Perfect Order Fulfillment

TermiKnowledge - Supply Chain, Procurement and Inventory Terminologies
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The Supply Chain Management (SCM) strategy focuses on three major objectives namely, identifying, improving and maintaining a comprehensive view of the entire product supply chain. Supply chain is a term used to describe the process by which raw materials are acquired, processed, and turned into finished goods or services. Supply chain management helps in decision-making regarding inventory levels, cycle times, throughput, costs and the like. Hence, it can be said that a successful Supply Chain has an optimal mixture of inventory control, information exchange, and control mechanisms.

The Supply Chain Council definition of perfect order fulfillment is "the percentage of shipments meeting delivery expectation with accurate and complete documentation and without delivery damage." In addition, the definition also states that "perfect fulfillment occurs when all customers receive, accept, and pay for merchandise" which is achieved when "work units are located in locations that are mutually compatible with production and warehousing operations." Thus, according to the SCM strategy, every aspect of the supply chain needs to be examined, such as inventory, asset management, and transportation.

An effective inventory deployment strategy should include planning and designing the processes for every step in the supply cycle. The inventory management process includes planning for raw material planning, making initial assessments of inventory needs, analyzing potential production and capacity demands, developing plans for current and future requirements, determining pricing strategies, establishing sales objectives, and developing delivery procedures. Once the inventory requirements have been estimated, allocating resources and estimating future sales, the process of production planning will then ensue. From here, the production process continues until goods are ready to be shipped to the customer. The last stage in the supply chain is inventory clearance, which involves physically examining and eliminating goods that do not belong in the inventory.

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