Order management Guide

Order Management Guide

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Perfect Order Management Requires End-to-End Process View

ERP Order Management Guide

To achieve perfect order management, application professionals must push for an end-to-end process view of functions that are now broken into departments, according to Forrester Research. Organizing work and the applications used to expedite it by processes can help application professionals consolidate sales order management systems and reduce waste, inefficiency and duplication in order. In this Solution Spotlight, readers will learn tips on how to create a perfect order management system.

Perfect Order Management Requires End-to-End Process View By: Courtney Bjorlin, News

To achieve perfect order management, application professionals must push

for an end-to-end process view of functions that are now broken into

departments, according to Forrester Research.

Organizing work and the applications used to expedite it by processes can

help application professionals consolidate sales order management systems

and reduce waste, inefficiency and duplication in orders, according to Ray

Wang, Forrester vice president and principal analyst with the Cambridge,

Mass.-based firm. Those processes include 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 such as Just-in-Time production. But on the sales side, someone

could be trying to sell something, and the system is showing the product isn't

available. These processes need to be aligned, Wang said.



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"It's really important for people to look at it from an end-to-end process --

looking at it from the time you take the order to the time you pay for the

order," he said. "Those are typically across a ton of different departments."

Wang has developed 20 steps corresponding to these processes to help

companies deliver the perfect order -- a sales order that consistently meets

customer, supplier, partner and employee expectations. Companies can

measure themselves against these 20 steps to see how well they execute

best practices such as supporting multiple channels and delivering a

consistent brand experience across all channels.

There are certain processes that give many companies trouble -- such as

"buy anywhere, return anywhere" policies, and selling services like

installation with a product.

"That's very complicated," Wang said. "Let's say I buy on the Web and return

in store. I can't track inventory."

Not having the right technology in place and not having the funding to

remedy this are major challenges to managing the perfect order. But

determining how well an organization is aligned with the steps can help

application professionals consolidate applications, such as transportation and

warehouse management, and free up capital.

There may be 10 applications supporting those 20 steps, and by taking a

process view, application professionals can figure out which ones can be

decommissioned, and which ones they can consolidate.

A survey of 61 companies running sales order management systems found

that, on average, companies had 11 order management systems, Wang said.

If that number is consolidated from 11 to three, he said, companies can

probably achieve a 20% to 23% cost savings.

This can free up capital for new technology projects and purchases -- such

as an order management hub, which handles mult i-channel requests and

enables end-to-end business processes.



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"How can they free up some of that capital? Part of it is by consolidating

some of the older systems," Wang said. "The ability and some of the

efficiencies gained in the newer system pay for investments."

Factors like compliance can help to drive the project -- if an existing system

doesn't allow a recall, for instance.

In turn, companies that deliver perfect orders have higher customer retention

-- 8% to 19%, according to Wang -- which results in a 3% to 5% increase in

order sizes.

Companies Wang interviewed reported a 5% to 17% cost savings from

optimizing core order management processes, such as multichannel selling

processes. Many companies are finding value, for instance, in channeling

repetitive and low-margin orders to Web-based channels and putting more

human interaction into the higher-dollar-value orders, he said.

"Conventional wisdom suggests that companies retrench and hold off on

investments," the report says. "However, those business process and

applications professionals who successfully lead the achievement of a

perfect order will set the stage for significant competitive advantage. Perfect

orders will move from being a concept to becoming the differentiator between

survival and success."

ERP Order Management Guide By: Catherine LaCroix, Contributor

An ERP order management system takes in orders on the front end and

fulfills those orders on the back end.

On the front end, the system captures data such as customer number,

product part number and due date for routing and indexing when an order

arrives, no matter whether the order is in the form of a fax, phone call, email,



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or whether it is paper-based or electronic. Captured data is then transferred

to an order management application.

In the back office, the manufacturing order management makes sure that the

order gets fulfilled -- and at the lowest cost, said Greg Aimi, a research

director at AMR Research who analyzes clients' demand-driven supply

networks.

Key ERP order management functions include:

Automated order entry, viewing and tracking

Real-time availability of order status and transaction data

Controlled handling for canceled transactions

Validating orders and credit limit checking

Checking for duplicate orders

Information on all customer order management processes

Reports on process time and volume, queued orders, exceptions and

delivery dates

In an ERP order management system, all the data is integrated between

orders, inventory and an organization's warehouse to make the fulfillment

and shipping of orders run smoothly.

"Most systems interact with information processes like customer service

(prioritizing shipment) or manufacturing (product availability)," Aimi said. "All

of these are outside of the execution of these systems, but it's good

information to have for a holistic approach."

The key benefit of an ERP manufacturing order management system is

faster order fulfillment and more effective sales administration. It can help

increase data entry accuracy and improve cash flow, reduce order errors and

fulfillment delays, and improve customer satisfaction. Reporting and analysis

features balance workloads and identify process bottlenecks.

Many ERP order management systems offer automatic confirmation sent

directly to the customer once the entry is created in the ERP system. This



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additional tracking of all incoming documents from creation in the ERP to

fulfillment adds another layer of process monitoring and control.

What other resources would you like to see on ERP orders management?

Email us at [email protected].

About the author:

Catherine LaCroix is a freelance writer based in Portland, Ore. She covers

technology used in business, education and healthcare.



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Order management Guide