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

5.4.1 Integrated Order Processing and Simultaneous Engineering

Intended learning outcomes: Differentiate between time-to-market and time-to-product. Differentiate between order processing via serial processing and with overlapping phases. Describe some aspects to consider for integrated order processing with overlapping individual phases. Produce an overview on simultaneous or concurrent engineering.


Time-to-market is the total lead time through R&D for new products: the time required for product innovation; that is, from product idea to introduction of the product to the market.

Short lead time through R&D is seen today as a strategy toward success. Because significant product ideas will be made ripe for the market by competitors with only slight delays, a few months’ difference in the time required for R&D can be crucial to the success of a new pro­duct. An extra issue is the require­ment of global R&D project organization ([BoGa08]).

Time-to-product is the total time required to receive, fill, and deliver an order for an existing (that is, entirely developed) product to a customer, timed from the moment that the customer places the order until the moment the customer receives the product.

This definition corresponds to the concept of delivery lead time. More and more, customers demand shorter delivery lead times, not only for products with a solid place in the market that are repeated, but also for custom orders, such as single-item or one-of-a-kind pro­duction orders. In many cases, such orders involve some design. Figure 5.4.1.1 shows, for example, the departments such an order must pass through during processing.

Fig. 5.4.1.1        Order processing of customer orders with specific R&D, production, and procurement (also see [Schö95a]).

If the delivery lead time required by the customer allows enough time, most companies tend toward serial processing of the various R&D, production, and procurement orders required by the customer order. Individual departments are informed about the order only when it is passed along by the upstream department. The information avai­lable is limited to the original order data and the specifications followed to date, as well as any documents on previous orders that may exist in the department. Similar observations can be made in R&D activities during the time-to-market. Figure 5.4.1.2 shows how this way of proceeding must change if the customer tolerance time does not allow enough time for serial processing.

Fig. 5.4.1.2        Order processing via serial processing and with overlapping phases

Simultaneous engineering, concurrent engineering, or participative design/engineering refer to an overlapping of the phases of R&D and, in addition, an overlapping with earlier phases of procurement and production.

For the necessary integrated order processing with overlapping individual phases, some four aspects must be considered:

  • The social and organizational aspects demand appropri­ate structural and process organiza­tion for rapid business processes, based on cooperative learning and acting. The walls between the departments shown in Figure 5.4.1.1 must come down. All persons involved in the customer order, whether in sales, development, or production, must be grouped “around the product.” This means that the organization must be business-process oriented.
  • The conceptual-logical aspect requires that the content of infor­mation systems must be linked in a way that allows the exchange of data or even allows for commonly shared data management. Integration means that a unit must process data that another unit will require. The design engineer, for instance, must include data on the blue­prints that allow identification for the bill of material. And, con­verse­ly, data must be kept on the item that is of relevance to design management. See further discussion in Section 5.4.3.
  • The technical-physical aspect demands that the various hardware and software components be linked, that is an integration of the systems so that there will be a common, or at least commonly accessible, database. See here Section 17.5.
Design for the supply chain means enhancement of a firm’s product design in consideration of the issues that will arise in the supply chain, from raw materials to the final stage of the product life cycle ([APIC16]).

Such demands are actually not new. In many small- and midsized compa­nies, work has always been done in this way. This has been the case par­ticu­larly where there is a large proportion of “one-of-a-kind” produc­tion orders, such as in plant and facilities construction or in structural and civil engineering. Companies specializing in these areas have been leaders in the integration of organization and in the integration of their IT-supported information systems as well. See Section 1.4.2 in [Schö01].



Course section 5.4: Subsections and their intended learning outcomes

  • 5.4 Logistics Business Methods in R&D

    Intended learning outcomes: Produce an overview on integrated order processing and simultaneous engineering. Describe release control and engineering change control. Differentiate between various views of the business object according to task.

  • 5.4.1 Integrated Order Processing and Simultaneous Engineering

    Intended learning outcomes: Differentiate between time-to-market and time-to-product. Differentiate between order processing via serial processing and with overlapping phases. Describe some aspects to consider for integrated order processing with overlapping individual phases. Produce an overview on simultaneous or concurrent engineering.

  • 5.4.2 Release Control and Engineering Change Control

    Intended learning outcomes: Describe release and engineering change control (ECC), particularly step-wise release. Present procedures in engineering for new product design or a new product release.

  • 5.4.3 Different Views of the Business Object According to Task

    Intended learning outcomes: Disclose examples of different views of a business object. Present business objects and attributes in the areas of design, release control and engineering change control, and planning & control.

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