Integral Logistics Management — Operations Management and Supply Chain Management Within and Across Companies

1.2.1 Customer, Supplier: Business-Partner Objects; Order, Customer Order, Procurement Order, Production Order, Overhead Order: Order-Related Business Objects

Intended learning outcomes: Present in detail the order as a business object. Produce an overview on terms such as customer, supplier, business partner, due date, customer order, procurement order, production order, overhead order.

The order serves as an instrument both in the legal sense and with regard to process organization, within and across companies. The following business objects are basic for the definition of an order.

A business partner of a company is a general term for a customer, recei­v­ing a good or service, or a supplier, selling or providing a good or service.
A date is a fixed point in time at which an event occurs. It is normally expressed as day and time of day ([MeWe18]).
A due date is a date on which something is sche­duled, i.e., expected in the prescribed, normal, or logical course of events ([MeWe18]).
A time period is a period on the time axis. The start date is the beginning, and the end date is the end of the time period. In a logistics environment, it is mostly a completion date.

An order as a business object is rather complex. It contains all the information required for planning & control of the flow of goods.

An order as a business object consists at minimum of a business partner (in addition to the company itself) and a date and sets binding obligations with regard to:
- Who the business partners are: the customer and the supplier
- When the order is issued, or what the order validity date is
- Within what time period the order is fulfilled (order start date and order completion date or order end date — in general the order due date).

Depending on the purpose, the order, with its constituent order items or order positions, also sets binding obligations with regard to
- The items (identification, quantity, due date) that must be manufactured or procured.
- The components (identification, quantity, due date) that must be ready for use or building in.
- The work, tasks or services that must be performed and in what sequence; this also includes transport, inspection, and other similar tasks.
- Whether and how order tasks are linked to other orders.

These definitions hold for all kinds of orders, both in industry and the service sector.

The kind of order classifies an order according to its business partners.
- A customer order or a sales order is an order from an external custo­mer (i.e., a customer that is not part of the company) to the company.
- A procurement order or a purchase order is an order from the company to an external supplier.
- A production order or a manufacturing order or a job order or a shop order is an internal order, or order from an internal customer (i.e., a customer that is part of the company) to manufacture a good.
- An overhead order or a work order is a company internal order, e.g., for R&D, for items to be manufactured (such as tools) or for services that concern the infrastructure of the company (such as equipment maintenance and repair).

Continuation in next subsection (1.2.1b).

Course section 1.2: Subsections and their intended learning outcomes