Order management and fulfillment is one of the core processes of supply chain and business success. It is a business process that touches almost all departments and requires collaboration to achieve a Perfect Order Index (POI) or “On-Time and In-Full” (OTIF) in-line with customer expectations. No matter which metric you use to capture how successful the supply chain execution and fulfillment is, it all boils down to long-term customer satisfaction and retention with continuously improved financial results.
Improving the competitive edge through order management and fulfillment is more important than ever. Today, industrial manufactures are faced with fragmented supply chains, increasing costs and an unparalleled customer pressure to make things cheaper, better, and available everywhere. This makes order management tougher than ever. Here are a few reasons:
- Expansion by mergers and acquisitions
- Increase of order and delivery channels
- The complexity of global supply chains
- The rising expectations of customers
Expansion by Mergers and Acquisitions
PwC has predicted that the industrial manufacturing merger and acquisitions (M&A) will shift to growth-oriented transactions in 2014. Manufactures are seeking to align with faster growing market segments and expand market share locally or in emerging markets.
Operations that have been involved in M&A need to find ways to leverage their investment by cross-selling products across divisions or merging sales and distribution channels. Often, the initial thought is to “rip and replace” existing legacy systems. However, this ambitious choice is usually extremely time-consuming, expensive, and disruptive with value only emerging at the end of the process. Often, the other option being considered is integrating the systems; an effort that might address today’s problems but lead to the same situation down the road when the business process or organization changes again.
The ultimate solution is finding and implementing a flexible solution enabling changes to business processes without the hassle of changing out all the systems or creating additional point to point integrations.
Increase of Order and Delivery Channels
Most manufacturers have customers ordering through multiple channels (EDI, eCommerce, service desks, etc). In a recent study conducted by Peerless Research Group on behalf of Logistics Management and Supply Chain Management Review, found that almost 86% of manufacturing companies have customers using multiple channels. 45% of the respondents say that the number of customers who use multiple sources has increased during the last year.
Multiple sales channels usually equal to multiple business systems where part of the order process is taking place. One area in need of improvement where many big rewards await manufacturers, is attaining visibility across the front end, including the dealer and distributer network, of the supply chain. The ability to capture purchase data, manage returns, warranty claims and provide consistent customer experience across channels is essential for overall brand experience.
The Complexity of Global Supply Chains
Companies increasingly look at the entire world as their market and the manufacturers’ supply chains are growing enormously complex. The product life cycles are becoming shorter and the ever-rising customer demand requires manufacturers to increase spread of distribution, manufacturing, sourcing, and engineering operations around the globe.
Cost reduction programs has over the past decade often included reallocation or outsourcing pieces of the supply chain. In addition, many manufacturing companies are trying to minimize taxes and cross-border duties and tariffs resulting in production facilities or warehouses located in geographies they wouldn’t otherwise choose.
For whatever reason the change has been made, the impact is the same: stretching and dispersing the supply chain adds complexity.
Multinational companies are finding it ever more difficult to synchronize all the pieces and at the same time continually drive down supply chain costs. Even though large manufacturers are viewed as a global operations, most still appear to be optimizing their supply chains and managing their orders on a “local” basis – by product, facility, country, or region. This means they are losing opportunities for large-scale efficiencies.
The Rising Expectations of Customers
Missteps in availability and customer service can cost in this competitive industry. The risk of not meeting ever-increasing customer demands – from product and service quality, to new product introductions, delivery, and warranty – remains a major concern for manufacturers globally. Keeping supply chain quality high is critical, not just for the product itself, but for after-sales service and delivery, as well. This places huge demands on the entire supply chain, and the penalty for failure is severe.
Conclusions and Recommendations
In today’s complex, global marketplace, large manufacturing corporations often have 45-60 systems (ERP, WMS, CRM, e-commerce, SCP, etc.) that are related to the order process impacting supply chain metrics. The number of systems are not just related to various systems and providers, but also due to implementation of different versions and data models. The reality is, many multinational companies are faced with siloes back office systems making it difficult to standardize business processes.
It is worth exploring innovative technology solutions available today that can address these issues and drastically improve an organization’s order orchestration and fulfillment practices. There are applications designed to co-exist with existing legacy systems for the purpose of creating new standardized processes across an entire global cooperation. By leveraging systems that separate the master data, business rules, and business process from the physical integrations, you have a flexible platform for the future that delivers immediate benefits, including:
- Improved customer satisfaction
- Reduced tied-up capital in inventory by better inventory utilization
- Reduced order handling cost
Standardizing on one unified global order process across all sites creates the ability to capture best practices for further improvement and efficiency. With an agile and scalable supply chain platform, it becomes easy introducing new products and new market channels. From a customer point of view, you will become a company easy doing business with.