18. How Should We Process Orders?

The speed and efficiency with which a customer's order is handled not only ensures marketing success, it can also affect the company's overall profitability. Time lags within the company in handling orders increase overall distribution costs because they necessitate larger inventory and/or faster transportation if customer service levels are to be maintained. Larger inventories and faster transportation in turn give rise to greater working capital requirements and/or higher operating expenses — hence the influence of order handling on profitability.