The Order Fulfillment Process for Setter Company:
The Setter Company is a mail-order rug company that sells products within the continental U.S. To make potential customers aware of the products available for purchase, Setter Co. distributes color catalogs detailing its inventory. Catalog recipients are identified either by a mailing list purchased from a marketing company (based on household demographic data) or through a direct request for a catalog by an individual.
The process of fulfilling an order begins when a customer places an order for a rug. This is accomplished by filling out an order slip, which is included with the catalog shipped to the customer. The customer must remit payment at the time of submitting the order slip by writing a check. Both the order slip and the check are mailed (via US postal service) by the customer to Setter’s corporate office, which is located in Chicago. All US mail arrives in three days.
At Setter Co., all incoming mail at Setter Co’s corporate office is handled by an administrative assistant. This assistant received his degree from Ohio State University’s College of Business. As can be expected, incoming mail typically sits in a pile on his desk for two days before he gets around to delivering it to the proper recipients within the office. The order is first delivered to the accounting department. Setter's accounting department uses a computer with AccountPro software to track customer orders and to manage its accounting information. Each order is input into AccountPro and customer balances are closely monitored. Additionally, the customer’s check is applied to the customer's order using the AccountPro software and is then scanned and recorded into AccountPro's database. The accountant that works at Setter Co. received her master’s degree in accounting from Northern Illinois University. Therefore, she is at the top of her game. On average, it takes her one day to complete any given data entry task. However, checks take three days to clear.
Setter Co. has several distribution centers from which customer orders are fulfilled. Once payment for an order has cleared, the order is forwarded via US postal service from the corporate office to the appropriate distribution center. Rugs are kept in inventory to allow for a quick cycle time on orders. When a customer orders a rug that is in-stock, it is picked from the storage shelves, packaged, and shipped to the customer. The picking and packing processes take a combined two days to carry out. The shipping company Setter Co. uses takes three days to deliver orders. Once rugs are placed on the shipping deck to be picked up by the delivery firm, they are marked as “shipped” on the order form. Any orders from customers requesting a rug that is out-of-stock is marked “back-ordered” on the order form. The updated order form is then mailed via postal service to the central warehouse.
The Setter central warehouse receives a back-ordered form from a distribution center, it gets placed in a “to-do” pile. The senior warehouse manager used to be a professional guitarist, but his Korn cover band never really took off. In fact, the only reason he took the job at Setter Co. is because his girlfriend kicked him out of her apartment and his parents would not let him move back home. Consequently, back-orders sit in the to-do pile for six days. Once aa back-order is forwarded to the senior operations manager, he begins processing it. The back-ordered rug is picked from the storage shelves, packaged, and shipped to the distribution center. The picking and packing processes take a combined two days to carry out. Shipping from the central warehouse to a distribution center only takes one day, as Setter Co. handles its own shipping to distribution centers.
Back-orders are a priority for distribution centers. As rugs are unloaded from the delivery truck, items that belong to back-orders are pulled aside and packed for shipping. This process takes one day. Then, the orders are placed on the shipping deck to be picked up by the delivery firm. Once back-ordered rugs are placed on the shipping deck to be picked up by the delivery firm, the order form is changed to “shipped.”
Once all items on an order forms is marked as shipped, it is mailed back to the corporate office by the warehouse manager at the distribution center. Once received by the accounting department, AccountPro is updated to reflect that the sale was completed / inventory was reduced.
Assignment:
Step 1: Model the sales fulfillment process using as a cross functional process map
Step 2: Estimate the cycle time (in days) for this business process; specifically, what are the minimum (rug is in-stock) and maximum (rug is back-ordered) cycle times required to fulfill customer orders. Additionally, identify which tasks have business value, real value, and no value? Present the results of this step using a table, as discussed in class.
Step 3: Discuss the efficiency of the modeled process. Point out places in the process that are candidates for process improvement and provide your reasoning for why they are candidates for improvement.