Production, dispatch and intralogistics: the rush order
A rush order is an order – in production, shipping or in intralogistics – which for various reasons has to be fulfilled faster or at shorter notice than its usual throughput time (see also order throughput time). Urgent orders can be placed by the production department as well as by the shipping department. While in the former case, the question to be answered is how to produce faster in coordination with regular orders in progress, in the latter case, it is relevant how to transport an item from the warehouse to the customer faster than is normally planned.
Rush order – definition
A general definition of the term rush order is as follows:
A rush order is an order that has a very high (externally assigned) priority. Urgent orders are given priority over other low-priority orders during processing.
Lexikon der Fertigungsleittechnik / Uwe Meinberg, Frank Topolewski
Rush order in production
While in e-commerce, it is the end consumers who determine the extent and demand for rush orders. In industrial production, it is the dependency between manufacturers and their customers as well as suppliers, which is responsible for a large proportion of rush orders. The specific period (see also cut-off time) when a rush order is required varies from company to company and from industry to industry. Still, it can be observed that the time span has become increasingly shorter in recent years.
Communication between customer, manufacturer, and supplier is more important for rush orders than for conventional orders. The customer, and thus the client, request a rush order from the manufacturer, who in turn coordinates the rush order with his supplier; due to the shortage of time, the requirements and deadlines must be determined quickly and reliably; this ensures both smooth cooperation between the manufacturer and supplier and production at the manufacturer and supplier itself, thus enabling the rush order to be fulfilled on time.
Rush orders also have an effect on fault tolerance. Manufacturers who produce in a hurry also increase the probability of errors occurring, which naturally does not increase customer satisfaction despite punctual delivery.
There are numerous theoretical approaches to finding the best way to integrate rush orders into a running production process or to test their feasibility and profitability; simulations are often used for this purpose. A general approach is offered by the bottleneck theory (Theory of Constraints), from whose perspective a rush order is defined as follows:
The planned amount by which the available capacity exceeds current productive capacity.
The Theory of Constraints (TOC, also known as bottleneck theory or throughput management) assumes that the throughput (performance) of a system is only determined by a single factor, which is called a bottleneck. From this bottleneck, all upstream and downstream processes are optimized; process optimization can therefore only be successful if it affects the entire system and always takes the bottleneck as its starting point. The bottleneck can be used to determine whether a rush order is feasible and how much it would disturb the regular flow of other orders.
Rush order in dispatch
The spread of e-commerce and the associated ordering behavior has led to an enormous change in customer expectations, particularly with regard to the time between ordering and delivery. Customers are less and less willing to wait longer for something that they have ordered within seconds with just one click. So it is important for every retailer to consider whether rush orders are available as a shipping option (see also same day delivery) and also what exactly this means for him. Offering rush orders has certain advantages and disadvantages:
- Customer satisfaction: As a rule, customers place rush orders when they need goods as quickly as possible. If this customer requirement can be met, customer satisfaction increases
- Customer retention: Satisfied customers order again because they have made positive the experience that the service is reliable. It is well documented that it is cheaper to retain customers as it is to win new ones
- Increase in turnover: If the profitability of the rush order option is positive, then turnover will also increase because rush orders are a competitive advantage as not every company offers them
- Challenging processing: Processing a rush order is a logistical challenge. picking, packaging and shipping – all process steps must be carried out in a much shorter time and the priority of the rush order must be communicated through all affected levels
- High costs: Rush orders cost more both in intralogistics and transport
- Ties up capacities: If a rush order option is offered, it may tie up large capacities in the (trading) company which then are lacking in other areas
Rush order in intralogistics
Intralogistically, a rush order always means a shorter lead time; furthermore, a rush order, as described above, always involves higher costs. In the process flow, rush orders lead to displacements, as they inevitably require rescheduling. As a rush order is more important than other ‘normal’ orders, it can happen that other regular orders cannot be fulfilled on time. It should be emphasized that rush orders are always at the expense of something else; in the worst case, the complete flow of all other non-urgent orders is disturbed; in the more favorable case, for example, only batch picking is disturbed. This applies both to manual processes, i.e., processes carried out by workers, and to mechanical, automated processes. Metaphorically speaking, rush orders push their way through an already existing queue of regular orders, thereby disrupting the smooth process flow or even halting it temporarily.
Based on company experience, it is indeed possible to keep certain resources free and available for rush orders, but this option is not subject to any guarantee or planning security. In order to achieve this, clear rules are set up within the framework of so-called service level agreements as to when a rush order can still be accepted and fulfilled. For example, a dealer for car spare parts can accept and fulfill rush orders in the form of a 24-hour delivery if the order from the car repair shop is received by noon.
Rush order summary
Rush orders have a shorter throughput time than the usual throughput time specified for ‘standard’ orders. The shorter throughput time results from an externally assigned prioritization. Rush orders are more cost-intensive and lead to displacement processes for other orders and operations. The disruptive effects of rush orders on intralogistics processes can be partially cushioned by service level agreements, but cannot be completely prevented. Therefore, from a company’s point of view, it is important to have a healthy balance between regular orders and rush orders.