OMS Blog Want to save a lot of money in your Wholesale business?

Use Master System's OMS ERP and you can save $24.64 per order! One way to get executives' attention is to show that operating cash and staff productivity are being squandered. Let's turn the spotlight on a business process that suffers from some of the same problems that plagues invoice processing and purchase order processing. Hear we focus on sales order processing. It's an area that continues to clamor for innovation, yet resists innovative work-flow automation.In the current economic climate, with demand soft in many sectors, organizations need to be on a steady hunt for waste. There are gaps in cost performance that suggests this is an area your business ought to investigate. But, what cost components are we to aim at? They are many, and they range from the costs of fax machines for receiving faxed orders to document storage. But it should be noted that the most significant cost driver is labor. And in that domain, we must consider not only the time (and therefore cost) required to collect and label a fax or phone order, but the time to enter data into a system, initiate your work-flows that lead to order fulfillment, and finally communication with the customer about the status of the order. What about the time and costs that rack up when an order or part of an order is lost, or when data entry errors are made, or when a change to an order arrives. By the way let's be sure to look at the opportunity cost incurred of having your staff performing repetitive transaction-oriented chores when they could be spending time in more valuable ways. Get Out from Paper-laden ProcessingWe need to gain an unobstructed view of how much an organization spends relative to its competitors and, what it takes in order to process a sales order; this is the preliminary first step. Business owners and managers will also want to investigate any underlying drivers of that performance. Not surprisingly companies that rely primarily on paper-based steps tend to incur much higher costs than their competitors that have electronic solutions for capturing customer orders electronically. This graphic calculated the average cost per sales order for two distinct channels for order receipt. We find that the top companies using so-called "new" channel's incurs an average cost of $2.50 per sales order. Now compare this to the companies that rely on traditional paper-laden methods and it is $6.93 per sales order. Now let's look at the bottom line. The results are startling. The bottom company in the "new channel" category incurs an average cost of $6.00 per sales order. On the other-hand the bottom companies in the "traditional" paper-laden category incurs an average cost of $27.15! By adopting innovation you can save as much as $24.65 per order.This graphic of relative cost should be enough to stimulate thinking about process automation. It's not hard to imagine that by moving to an electronic model for this particular process and other like lit, can lead to a sound return on investment. But let us not neglect to factor in some of the hard-to-measure benefits that automation can deliver. One such benefit is the ability to speed the process and reduce order-entry pile-ups. It is very likely a company can find itself very able to process all incoming orders electronically on the same day they are received. That's that an important milestone on the journey to excellence in superior customer service.Five symptoms of inefficient order management The speed and precision of order processing is highly dependent on how customer orders are received and the way companies process them. Most companies struggle to automate all of their partners' transactions, which means they have no other option but to handle customer orders manually. They resist automating with excuses and, perceived lost customer contact. Nothing could be further from the truth.Manually processing sales orders is inherently labor-intensive, time consuming and error-prone, requiring valuable resources to manage each part of the process. When using this conventional method, it can take hours to prepare, enter and store a sales order. It implies many manual touch points, possible misplaced orders,delays in fulfillment and payment, errors and returns of incorrect shipment, which result in customer dissatisfaction and loss of business.Manual processing of orders can cost you because of:High Error Rates, Incorrect ShipmentsHigh Cost Per OrderLimited Process VisibilityLengthy Order ProcessingCustomer DissatisfactionLimited Order Process VisibilityAt every manual touch point of order processing, companies tend to lose the transparency that provides a view of daily activities of effective order management. This lack of visibility leads to difficulty in planning and forecasting and, contributes to the inability to identify and prioritize urgent orders. Companies are unable to address and respond to top customer needs, ship orders quickly and even be more proactive so they do not lose any competitive advantage.Lack of ProductivityManual order processing is sluggish, is filled with obstacles, hurdles and road blocks and requires dedicated employees to accomplish each task, when in reality they could be assigned to more value-added jobs. Keying-in, distributing, printing, filling, routing, verifying and tracking paper orders takes time, and usually implies a backlog of several days. These paper-laden steps slow down your company's processing speed and decreases productivity.Expensive Fulfillment ErrorsWith paper-laden processes and, the associated multiple touch points, manually processing orders implies a high risk of errors, due to incorrect data, un-entered items, missing documents, etc. Reproducing a single order due to error or document loss can cost as much as $200. Delaying fulfillment, order errors often result in extra shipping costs, wasted materials, credit memos, cancellations and, even write-offs.High Cost per OrderManually keying-in orders requires physical document handling. Documents need to be printed. Maintaining the infrastructure for printers and fax machines is expensive. Additionally, the cost of error disputes, late invoices and the administration work involved is considerable. Inefficient SoftwareIn many companies, the software environment that supports order management is a complex collection of point-to-point processes creating massive amounts of paper. It restricts companies from having to deal with customers using EDI and e-commerce. To prevent customer dissatisfaction, companies have to find an optimal solution to manage orders. OMS ERP is that solution.THE SOLUTIONOMS ERP business software sales order processing solution automates the entire order entry process. Sales orders can be received by any media, including fax, email, the web or EDI. When an electronic order arrives, the solution captures data such as customer number, product numbers, order quantities, pricing terms, ship to locations and due date, for routing and indexing. No predefined templates are needed. Captured data is automatically validated against ERP data, and then posted to the OMS ERP order management application.An image of the sales order is directly linked to the new business transaction, allowing users to view original documents without leaving their OMS ERP system. The document is physically stored within OMS ERP. Confirmation can be automatically sent to the customer when the entry is created in the OMS ERP application via an email. The OMS ERP solution enables process monitoring and control by keeping track of all incoming documents through to their creation in the OMS ERP business software solution. In addition, the process automation guarantees its consistency.The order-to-cash cycle involves tedious processes that can account for up to 30% of total finance costs - yet many organizations' order-to-cash processes aren't ranked among top strategic priorities to improve the bottom line.The order-to-cash cycle touches key performance areas including order management, order fulfillment, invoicing, credit management and cash collection. Even the smallest error can make the process inefficient, quickly draining available capital and resources. Automating order-to-cashdocument processes improves cash availability by decreasing the number of touch points at each step of the cycle.Order-to-cash automation gives companies a competitive advantage by:Reducing receivables and DSO rates, optimizing cash flow and ultimately leading to more effective management of working capitalImproving company debt-to-equity ratio Reducing external financing needs and enhancing credit ratingStrengthening business relationships through higher customer satisfaction resulting in increased salesFreeing resources to focus on core business-building activities Lowering order-to-cash processing time and costsOMS customers report savings of 40%-70% on sales order processing costs, 40%-90% reduction of order processing time and up to 95% fewer order management problems. By optimizing the process of receiving, entering and checking customer orders, businesses are able to ship more orders faster with increased visibility and control.OMS customers have been able to:Shorten average order processing time from 43 minutes to 11 secondsReduce time to complete 6-12 page, 300-line-item orders from 3-5 hours to 10 minutesAchieve and maintain +99.6% order accuracy rateSupport 20% increase in order volume without additional headcountProcess orders 76% faster than manuallyEliminate the need for 1-2 fax machines formerly dedicated to inbound ordersLet's take a look at the automated workflow process that proves our OMS ERP business software solution: It all begins with the customer making contact and, wanting to place an order for delivery. How many steps do you take? What decisions need to be made? How can you minimize the steps you take to satisfy every customer? You could take all the steps shown here, or you could take a single step