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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Perfect Order Management Requires End-to-End Process View
ERP Order Management Guide
"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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Perfect Order Management Requires End-to-End Process View
ERP Order Management Guide
"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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Perfect Order Management Requires End-to-End Process View
ERP Order Management Guide
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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