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

1.2.1b Order Promising, Order Confirmation, Order Status, Order Header, Order Main Section, Order Footer: Order-Related Business Objects

Intended learning outcomes: Produce an overview on terms such as order promising, order confirmation, order status. Differentiate between order positions for items (to be) delivered and labor (to be) performed.

Continuation from previous subsection (1.2.1).

An order becomes legally binding by order promising and confirmation.

Order promising is the process of making a delivery commitment, i.e., answering the question: When can you ship how much ([ASCM22])?
An order confirmation is the result of order promising.

An order runs through several phases.

Order status is a phase in the carrying out of the order. We can distinguish among four phases:
1. Planning or bid status
2. Order confirmation status
3. Order execution status
4. Billing status (calculation or invoice)

In the first status (planning or bid), the order data represent projections. In the second and third status, they are projections (budgets or cost estimations) that will be replaced gradually with real data. In the fourth status (billing), we find the effective data associated with a concrete order, tapped through some kind of recording of shop floor data.

Figure shows an example of a simple sales order, an order form used by an Internet company. This order is a typical example of a sales order or also simple purchase order in all areas of business.

  • The upper portion, the heading, contains customer data and suppli­er, that is, company data. Order validity date in this case is under­stood implicitly as the date the order is received by the company.
  • The main section of the sales order represents its positions and lists the items to be delivered, that is, their identification and quantities.
  • Finally, the footer contains the delivery address.

Fig.        Simple sales order form used by an Internet company: status “order.”

Here, the delivery due date is under­stood to be “as soon as possible.” Thus, with little data a practical order comes about. Because the company usually has the items in stock, this sales order serves as distribution control to the customer. The invoice is usually produced — follo­wing delivery — within the same struc­ture. Billing information, in most cases, will corres­pond to order infor­mation. Deviations might occur due to delayed deliveries or backorders.

Figure shows a more complicated example from the service industry, an invoice for auto repair. This invoice is the result of an order that was placed previously within the same structure: usually in verbal, sometimes in written form.

  • The heading contains company and customer data, complemented by the delivery date and the characteristic object related to the ser­vice (the car). As this is an invoice, the billing date is also given.
  • The main section includes order positions for labor performed. The (spare) parts list lists the items used to complete the labor. These items may be listed as in-stock shop supplies or items orde­red specially for the job. Quantity and price relate to definite defi­ned units, such as pieces and hourly labor rates. Comments on the in­voice aid communication between customer and service provider.
  • The footer of the invoice contains specific billing information, such as the total amount, broken down into the various charges, conditions of sales, and sales tax. Bids and order confirmations, or, in other words, the first and second statuses that preceded the billing status, would contain similar data.

Fig.        Example of a complex sales order at an auto garage: status “billing.”

Course section 1.2: Subsections and their intended learning outcomes