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Dealing with custom orders in a highly standardized order environment : the analysis and redesign of the order process of customer specific orders

Trienes, Leon (2013) Dealing with custom orders in a highly standardized order environment : the analysis and redesign of the order process of customer specific orders.

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Abstract:Background – Recently the company, for which the research described in this paper was carried out, increased its focus on the OEM (Original Equipment Manufacturer) market. Since, the company traditionally focusses on wholesale, the general processes within the company are designed around the delivery of commodities. However, since orders from OEM customers often contain order lines of non-commodity products (e.g. kits, production parts or sourcing parts), current business processes are thought to contain bottlenecks which prevent the company from efficiently processing these orders. The research in this paper seeks to analyse the order process of these customer specific orders and to make recommendations for improving these processes. Research design – In order to analyse these business processes they were modelled using the comprehensive and widely used standardized modelling language BPMN. After the analysis, recommendations were made regarding process improvement. Subsequently, the proposed redesign was validated and refined by discussing it with key users and experts within the company. Finally, a business case was used to specify the redesign benefits and to give an indication of the costs and risks associated with the implementation of the proposed redesign. Findings – The scope of the analysis was set to the processing of customer specific order that are received by the company through email, fax or phone (i.e. excluding orders received through EDI – Electronic Data Interchange). During the analysis of the current process it became clear that there exist a number of bottlenecks. The bottlenecks can be related to; the complexity of order input, the current division of labour between Commercial Support and OEM Sales, the availability of order confirmations, and the ERP system currently in use. However, it was determined that only the first three bottlenecks would fall within the scope of the project. Order input complexity and availability of order confirmations were categorized as IT-related bottlenecks, the division of labour was categorized as a bottleneck related to the distribution of resources. For both types of bottlenecks a redesign was proposed that tried to fully eliminate that specific bottleneck. After discussing both redesigns a final redesign was composed that incorporated those elements that were considered to contribute the most to the elimination of these bottlenecks. This redesign was validated and refined by discussing it with a number of key users and IT consultants. Based on the business case, the company is advised to at least implement those features of the redesign that; simplify the order entry of call-off orders and transfer tasks that do not involve customer contact to the Commercial Support department. Since the business case did not sufficiently provide clear evidence to suggest that the benefits obtained from adapting the order confirmation process outweigh the costs, the company is advised to look for additional evidence regarding these benefits before implementing this change. Research limitations – The validity of the proposed redesign was assessed by consulting key users and experts within the company. Although the sample of consulted users was representative for the population, the sample size might be considered somewhat limited. Another limitation regards the business case that was developed for the proposed redesign. It turned out that in most cases, it was hard to determine the (financial) value of the costs and benefits the company will incur when the redesign is implemented. In order to make a better-informed decision when it comes to choosing between investment options, future research should look into ways to overcome the quantification problems of some of these costs and benefits. Practical implications – Based on the analysis and redesign of the current process, and the business case that was developed, the company can make an informed decision regarding the selection of process improvements to invest in. Value – The value of this research lies in the creation of an artefact, in this case the redesigned business process. We argue that, with the implementation of proposed redesign, the order process of customer specific orders will improve, as the redesign causes order entry errors and order entry costs to reduce, and customer satisfaction to increase.
Item Type:Essay (Master)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:Business Administration MSc (60644)
Link to this item:http://purl.utwente.nl/essays/64538
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