Many companies strive for faultless order management because lives may depend on it. Take, for example, the need to provide parts to repair medical diagnostic equipment, maintain aircraft, or ensure that first responders are well equipped. Every step of the order management process requires precision and perfection — from initial order intake to manufacturing, from warehouse operations to fulfillment completion.
But investing continuously to achieve 100% perfection for every order every time is an expensive proposition that may offer diminishing returns as the ultimate goal approaches. Organizations need to decide when perfection is essential, and whether incremental improvements might be good enough. Most distributors operate with slim margins and might find it more practical to focus on improving efficiency and reducing process errors that disrupt value-chain performance.
For many companies, it might be more practical to make sure the right customers receive the best service, based on criticality, order size and profitability.
Whether the goal is perfection or incremental improvement, digital order management solutions and robotic process automation (RPA) can help companies fundamentally retool their value chains and improve customer satisfaction without sacrificing profits.
A perfect order, as defined by the Warehouse Education and Research Council, is one that is delivered complete, damage-free, on time, and with the correct documentation. While such perfection is a worthy goal, there are situations in which it isn’t an essential priority. For example, if a pallet ships with the wrong quantities of soda and energy drinks, the receiving retailer or end customer probably won’t suffer greatly, especially if the mistake is quickly rectified.
But consider the cost of a mistake in commercial aviation — where the key metric for business performance is to have the aircraft in use as much as possible. When aircraft sit on a runway or in a hangar waiting for a part, the loss of use costs thousands, negatively affects on-time performance, and inconveniences customers — which can tarnish the brand’s reputation. Likewise, a mining company may lose millions of dollars if it halts work after receiving the wrong excavator wheel-track replacement.
A company’s mission and industry should dictate whether (or in which cases) it will strive for perfect orders. For example, parts ordered by an airline or mining company are more mission-critical than an order of balloons headed to a party store. And every supply chain has its own complex systems and interlocking components that impact the costs of achieving perfection.
With many new solutions available to help improve accuracy and reduce variability, companies must assess expected gains against projected costs. By automating manual and analog order management tasks, organizations are increasing accuracy, reducing the use and waste of items such as paper and printing supplies, and improving customer service by providing greater transparency into order status.
Before deploying new systems and automation, companies should understand their order accuracy requirements and the potential returns on their investments.
To capture these measures, organizations should track all their credits as well as the time spent fixing each mistake. Additionally, they should calculate the average time required to process an order, being sure to factor in the cost impact of time spent making corrections — including the time to pick, pack and ship a typical order.
According to AMR Research, companies with the best supply chains greatly outperform the S&P 500, and those with perfect order rates of 80% or higher are more profitable than peers with lower rates. These companies also have higher earnings per share and a better return on assets. By applying the perfect order rate to manufacturing output or distribution center operations, managers can better understand the value of delivering a perfect order. And by quantifying the costs and risks of failure, organizations will better understand whether and where to invest in order management improvements.
To increase perfect order rates, RPA and artificial intelligence (AI) can help streamline and automate order entry, processing and inquiry — including returns management. These technologies speed order processing by automating data entry and eliminating manual, paper-based forms. They also increase availability of data throughout the order fulfillment cycle by providing real-time information, which improves customer-inquiry handling and speeds documentation processes and delivery.
RPA and cloud-based solutions can deliver quick and meaningful benefits. A U.S.-based multinational conglomerate sought to reduce its order management error rate. Many of its more than 700 customer support team members were tasked to address fallouts, failures and exceptions. By deploying a digital order management solution that spanned every sales and order channel, the company virtually eliminated manual entry. Significant cost savings resulted due to a reduction in errors and related support needs. Revenue increased $20 million with fewer cancelled orders, and the company saved more than $5 million through a reduced order-touch rate. By introducing digital service order management in its installation scheduling processes, the company further increased efficiencies, resulting in an additional $11 million in revenue.
Similarly, a U.S.-based entertainment media company sought to formalize its order entry process and improve how it reviewed, verified and sanitized orders before delivering content. It was also seeking to focus its sales team on building valuable customer relationships, rather than merely taking orders. With a new digital order management system, the company was able to offload non-value-add work from the sales team. The system automatically flagged key orders that required more personalized follow-up and consultative selling based on the customer’s account history and activities. As a result, the company increased up-selling revenue more than 300% month over month.
By deploying digital order management and RPA solutions, companies can:
These solutions also help increase collaboration and accountability among internal departments, such as order processing, and throughout factory, warehouse and distribution operations. Automation can also provide workers with a better experience — they transition to more skilled positions and tackle critical and strategic problems, rather than handling rote tasks. Moreover, customers benefit from an improved ordering and service experience, and can lower their own internal costs for managing orders and addressing returns or vendor problems.
Striving for perfect orders is a worthwhile objective to increase customer satisfaction and reduce costs — particularly for critical customer situations that truly require it. By adopting digital, and deploying automated solutions in an agile and rapid manner, manufacturers and distributors come closer to realizing the perfect order and progress along their journey toward improved order accuracy.
This article was written by Ankur Jain, Client Services Executive, Manufacturing, Logistics, Energy & Utilities for Cognizant’s Digital Operations Practice.