Production, shipping and intralogistics: the rush order

A rush order is an order – in production, shipping or intralogistics – that, for various reasons, has to be fulfilled faster or at shorter notice than its usual throughput time (see also order throughput time) would suggest. Rush orders can come from both production and dispatch. While the former involves answering the question of how to produce faster in coordination with ongoing regular orders, the latter involves determining how to transport an item from the warehouse to the customer faster than usually planned.

Rush order – definition

A general definition of the term rush order is, for example, as follows:

A rush order is an order that has a very high (externally assigned) priority. Rush orders are processed with priority over other orders with a lower priority.

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 interdependency between manufacturers and their customers and suppliers that is characterized by a large proportion of rush orders. The specific time span (see also cut-off time) for a rush order varies from company to company and from industry to industry, but it can be seen that the time span has been getting shorter and 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 requests a rush order from the manufacturer; the manufacturer in turn coordinates the rush order with his supplier; due to the time constraints, the requirements and deadlines must be set quickly and reliably; this ensures both smooth cooperation between the manufacturer and supplier and production at the manufacturer and supplier themselves, thus enabling the timely fulfillment of the rush order.

Rush orders also have an impact on error tolerance. Producing in a hurry also increases the likelihood of errors, which, despite timely delivery, does not increase customer satisfaction but rather decreases it.
There are numerous individual, theoretical approaches to how rush orders can best be integrated into an ongoing production process or how their feasibility and profitability can be checked; simulations are often used for this. TheTheory of Constraints (TOC) offers a general approach, 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) assumes that the throughput (performance) of a system is determined by a single factor, which is referred to as a bottleneck. All upstream and downstream processes are optimized from this bottleneck; a 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 can be fulfilled and to what extent it would disrupt the regular processing of other orders.

Rush order in shipping

The spread of e-commerce and the associated ordering behavior have led to a significant change in customer expectations, particularly with regard to the time between order and delivery. Customers are less and less willing to wait longer for something they have ordered with just a few clicks in a matter of seconds. So every retailer needs to weigh up whether to offer rush orders as a shipping option (see also same-day delivery) and also what exactly this means for them. Offering rush orders has certain advantages and disadvantages:

Advantages

  • Customer satisfaction: as a rule, customers have their orders processed as rush orders when they need the inventory as quickly as possible. If you can fulfill this customer request, then customer satisfaction increases.
  • Customer commitment: satisfied customers will order again because they have found that the service is reliable. It is still cheaper to retain customers than to acquire new ones.
  • Increased sales: If the profitability of the rush order option is right, then sales will also increase because you fulfill rush orders, which not every mail order company does.

Disadvantages

  • 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 levels involved.
  • High costs: Rush orders cost more both in terms of intralogistics and logistics.
  • Ties up capacities: If a rush order option is offered, it ties up large capacities in the (retail) company, which are then unavailable for other areas and are neglected accordingly.

Rush orders in intralogistics

In terms of intralogistics, a rush order always means a shorter throughput time; furthermore, as described above, a rush order is always associated with higher costs. In the process flow, rush orders lead to displacement mechanisms, as they inevitably result in rescheduling. Since a rush order is more important than other ‘normal’ orders, after all, it is given a higher priority, it may happen that one or the other regular order 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 process of all other non-rush orders is disrupted and mixed up; in the more favorable case, for example, only the batch picking is disrupted and the optimization of the process is hindered. This applies to manual processes, i.e. processes carried out by workers, as well as to automated processes. Figuratively speaking, rush orders push their way into an already existing queue of standard orders, thereby disrupting the smooth process flow or even making it impossible.

Based on the company’s experience, it is possible to keep and free certain resources for rush orders, but this option is not subject to any guarantee or planning security. In order to achieve this to some extent, clear rules are established within the framework of so-called service level agreements as to when a rush order can still be accepted and fulfilled. For example, a retailer of automotive spare parts can accept and fulfill rush orders in the form of a 24-hour delivery if the order is received from the auto repair shop by noon.

Summary of rush orders

Rush orders have a shorter throughput time than the usual throughput time specified for them. 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 mitigated to some extent by service level agreements, but not completely avoided. Therefore, from a company’s point of view, it is important to have a healthy balance between standard and rush orders.

If you are interested in the topic of rush orders, then you should also read the articles order processing and returns in online retailing.