A REPORT ON

Modes of transportation, transport costing in relation to marketing, carrier liability, intermodal transportation and order processing
SUBJECT Sales and distribution management SUBMITTED BY VAIBHAVI RANDERIA (42) GAUTAM DUA (10) RASHMI GARG (12)

SUBMITTED TO PROF. Lalit Tank

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What is transportation?
Transportation is movement of people and goods from one location to another. Transportation is performed by various modes such as air, rail, road, water, cable, pipelines and space. The field can be divided into infrastructure, vehicles and operations.

Modes of transportation
A mode of transportation is a technological solution that used a fundamentally different vehicle, infrastructure and operations. They are as follows: Human powered Animal powered Air Rail Road Water Pipelines

Human powered
Human powered transport is the transportation of person(s) and/or goods using human muscle-power. Human-powered transport has existed since time immemorial in the form of walking, running and swimming. Modern technology has allowed machines to enhance human-power.

Advantages: 1.Cost-saving, leisure, physical exercise and Environmentalism 2.Useful in underdeveloped or inaccessible regions,
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3. Considered an ideal form of sustainable transportation. Disadvantages: 1.Make transportation slow 2.Transportation of heavy goods, 3.Not suitable for long distances, 4.Most time consuming mode 5. Can be influenced by the environment Examples: Bicycles, hand carts, watercraft rowing.

Animal powered
Animal powered transport is the use of working animals for the movement of people and goods. Humans may ride some of the animals directly, use them as pack animals for carrying goods, or harness them, alone or in teams, to pull sleds or wheeled vehicles. Animals are superior to people in their speed, endurance and carrying capacity; prior to the Industrial Revolution they were used for all and transport impracticable for people, and they remain an important mode of transport in less developed areas of the world. Advantages: 1.Suitable for rural and less developed areas, 2.Economical means of transportation, 3.Require low infrastructure, 4.No fuel expenses, 5.Environmental friendly, 6.Less chances of accidents

Disadvantages: 1.Slow means of transportation,

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2.Not suitable for long distance transportation, 3.Not suitable for transportation of heavy loads, 4.Create problems of cleanliness and sanity in big cities, 5.Cause traffic distortion and accidents in big cities, 6.Considered as outdated mean of transportation, 7. Less reliability. Example: Donkey cart, camels, horses, elephants, Reindeer, pigeon, dogcart etc.

Air
A fixed-wing aircraft, commonly called airplane, is a heavier than aircraft where movement of the air in relation to the wings is used to generate lift. The term is used to distinguish from rotary-wing aircraft, where the movement of the lift surfaces relative to the air generates swift. A gyroplane is both fixed wing and rotary-wing. Fixed- wing aircraft range from small trainers and recreational aircraft to large airliners and military cargo aircraft. Two necessities for aircraft are airflow over the wings for lift, and an area for landing. ADVANTAGES: 1.Quick mean of transportation, 2.Suitable for long distances, 3. Suitable for transport heavy goods. DISADVANTAGES: 1.Not suitable for short distances, 2.Release pollutant like Carbon Dioxide in the environment, 3.High cost, 4.High consumption of fuel, 5.Require special infrastructure,
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6.Very risky in bad weather conditions, 7.High repair and maintenance cost, 8. High chances of technical faults. EXAMPLES: Helicopters, Jet planes, Boeing planes, parachutes, etc.

Rail
Rail transport is where train runs along at nonparallel steel rails, known as a railway or railroad. Alternative methods include monorail and maglev. At rail consists of one or more connected vehicle that runs on the rails. Propulsion is commonly provided by a locomotive, that hauls series of unpowered cars that can carry passengers or freight. The locomotive can be powered by steam, diesel or by electricity. ADVANTAGES: 1.Fast medium of transportation, 2.Suitable for long distances, 3.Economical medium of transportation, 4.Suitable for transportation of heavy goods, 5. Energy efficient mode of transportation. DISADVANTAGES: 1.Requires special infrastructure, 2.Chances of accidents are high, 3.Require high cost, 4. Not flexible mode of transportation. EXAMPLES: Trains, Bullet trains etc.

