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Managing stock‐outs effectively with order fulfilment systems

Managing stock‐outs effectively with order fulfilment systems Purpose – When approaching a stock‐out situation, a company should be able to actively manage the allocation of available products on the basis of customer requirements and priorities as well as contractual relationships. The purpose of this paper is to describe different order promising mechanisms and analyze how well they can contribute to the effective management of stock‐out situations. Design/methodology/approach – The paper provides a formal description and analysis of alternative order promising mechanism applicable in make to stock systems. Numerical analysis is conducted based on the data of a pharmaceutical company. Findings – The paper clearly points out the potential of alternative order promising mechanisms to alleviate the negative consequences associated with a temporary stock‐out situation. Research limitations/implications – The paper does not consider implications of inventory pre‐allocation to customer classes. Further research should address the interplay between pre‐allocation and different order allocation mechanisms. Practical implications – The results obtained from this analysis provide guidelines for manufacturers, retailers, and vendors of supply chain software on how to design and utilize order promising systems. Originality/value – The paper provides a consistent formal approach to modelling order promising mechanisms, introduce new and innovative order promising mechanisms and provide valuable insight into their performance through numerical analysis. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Manufacturing Technology Management Emerald Publishing

Managing stock‐outs effectively with order fulfilment systems

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Publisher
Emerald Publishing
Copyright
Copyright © 2006 Emerald Group Publishing Limited. All rights reserved.
ISSN
1741-038X
DOI
10.1108/17410380610678765
Publisher site
See Article on Publisher Site

Abstract

Purpose – When approaching a stock‐out situation, a company should be able to actively manage the allocation of available products on the basis of customer requirements and priorities as well as contractual relationships. The purpose of this paper is to describe different order promising mechanisms and analyze how well they can contribute to the effective management of stock‐out situations. Design/methodology/approach – The paper provides a formal description and analysis of alternative order promising mechanism applicable in make to stock systems. Numerical analysis is conducted based on the data of a pharmaceutical company. Findings – The paper clearly points out the potential of alternative order promising mechanisms to alleviate the negative consequences associated with a temporary stock‐out situation. Research limitations/implications – The paper does not consider implications of inventory pre‐allocation to customer classes. Further research should address the interplay between pre‐allocation and different order allocation mechanisms. Practical implications – The results obtained from this analysis provide guidelines for manufacturers, retailers, and vendors of supply chain software on how to design and utilize order promising systems. Originality/value – The paper provides a consistent formal approach to modelling order promising mechanisms, introduce new and innovative order promising mechanisms and provide valuable insight into their performance through numerical analysis.

Journal

Journal of Manufacturing Technology Management – Emerald Publishing

Published: Aug 1, 2006

Keywords: Order processing; Stock control; Resource allocation; Customer requirements

References

  • Available to promise
    Ball, M.O.; Chen, C‐Y.; Zhao, Z‐Y.
  • Quantity‐and‐due‐date‐quoting available‐to‐promise
    Chen, C‐Y.; Zhao, Z‐Y.; Ball, M.O.
  • A model for batch advanced available‐to‐promise
    Chen, C‐Y.; Zhao, Z‐Y.; Ball, M.O.
  • Optimal stock allocation for a capacitated supply system
    de Véricourt, F.; Karaesmen, F.; Dallery, Y.
  • Customer orientation in advanced planning systems
    Fleischmann, B.; Meyr, H.
  • A survey of the state‐of‐the‐art of common due date assignment and scheduling research
    Gordon, V.; Proth, J‐M.; Chu, C.
  • Inventory rationing in a make‐to‐stock production system with several demand classes and lost sales
    Ha, A.Y.
  • Demand fulfilment and ATP
    Kilger, C.; Schneeweiss, L.