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Control of End-to-End Processes is the Key to Effective Order Management

December 24, 2011

In my position, I end up going though many articles and surveys and I came across one the other day that said almost 65% of all companies running sales order management systems had as many as 11 order management systems.

Yikes.

This not only seems like a waste of money and resources, but the perfect storm of inefficiency and miscommunication.

Communication Chain

Purchase order management isn’t just a communication chain between you and your suppliers, it’s also a chain with your business itself that includes many processes, including opportunity to order capture, order capture to order fulfillment, order fulfillment to order completion, and order completion to order settlement.

For instance, a common problem is having too much inventory. One side is working to reduce the level of inventory in the warehouse using lean principles. But on the sales side, someone could be trying to sell something, and the system is showing the product isn’t available. If you have 11 different processes working, or in this case, not working together, it’s a cacophony of waste and duplication of orders.

That’s why order companies should look at it from an end-to-end process, starting from the time the order is taken to the time payment is made. Stringing those processes through multiple departments is a recipe for disaster. Those processes should all be aligned.

20 Steps to Perfect Order Management

Ray Wang, Forrester vice president and principal analyst with the Cambridge, Mass.-based firm, offers a video that features the 20 Steps to Perfect Order Management. Wang developed these steps to help companies deliver the perfect order — one that consistently meets customer, supplier, partner and employee expectations.

Of course, the biggest challenges are having the right technology for your company as well as the funding.  The purpose of the 20 Steps, according to Wang was to provide a blueprint for determining how well an organization was aligned with the steps and the idea that it could help companies consolidate applications and decommission others.

Going back to the 11 order systems in the survey, Wang says, cutting that number down to three could save a company as much as 20-23% in cost savings.

A Solution That Pays for Itself

While there has been some resistance to invest in given the sorry state of the economy for many businesses, it can pay for itself rather quickly, especially a hosted solution. By consolidating and saving time and money, businesses can free up capital for other new technology projects and purchases.

It also makes a difference customer service-wise. The repetitive and low-margin orders can be handled by Web-based channels and companies can place a higher priority on more human interaction into the higher-dollar-value orders.

And , as they say on TV, that’s not all. Increased accuracy of orders, simple tracking, and scaling your processes closer to your customers, tends to create more return business and better customer retention.

In this new customer-driven environment, it is imperative to improve collaboration by creating more visibility with your trading partners at both ends of your supply chain. One of the best ways to do that is by consolidating your order management processes.

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