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Roads
A road is an identifiable route, way or path between two or more places. Roads are typically smoothed, paved, or otherwise prepared to allow easy travel; though they need not be, and historically many roads were simply recognizeable routes without any formal construction or maintenance. ADVANTAGES 1.Provide high flexibility, 2.Allow easy travel, 3.Serve as initial and final stage of freight transport, 4.Most commonly used mode of transportation, 5. Suitable for short and medium distances. DISADVANTAGES 1.Low capacity, 2.High energy and area use, 3.Main source of noise and air pollution, 4. Cause of road accidents. EXAMPLES: Cars, Buses, Trucks, Motor Bikes, Rickshaws etc.

Water
Water transport is the process of transport a watercraft, such as a barge, boat, ship or sailboat, over a body of water, such as a sea, ocean, lake, canal or river. ADVANTAGES: 1.Play major role in the international trade, 2.Effective method of transporting large quantities of non-perishable goods, 3.Less costly than air transportation,

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DISADVANTAGES: 1.Accident can cause water pollution and creating dangers for marine life, 2.Effected by weather conditions, 3.High fuel consumption, 4. Not flexible. EXAMPLES: Jet boats, Ship, sailboat, barge etc.

Pipeline transport
It is the transportation of goods through a pipe. Most commonly, liquid and gases are sent, but pneumatic tubes that transport solid capsules using compressed air have also been used. As for gases and liquids, any chemically stable substance can be sent through a pipeline. Therefore sewage, slurry, water, or even beer pipelines exist but arguably the most valuable are those transporting oil and natural gas.

ADVANTAGES 1.Lower cost of transportation 2.Lower transit losses 3.Lower energy intensiveness 4.Economies of scale 5.Safety and Reliability -minimum disruptions 6.Environment-friendliness 7.Multi-product handling 8.Flexibility 9.Stationary carrier 10.Augmentation at low cost 11.Minimal land costs
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12.Decongestion of surface transport systems DISADVANTAGES Pipelines can be the target of vandalism , saboage, or even terrorist attacks. In war, pipelines are often the target of military attacks, as destruction of pipelines can seriously disrupt enemy logistics.

Transport costing in relation to management

Recall that prices for a supplier are costs for a consumer. At some stage in the supply process a supplier become a consumer to provide some portions of supplied goods and services. Transportation costing and pricing are functions of rules and policies. There are no absolutes or general methods in use for all modes. Costs are functions of 'accounting rules'. The problems of un ambiguous costing increase as the size and age of the entity increases. Mature and large transportation organizations like the railways companies or transportation departments of government present examples of the difficulties of determining costs that are suitable for all uses. The general rule that sunk cost or past cost should not effect decision about the future applies. Only future cost commitments should effect the decisions about future operations. The costs that are suitable for financial purposes may not be suitable for operational management or pricing. Improvements in data collection and analysis can be expected to improve the quality of costing. Improvement in economic and social theory and practice are required to improve pricing. Transport service prices often have little relation to costs in detail. The notion of cost based pricing relies on accurate estimation of the demand and usually requires considerable levels of cost aggregation and redistribution. Prices are usually set to achieve some overall objective in relation to the market for the service that can be provided. Ideally costs tend to be specific to
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particular items of service. Pricing blurs the costs of providing service because one is based on providing the service while the other is based on realizing revenue from the market. Suppliers prices are the consumers costs. In a market based economy it is assumed that the aggregated costs of service will be equaled (or exceeded) by the revenues as represented by the aggregated prices. This may however not be true according to current accounting rules. Sunk costs are committed economic opportunities. These costs are borne by some segment of the socio economic system regardless of the accounting system. They represent lost opportunities. Bankruptcies are a form of redistribution of the differences between accounted costs and revenues. Most transport systems require large amounts of fixed plant and Equipment which results in large sunk costs. When these costs are borne by a supplier who, in the business sense, is isolated from the consumer, the suppliers profit sensitivity to market changes is often very great. The consumers feel little or no responsibility for the costs and the risks are therefore quite high. The record of public (i.e. for hire) transportation operations reflects this phenomenon. Pricing for maximum net return from the market regardless of demand satisfaction becomes the obvious strategy. In the past much effort has been expended to restrain indiscriminate and antisocial use of tactics that result from this strategy. Much of the railway regulation is based on restraining the profits and providing service on unprofitable operation in the name of the public good. If a significant part of the system fixed cost can be transferred to the users, which is the case with private transportation such as automobiles, trucks, etc., then the costs and payoffs are to a larger extent the responsibility of the consumer. The user is then much more responsible for the level of service provided and the potential and assignment of responsibility for individual choice is improved. Under such arrangements it may be assumed that

