3. Order filling.

Order filling is represented by the physical activities required to (1) acquire the items through stock retrieval, production, or purchasing; (2) pack the items for shipment; (3) schedule the shipment for delivery; and (4) prepare the shipping documentation. A number of these activities may take place in parallel with those of order entry, thus compressing processing time.

Setting order-filling priorities and the associated procedures affect the total order cycle time for individual orders. Too often, firms have not established any for­malized rules by which orders are to be entered and dealt with during the initial stages of order filling. One company experienced significant delays in filling impor­tant customer orders when order clerks, during busy periods, would handle the less-complicated orders first. Priorities for processing orders may affect the speed with which all orders are processed or the speed with which the more important orders are handled. Some alternative priority rules might be the following:

1. First-received, first-processed

2. Shortest processing time

3. Specified priority number

4. Smaller, less-complicated orders first

5. Earliest promised delivery date

6. Orders having the least time before promised delivery date

Selection of a particular rule depends on such criteria as fairness to all customers/ the differentiated importance among orders, and the overall speed of processing that can be achieved.

The process of order filling, either from available stock or from production, adds to the order cycle time in direct proportion to the time required for order picking, packing, or production. At times the order cycle time is extended by split-order pro­cessing or freight consolidation.

When product is not immediately available for order filling, a split order may occur. For stocked products, there is a reasonably high probability of incomplete order filling occurring, even when stocking levels are quite high. Therefore, partially filling the order from a backup source for the product is more likely than we might first think. As a result, additional order-processing time and procedures will be needed to complete the order.

Split deliveries and a large portion of any additional order information handling time can be avoided by simply holding the order until replenishment stocks for the out-of-stock items are available. This may adversely affect customer service to the point of being unacceptable. Therefore, the decision-making problem is one of trad­ing off the added costs of the increased order information handling and the trans­portation costs with the benefits of maintaining the desired service level.

The decision to hold orders rather than fill and ship them immediately, for con­solidating the order weight into larger but lower per-unit transport cost loads, does require more elaborate order-processing procedures. Increased complexity is a con­sequence since these procedures must be tied into delivery scheduling to achieve an overall improvement in order processing and delivery efficiency.