivers for distributed order management systems continue to significantly expand the market for distributed order management systems, as is evidenced in Appendix a of this document, Global Order Management Market Sizing.

Figure 1 provides a graphical description of the order management function within manufacturing companies in the form of common order management module functions. Was is very clear from this graphical description is the pervasive need for integration between order management modules and the many systems it relies on for completing its critical tasks. The intent of this paper is to provide a thorough analysis of distributed order management systems, the key influences impacting them today, and the growth of the market overall.

The intent of this research is to first define how distributed order management systems are progressing from being ERP centric and more customer-focused. The unresolved question however in current research is the level of adoption for distributed order management systems across key industries and what the level of adoption translates into for transaction velocities. The major benefit of knowing if and by how much distributed order management systems increase transaction velocities has a direct impact on profitability. This research will deliver the size of the distributed order management marketplace globally, and also provide benchmarks of transaction velocities of distributed order management systems.

Part 2: Introduction and Background

An Order Management Revolution is Underway

If there is any one ERP module that is a victim of evolutionary functionality bloat, it is the order entry module. As mentioned earlier, it was never really designed to meet the needs of the actual users, usually customer service personnel. Five to ten years of scattered functional enhancements will add further complications:

Numerous order entry forms

Hundreds of confusing control fields

Pricing matrices that are virtually incomprehensible and impossible to maintain

An order entry process that is disconnected from many other critical supply chain processes such as planning, warehousing, and distribution

Graphical user interfaces (GUIs) that do not look any more like customer order entry forms than their character-based, green screen predecessors

So what is the answer? It may be that the order entry module needs to undergo the same level of revolutionary change as the MRP, capacity requirements planning (CRP), and master production scheduling (MPS) modules are currently undergoing as a result of advanced planning and scheduling (APS). APS is redefining the planning process to match the dynamic requirements of today's manufacturing environment. From the design perspective, APS started from a clean sheet and leveraged current technology to develop planning software better suited to meet a wide variety of real-world requirements.

Order Management Is Not a Customer Order Capture System; it Is a Synchronization System

The many research sources consulted to complete this report share a common theme, which is the progression order management system early adopters make from order capture first, then into synchronizing all their warehouses, distribution centers, and fulfillment functions globally. The order management function within most ERP systems, however, does not provide support for many of the requirements of these extended global fulfillment functions, which, in addition to order capture and processing, might include the following:

Operating 24-hour call centers

Distributing product information or discussing product features and capabilities

Using and understanding product catalogs

Performing price lookups

Supporting ongoing problem resolution dialogs with customers

Identifying spares and service parts

Reacting to special customer requests

In ERP systems, the customer service capability revolves around the order. Without first entering an order, there is usually little or no access to product information, prices, or a placeholder for customer requests. This is one of the primary market factors influencing the growth of distributed order management systems. Figure 2 shows the intersection of customer support, collaborative planning and replenishment, order management, order fulfillment, and order entry on the business process phases that distributed order management needs to successfully support.

Figure 2:

Overlaying business process steps with order management system components

While these process steps vary by industry, they do provide a common basis of comparison across industries. Appendix B, Distribution of Order Management Systems by Industry, provides a useful glimpse into the specifics of how each industry adopts distributed order management best practices.

Part 3: Literature Review

In completing this literature review, it became apparent of how intertwined order management and the broader aspects of supply chain management have become. Inherent in this literature review is the role of the supply chain in influencing the synchronization of orders throughout multiple distribution centers, fulfillment locations, warehouses, and secondary channel partners. A high percentage of companies -- around 30% -- live in a world based on the complexity of the demand chain and diversity of supply chain relationships. In the past, companies have organized the business structure around channels/segments, products/supply chains, and geographies to minimize complexity. However, the move to global processes and the demand from customers to have a more unified relationship is forcing companies to rethink the systems approach and organization alignment. The approach requires a new strategy, and ERP systems will provide local execution, but not the global integration and coordination. The approach is not about functionality; it is about achieving process flexibility and data rigidity to support a distributed process.

All of these factors are propelling distributed order management as one of the top priorities for manufacturing and service companies alike.

Systems architectures must be redeployed to deliver on an integrated order management strategy

While a single instance ERP system may not be the long-term solution to the extended order management vision, it will continue to be a critical building block, providing much of the master data and transaction processing. The question is not whether there is a role for ERP systems in the order management process, but rather is it the architecture to provide the integration and coordination across the extended internal and external network of suppliers, buyers, and customers. The monolithic design of all… READ MORE

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