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the overall system efficiency may be lower, but this may in fact not be so and the users will be afforded better opportunities to optimize their own activities. All transportation pricing and supply strategies result in conflict between various individual users and suppliers. For a particular transport demand, the supply strategy will be indicated by the objective statement of how the various conflicts are to be structured. Many argue that transport benefits (and costs) first of all accrue to the user. These are generally easier to evaluate than the secondary costs and benefits that are also present. Present trends suggest that policies favoring the maximum practical amount of user and supplier freedom are favored. The concept of balanced transportation means that modal selection should be made on the basis of economic efficiency using limited and/or artificial competition as the basic regulatory devices. Attempts at utilizing portions of the consumer surplus to extend supply beyond the apparent breakeven point seem to be responsible for some public transportation policy as well as for some of the concepts associated with the provision of minimum service. The uncertainty of objectives and associated effects adds greatly to the uncertainty which must be recognized in the processes used for selection of transport supply and their results. The basic economic assumptions of informed public and rational decisions on an economic basis seem unable to account for many observed behavioral patterns. The individuals selection of services such as transportation will rarely be made on the basis of such precepts as the common good or even on the basis of lowest apparent individual cost. Much private transport activity such as sightseeing, motor boating, skydiving, etc., is very costly and is only in the common good from the fact that it is consumption. Many apparently different costs, benefits, responsibilities, etc., can be determined for the same action by the preselecting of what is included in the accounting. The most common rationale is based on what are individually significant, internal factors and what is external or not individually significant.
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What is carrier liability?

Air and ocean carriers are normally liable for all damage, delay, and loss of cargo except those arising from act of God, act of the shipper, and inherent nature of the goods from acceptance of cargo through its delivery or release. Air carriers are usually liable under Warsaw convention, and ocean carriers under Hague convention.

Limitations on carrier liability

The carrier is not liable in a claim for loss or damage to articles in the following situations: 1. Change in condition or flavor of perishables, 2. Loss or damage caused by the shipper, including improper packing, 3. Defect or inherent vice of the article, such as susceptibility to atmospheric changes. 4. Insects, moths, vermin, ordinary wear and tear, or gradual deterioration, 5. Mechanical or electrical derangement of musical instruments, electronic components or appliances, if there is no sign of exterior damage, 6. Loss or damage caused as a result of any strike, lockout, labor disturbance, riot, civil commotion, or any act of any person or persons taking part in any such occurrence or disorder, 7. Hostile or warlike action in time of peace or war, 8. Breakage caused by normal handling of china, glassware, bric-a-brac, or other similar items, unless packed by the carrier, and
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9. Liability of carrier for loss or damage shall be subject to your compliance with the rules for filing claims.

