Order Sourcing System Using Adjustable Savings Values
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Solution Overview
Problem
Existing order sourcing methods often fail to optimize logistics and minimize costs by not considering relevant shipping costs, assigning orders to sources based solely on geography, and inadequately integrating different products onto transport mediums, leading to increased costs due to unnecessary reassignments and split shipments.
Innovation Solution
A method that assigns orders to distribution centers based on adjustable savings values, determining cost savings across multiple centers, and reassigning orders to optimize shipping routes and integrate products efficiently, considering production, shipping, storage, and handling costs, while ensuring that orders are only assigned to sources capable of fulfilling a majority of the order's requirements.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Ease of operation
If orders are assigned to distribution centers based solely on geography, then assignment simplicity is improved, but shipping costs increase due to ignoring relevant shipping costs
Solution Approach 1:
The system changes the parameter basis for order assignment from geographic location to adjustable savings values that reflect actual shipping costs, production costs, storage costs, and handling costs. This allows the system to dynamically adjust assignment criteria to minimize total logistics costs while maintaining operational simplicity through automated calculation.
2Loss of energy
If orders are reassigned to optimize logistics and minimize costs, then shipping costs decrease, but manual intervention is required increasing operational complexity
Solution Approach 1:
The system implements self-service automation where the order sourcing system automatically calculates savings values, determines optimal distribution centers, and executes reassignments without manual intervention. The system serves itself by continuously monitoring costs and autonomously optimizing order assignments based on predefined criteria and adjustable savings thresholds.
3Adaptability or versatility
If orders are assigned to distribution centers that produce or store only a minority of order products, then assignment flexibility is improved, but costs increase due to obtaining products from multiple sources
Solution Approach 1:
The system performs preliminary analysis of distribution center inventories and product capabilities before assigning orders. By evaluating which distribution centers produce or store the majority of products in an order beforehand, the system can prioritize assignments to centers that minimize the need for product transfers from multiple sources, thereby reducing sourcing costs while maintaining assignment flexibility.
4Ease of operation
If different types of products in an order are placed on separate trucks, then product handling simplicity is improved, but shipping costs increase due to inadequate integration
Solution Approach 1:
The system merges different types of products from the same order onto the same transport medium when feasible. By integrating product shipment decisions with order sourcing, the system consolidates multiple products destined for the same customer onto single trucks, improving load utilization and reducing total shipping costs while maintaining efficient product handling through coordinated logistics planning.
Data Source
AI summary
The present invention relates a method of sourcing an order. The method adds flexibility to an order sourcing system by readily adjusting the amount of money that must be saved for an order to be reassigned from one source (e.g., a production or distribution center) to another source. The savings value that must be exceeded to reassign the order from one source to another may be set individually for each source and govern where orders can be reassigned. In addition, the savings values for each distribution center may reflect more of the relevant costs that are associated with the products which are used by each distribution center to fill orders. In some forms, the method includes determining all of the costs that are associated with shipping orders to a customer, including orders that require products to be shipped multiple times before reaching a customer.