Abstract
Customer and order prioritization is prioritizing the orders according to features of customers and orders. In make-to-order production systems, especially when demand exceeds the capacity, a need arises for prioritizing the orders. As a customer may have more than one order and as one type of order may belong to different customers, every job order must be prioritized according to both customer and order features. Prioritization values may be used for accepting and scheduling orders or selecting customers as a reflection of supplier selection. In this chapter, the production manager and customer relationship manager of a metal processing firm were interviewed for determining the criteria for prioritizing customers and orders. After determining the criteria, the managers were asked to pairwise compare the criteria for weighting with analytical hierarchy process (AHP). Then by considering scores of customers and orders for each criterion, orders were prioritized with technique for order preference by similarity to ideal solution (TOPSIS).
TopIntroduction
In make-to-order (MTO) production systems, customers and orders are needed to be prioritized especially when demand is more than capacity. Prioritizing only orders may not be enough, when the same type of orders are waiting for processing from different customers. On the other hand, a customer may have more than one order of different types, in this case the orders will have different priorities according to the features of different orders. So, both orders and customers need to be prioritized. Like supplier selection or evaluation, customers also need to be evaluated depending on their features and profiles such as loyalty, profitability, payment performance, good relation, being solution oriented etc.
In this chapter a model will be proposed for customer and order prioritization. Although there are too many studies about supplier selection/evaluation, there are very few studies about the downstream of the supply chain, customer selection/evaluation. This topic is the reflection of supplier selection/evaluation on the downstream side of supply chain as customer selection/evaluation or in other words customer and order prioritization. For this purpose, the customers and orders of a common use facility working in metal industry with an MTO manufacturing environment where demand exceeds capacity, customers and orders are prioritized according to determined criteria. The target of the facility is sustainability rather than profitability, so while prioritizing customers and orders criteria about customer potential or long-term relations are used rather than revenue, profitability.
The rest of the chapter is as follows: Literature about customer and order prioritization is reviewed, classified and summarized. Afterwards prioritization and related subjects like order acceptance, demand, revenue, capacity management mentioned. Then application in a metal facility is carried with AHP and TOPSIS. Lastly conclusions are presented.
Key Terms in this Chapter
Analytical Hierarchy Process: A method for weighting criteria or alternatives according to pairwise comparison and synthesizing process.
Make to Stock: Manufacturing system working according to push system or forecasted demand.
TOPSIS: A method ranking alternatives according to closeness to ideal and distant to negative ideal solution.
Customer Prioritization: Prioritizing customers according to the features of customers such as profitability, lifelong value, long-term relations.
Demand Management: Manipulating the demand with price under the conditions of positive or negative difference between demand and capacity.
Make to Order: Manufacturing system working according to pull system or orders received.
Revenu Management: Maximizing revenue by selecting most profitable orders when demand exceeds capacity.
Order Management: The whole process of order negotiation, prioritization, acceptance or rejection.
Order Prioritization: Prioritizing orders according to the features of orders such as profitability, continuity, lead-time.
Multi-Criteria Decision Making: Selection, classification or ranking of alternatives according to more than one criterion.