Intermodal transportation
The 21st century will see a renewed focus on intermodal freight transportation driven by the changing requirements of global supply chains. Each of the transportation modes (air, inland water, ocean, pipeline, rail, and road) has gone through technological evolution and has functioned separately under a modally based regulatory structure for most of the 20th century. With the development of containerization in the mid-1900s, the reorientation toward deregulation near the end of the century, and a new focus on logistics and global supply chain requirements, the stage is set for continued intermodal transportation growth.

The growth of intermodal freight transportation will be driven and challenged by four factors: (a) Measuring, understanding, and responding to the role of intermodalism in the changing customer requirements and hypercompetition of supply chains in a global marketplace; (b) The need to reliably and flexibly respond to changing customer requirements with seamless and integrated coordination of freight and equipment flows through various modes; (c) knowledge of current and future intermodal operational options and alternatives, as well as the potential for improved information and communications technology and the challenges associated with their application; and

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(d) constraints on and coordination of infrastructure capacity, including policy and regulatory issues, as well as better management of existing infrastructure and broader considerations on future investment in new infrastructure.

What is intermodal transportation?

The term intermodal has been used in many applications that include passenger transportation and the containerization of freight. A more descriptive term for this process would be multimodal, because of a lack of effective and efficient connectivity for both freight and information among and between the various modes on shipments under a single freight bill. For the purposes of this paper, intermodal freight transport is defined as the use of two or more modes to move a shipment from origin to destination. An intermodal movement involves the physical infrastructure, goods movement and transfer, and information drivers and capabilities under a single freight bill. The "concept of logistically linking a freight movement with two or more transport modes is centuries-old," according to Muller (1). The recent focus has been on containerization; however, intermodal transportation, as defined in this paper, encompasses all single-bill shipments using multiple modes.

Intermodal transportation and supply chains

Intermodal transportation, with the options of integrating multiple modes, provides a flexible response to the changing supply chain management requirements in global markets and distribution systems. The integrating of modes requires a process or systems approach for execution and "a higher degree of skill and broader knowledge of the transportation/supply chain processes . . . information, equipment, and infrastructure

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(1) Intermodal transport, as it moves from a focus on infrastructure components to a holistic focus on process or systems will have more viability and applicability in the world of global supply chain management. A supply chain is defined as a set of three or more organizations directly linked by one or more of the upstream and downstream flows of products, services, finances, and information from a source to a customer, and supply chain management is defined as the systemic, strategic coordination of the traditional business functions and the tactics across these business functions within a particular company and across businesses within the supply chain, for the purposes of improving the long-term performance of the individual companies and the supply chain as a whole. (2) The components of supply chains, much like the modes of transportation, have existed for many years. It is in this time of information and communications technology and capability that the supply chain processes, and the modes supporting those processes, are gaining the capability of being integrated. This integration can permit the optimization of trade-offs between the components of supply chains as well as between the service and cost aspects of the modes within supply chains. Information capability and supply chain relationships will require careful balancing of all the business objectives of both the customers and the providers. Supply chain participants must respond and compete in the global marketplace, which is evolving rapidly. An integrated intermodal transport system is a significant and critical factor in the successful execution of supply chains, both domestically and internationally. The awareness of and requirements for options in the intermodal execution of supply chains are being driven heavily by information and communications systems. One
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example that is gaining global implementation and effectiveness is the use of relational databasesthe electronic ability to integrate and operationalize related but different data sets. This comprehensive ability to understand and assess the total supply chain capability and performance will place new demands on supply chain participants, including the transport system. New demands on the transport system will require a rethinking of transportation policy and investment.

