If you work in manufacturing or sales management,
"This is a customer order."
"This is for a customer order, so please be careful with it."
"Please reserve the customer-order portion first."
are phrases you'll sometimes hear.
If you've just started working in manufacturing,
"What's a customer order?"
you might find yourself wondering.
This article explains "customer order" (kyakuchū), a term used in manufacturing and sales management, in a way that's easy for beginners to follow.
What Is a Customer Order?
Put simply, a customer order is
arranging goods or materials tied to an order from a specific customer
.
For example, say a customer orders 100 units of Product A, an item you don't normally keep in stock.
A社から注文：製品A 100個
But your company has no stock of Product A.
So, based on Company A's order, you procure or manufacture 100 units of Product A.
A社から100個の注文
↓
製品Aを100個手配
↓
A社へ100個出荷
Arranging goods triggered by a specific customer's order like this is what's called a customer order.
In a nutshell,
"arranging goods for a customer's order"
— thinking of it that way should make it easy to grasp.
What's the Difference Between Regular Stock and a Customer Order?
To understand customer orders, it helps to think about how they differ from regular stock.
For example, say you procure 100 units of Product A because you expect them to sell in the future.
製品Aを100個仕入れる
↓
倉庫に保管する
↓
注文が入ったら出荷する
At this point, who it will be sold to hasn't been decided yet.
Company A might place an order.
Company B might place an order.
Stock like this is regular inventory that can be used for any of several customers' orders.
A customer order is different.
A社から注文
↓
A社向けに100個手配
It's arranged for Company A's order from the very start.
In other words,
regular stock = something for which the intended buyer hasn't been decided yet
customer order = something tied to a specific customer's order
— that's the difference between them.
A Customer-Order Item Has "a Fixed Destination"
A key feature of a customer-order item is that its destination is decided before it even arrives.
For example, say Company A orders 50 units of a special part.
Based on that order, you place an order with your supplier for 50 units.
A社の注文：50個
↓
仕入れ先へ50個発注
↓
50個入荷
↓
A社へ出荷
These 50 units were ordered precisely because Company A placed its order.
So even though they've arrived, freely using them for Company B's order instead could cause a problem.
The physical goods exist in the warehouse.
But what they're for has already been decided.
In this sense, it's a concept similar to "allocation," which we covered in an earlier article.
A customer-order item has
"goods meant for this specific customer"
attached to it as information.
What's the Difference Between a Customer Order and Allocation?
A customer order and allocation are similar, but they aren't the same thing.
Allocation is
reserving existing inventory, or the like, for a specific order
.
For example,
現在在庫：100個
↓
A社の注文に80個を引き当て
is that kind of process.
A customer order, on the other hand, is
arranging goods based on a customer's order
.
A社から100個の注文
↓
在庫がない
↓
A社向けに100個発注
In other words,
allocation = reserving stock that already exists
customer order = arranging goods based on a customer's order
— thinking of it that way should make it easy to grasp.
In actual practice, goods arranged through a customer order are sometimes then allocated to that customer's order afterward.
The Relationship Between Customer Orders and Outstanding Orders
Customer orders are also related to outstanding orders.
For example, say Company A orders 100 units of Product A.
Since there's no stock, you place an order with your supplier for 100 units.
A社の注文：100個
仕入れ先への発注：100個
発注残：100個
The goods haven't arrived yet.
So the outstanding order is 100 units.
After that, 60 units arrive.
入荷済：60個
発注残：40個
These 60 units are the customer-order goods arranged for Company A's order.
In other words,
a customer order represents "who the goods are being arranged for"
an outstanding order represents "how many units still haven't arrived"
.
Even though they're both pieces of information about the same product, they represent different things.
Why Do You Need to Manage Customer Orders?
If customer orders aren't managed, goods that arrive could end up being shipped to the wrong customer.
For example,
A社向け客注：100個
say goods like this arrive.
But if the system doesn't distinguish this from regular stock,
現在在庫：100個
it might just show up as this.
Then, an order for 100 units comes in from Company B.
The person in charge thinks,
"There are 100 units in stock, so we can ship them."
and ends up shipping them to Company B.
That leaves nothing for the goods that were arranged for Company A.
You can no longer deliver to Company A.
To prevent problems like this,
"which order was this product arranged for?"
is tracked and managed.
Is a Customer-Order Item Inventory?
Once a customer-order item arrives, it physically exists at the company.
In that sense, it's inventory.
But it's different in nature from regular stock.
For example,
製品A
現在在庫：150個
even in a state like this, if you look at the breakdown,
通常在庫：50個
A社向け客注：100個
it might look like this.
There are 150 units in the warehouse.
But only 50 are freely available for new orders.
So in inventory management, more than just the raw stock count,
"who the inventory is for"
can be important information to track.
How Are Customer Orders Managed?
The way customer orders are managed varies by company and system.
For example, they're managed by linking together:
- Order number
- Customer
- Order line items
- Purchase order number
- Purchase order line items
among other details.
As an image, it looks like:
受注：A社 100個
↓
発注：仕入先 100個
that kind of relationship.
In the system,
"which order did this purchase order arise from?"
is made traceable.
That way, when the goods arrive,
"this is product for Company A"
can be determined.
In the case of manufacturing,
A社の受注
↓
製造指示
↓
製品完成
↓
A社へ出荷
the order and the production run may be linked together in a form like this.
Summary
A customer order is
arranging goods or materials tied to an order from a specific customer
.
Regular stock hasn't yet been decided as belonging to anyone.
A customer order, on the other hand, is arranged for a customer's order right from the start.
In a nutshell, a customer order is
"goods arranged in connection with a customer's order"
.
It's similar to allocation, but generally,
allocation = reserving stock that already exists
customer order = arranging goods based on a customer's order
— thinking of the difference this way should make it easy to grasp.
That said, the specific meaning and handling of "customer order" can vary by company.
If this term comes up on the ground at your workplace,
"which order was this product arranged for?"
try asking this question.
Doing so will make the meaning of "customer order" much easier to understand.