Paths to Ordering

From the Plant to the StoreWhen stores place an order, the finished goods come either directly from the manufacturing plant, or from the store's distribution center or warehouse (which ordered it from a manufacturer). Increasingly, orders are being placed electronically by a computer linking the ordering and supplying parties.

The same "order" means two different things depending on who ships or receives the goods. The entity placing the order (in this case, the store) issues a purchase order, the party supplying the merchandise (in this case, the manufacturing plant or the distribution center) considers it a customer order.

When a plant receives an order from a store, it needs to check whether it has enough inventory to ship, or if it needs to produce or manufacture the products. Real perishable goods with short shelf lives, such as bread and milk, are "manufactured to order." This means that the products are processed after the order is placed. Other products are "manufactured to inventory" or made to stock in a warehouse. For example, ice cream is made at Safeway's ice cream plant then transported to the distribution center and stored in freezers. The ice cream subsequently will be shipped to the Safeway stores when they place a replenishment order.