Status of intermodal freight

Intermodal transport continues to be significant in the movement of freight. The railroad industry reports an approximately fivefold growth in trailer and container traffic on the railroads from 1965 to 1995 (3). However, intermodal revenues in 1996, defined as rail trailer and container movements, were only $5.6 billion compared with total freight revenues in the United States of $420.2 billion (4). Although trailer and container traffic is frequently foremost in mind when intermodal transport is discussed, it is important to note that many other commodities can in fact be intermodal shipments. For example, all grain moves off the farm by truck before being connected to those movements that will continue by water or rail, and a significant portion of grain transported by rail goes to water transportation. Many other bulk or semi bulk commodities such as fertilizers and building products move intermodal. Another intermodal bulk commodity is coal, which goes by road, rail, or river before transfer to rail and river for domestic delivery or to ocean for export. Increasingly, traditional trucking movements from small packages to less than truckload (LTL) and truckload (TL) shipments are spending part of their time on rail. In fact, all air express shipments are inherently intermodal, with truck links connecting with air linehaul at origin and destination.
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If intermodal transport were measured as it has been more broadly defined in this paper, as all multiple-mode single-bill shipments rather than the historical narrow measure of containerized freight, the tremendous significance of intermodal movements in the logistics and supply chain structure would be more apparent. True broad measurement of intermodal movements would also affect the perspectives of private and public organizations toward the importance of developing intermodal infrastructure and information and communications capabilities. Overall, intermodal transport, both containerized and multiple-mode

noncontainerized, has performed satisfactorily in the last half of the 20th century as logistics has grown as a profession and responded to deregulation. However, to encourage and allow broadly defined intermodal transport to become as effective and efficient as it needs to be for future global market and supply chains, four issues need to be addressed.

Issue 1: Role in Hyper competition of Supply Chains The internationalization and globalization of resources and markets will place demands on intermodal transport in ways never witnessed before. Two- and threeparty partnerships will give way to fully integrated supply chains. The competitive world of the future may well be centered between global supply chains and their supporting modal and intermodal capabilities. Linehaul movement and local delivery require intermodal transport as a critical element of supply chain physical execution. This potential for worldwide competition between global supply chains has sometimes been labeled hyper competition and places new requirements on execution and implementation, including the coordination and integration of
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intermodal movements. Customers in the future will be indifferent to global sourcing issues and will expect their order to be delivered at the right place, at the right time, in the right condition, and for the right profit. In order to fully understand this global role and permit effective and efficient planning, response, and resource investment for intermodal transport, accurate and appropriate measurements must exist. Most measurements have focused on containerized intermodal transport. The 21st century needs to have a set of measures for the broader definition of intermodalism, all single-bill multiple-mode shipments. This new intermodal measurement would supplement the historical modal measurements that are a residual of regulation and the needed focus during modal development in the 20th century. Future resource investments, education, and training will require full understanding of the actual and potential interaction between modes that affects the entire transport industry and the infrastructure and information technology that supports and enables effective and efficient execution of intermodalism in global supply chains. For the understanding of and response to intermodal needs, transportation and intermodal measurements need to be recast for the broader definition of all multiple-mode single-bill shipments Issue 2: Focus on Changing Customer Requirements The marketplace of the future will have a diversity of demand worldwide and a multiplicity of sourcing and trading patterns. All of this diversity will be in response to customers expectations and requirements for small and quickly delivered lot sizes or shipments. Inventory will be held only briefly for staging, such as cross-docking, and the future focus will be primarily on inventory in transit and not inventory in storage, distribution centers, or warehouses. E-commerce will have a substantial future role in the supply chain process and will reinforce information and communications as key factors in supply chains and their
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intermodal components. The customer will expect highly coordinated and customized delivery by the supply chain with great flexibility as the marketplaces shift and change, driven by increased information flows to the final consumer or producer. In addition, the almost unlimited range of sourcing options and market opportunities will drive rapid and constant change, requiring continued commitment to innovation in intermodal operational and information and communications technology. Reliability levels (i.e., the removal of variance) will be a higher requirement to permit satisfaction of customer demand while minimizing the costs of the supply chain. A single freight bill, possibly a single supply chain bill, will be tendered through electronic means. Customers will expect the intermodal and transportation systems supporting supply chains to be focused on speed, flexibility, variance elimination, and relationships with other members of the supply chains that permit profit potential for all. The intermodal capability will have to be integrated and seamless, with better connections between the modes at all points.

