George,
From my warped way of thinking....
It does not make any sense to use that functionality unless
there is some known order for the records.
But, assuming there is, then using drag & drop to change the order
is easily implemented and no matter what you do, you will need to swap
the order of the record being dragged and the record being dropped on.
I did not have a good look at the code on the Kendo Demo but I would
be surprised if updating some order attribute somewhere.