Issue 3: Knowledge and Skills for New Operational and Information Communications Technologies To be able to optimize transport options, managers will have to be highly knowledgeable in all of current and future intermodal options and alternatives. This need may well drive heightened transportation education at all levels, from elementary and secondary education to fundamentals at the undergraduate level, managerial issues at the masters degree level, and conceptual or strategic issues at the doctoral level. Much of this education will be focused toward the operational, marketing, financial, economic, and competitive factors of modes and intermodal
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execution. This focus must also include the development of innovations such as equipment technology evolution through concepts such as FastShip, which proposes to reduce ocean shipping time by half, and RoadRailer, the blended railtruck technology that permits substantially lower-cost transfer between the modes without lift devices and therefore uses smaller-scale facilities. It will also require an understanding of the fundamentals of linehaul and terminal structure, capacity, and execution so as to understand the options and alternatives in dealing with growing constraints on the operational side. All of this knowledge and the resulting management are driven by current and future technology and information capabilities and advances. As shippers and users of supply chain structure continue to implement enterprise-wide relational software and databases, transport and intermodal companies in supply chains will be challenged as well as empowered by information technology and communications capability. As increasingly more pieces of freight equipment, and possibly the freight itself, become electronically tagged for tracking and operational execution, the data available to manage linehaul and terminal operations will increase dramatically. This increased information-communications technology will give the supply chain managers, and those who contract with supply chain companies, information to make management decisions regarding intermodal trade-offs, alternatives, and options that are just beginning to be fully evaluated and operationalized today. This level of information communications capability will provide significant challenges to enable information flows in both directions between the marketplace and the sourcing of materials. This capability will also apply to both private- and publicsector applications and management of infrastructure. Issue 4: Focus on Management, Coordination, and Integration of Infrastructure and Resources by Private and Public Sectors
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All the supply chain capability and the related information-communications options are of little value if the infrastructure is constrained and the equipment carrying the freight cannot efficiently and effectively execute the requirements of the customer. Infrastructure and equipment capacity can be evaluated in two contexts, static and dynamic, and it is the dynamic capacity that is the concern for the future. Static infrastructure and equipment capacity is purely the physical space available for linehaul or terminal operations and the nonmoving carrying capacity of the equipment. It is a physical measure of infrastructure and equipment but is not a reliable capacity measure of either. Dynamic capacity, on the other hand, deals with the throughput that is derived from operating static infrastructure and equipment capacity. Dynamic capacity is a factor of speed and the lack of variability, which causes slowdowns or reworking of the process. Concerns are beginning to grow regarding constraints on the dynamic capacity of intermodal linehaul connectors and terminals that are becoming the mainstay of supply chains. In addition, impediments are growing on the ability, particularly in densely populated areas, to expand the static capacity of the infrastructure. Limitations on financial and physical resources constrain the ability to add new static capacity. These constraints call for intermodal transport to develop information-communications and management capability for efficient and effective linehaul transit as well as coordinated and integrated connections through terminals to other modes. Once again, information systems are becoming significant and critical to this effective coordination and integration. There is additional concern with the static capacity of terminals generally located in or near large population centers, whose populations in part drive supply chain demand. However, the physical transport of goods creates environmental externalities such as congestion, air and water quality impacts, and noise and light
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complications for society, particularly in metropolitan regions. The physical aspects of terminals in urban areas are complicated further by the desire of local municipalities and regions to maximize the taxbase, frequently through commercial alternatives, such as retail operations and tourism, rather than transportation, intermodal, and supply chain facilities. The growth of world populations is heightening global demand for products. The absolute volume of shipments is increasing and will continue to increase. Linehaul or terminal infrastructure built decades ago is being stretched to accommodate the volumes moving intermodally in conjunction with supply chains. A focus of concern for intermodalism continues to be the connectors between the transport linehaul and the terminals, as seen in specific provisions in the Transportation Equity Act for the 21stCentury (TEA-21) and the Intermodal Surface Transportation Efficiency Act (ISTEA). Transport managers, policy makers, planners, and taxpayers will have to continually address these inherent difficulties through innovative technology, both physical and electronic; land use and transportation planning; and management of existing infrastructure.

Intermodal direction for the future: faster, better, smarter and profitable
Customers of global supply chains in the future will continue to demand faster supply chain delivery of their commodities and products. Speedor total transit time through the supply chainwill continue to be a necessary factor for intermodal transport. Customers will demand better execution of the supply chains, represented by quality and reliability. Customers will also have more access to information through the use of information communications capabilities only dreamt of in the past, and that information will drive higher expectations of
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performance as well as provide the foundation for alternatives, options, and continued change. Finally, customers and supply chain operators will want all of this done more cheaply, or in a more appropriate perspective, more profitably. Therefore, evaluating the life-cycle cost of prospective technology applications is essential. Intermodalism will be a significant and critical factor in the success of hyper competition among supply chains of the future. Its more significant role in global supply chains will require an understanding of supply chain management, the needs and requirements of the marketplace, the capabilities and advances in information and communications technology, and the continuing challenges and constraints on transport infrastructure. It might be argued that the future driver of the intermodal process and options in supply chains needs to come from the demand or supply chain side of the equation rather than the traditional supply or mode-carrier side. But from wherever the future impetus for intermodalism comes, additional insights need to be gained through measuring it in its broader definition and not just the historical containerized context. An increased awareness of the scope and magnitude of broadly defined and measured intermodalism will heighten the need for intermodal education and training for those being asked to manage and execute both new intermodal technologies and information-communications systems and the increasingly constrained infrastructure of intermodalism.

Example of intermodal transportation

LoadMatch focuses on domestic intermodal transportation of equipment between trucks, railroads, and steamship lines. Maybe you have seen a train pass by with truck trailers riding on the railroad cars. The following is a quick example of utilizing more than one mode of transportation to ship freight from origin to destination:

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A truck moves an empty piece of equipment to a shipper to pick up a load. The equipment is loaded with freight and then taken by truck to a railroad yard. Loaded equipment is put onto a train and railed to its destination. The load is taken off the train and delivered by truck to the customer. Equipment is unloaded and now empty, ready for another load.

The following is an example of an intermodal train moving new 53' trailers. These trailers, shown in the picture, can be found listed in Equipment Matching under TemStar.

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Order processing
Order processing starts with the receipt of an order from a customer. It may be obtained by a salesperson, be telephoned in, or arrive by mail. Regular buyers and sellers are often linked electronically. As the buyers inventories become low, an electronic purchase order is generated. It is communicated to the seller, whose computers will determine that the goods are available, and the seller will inform the buyer, still using electronic methods, that the order will be filled and shipped by a certain date .As the supply network of EMS/ODM extends to include other partners,

component manufacturers and third party distributors; it is critical to co-ordinate fulfillment processes across multiple parties and has real time visibility to react quickly to any problems. To maintain customer service, the EMS must provide customers with continuous and up to date information, while still minimizing internal and external distribution and warehouse costs. Frequently, the EMS is required to monitor and replenish customer inventory and guarantee availability of parts at the Brand Owner location. Fulfillment controls the actual fulfillment of customer replenishment orders based on the manufacturing program and according to the criteria established in the contract with the Brand Owner. Fulfillment

orders frequently involve similar processes as sales order processing in terms of logistics and configuration, however pricing and the actual sale was established through the contracting process.

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Business Goals & Objectives

Improving Customer Service: Increase multi-channel delivery of services Reduce late orders

Improving Regulatory Compliance: Reduce risks of fines and penalties Managing Fixed Assets & Resources: Improve physical inventory process Reducing Operating Costs & Increasing Efficiency: Lower logistics costs

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