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In this guest article, Brian Shannon, Chief Strategy Officer, Dolphin Enterprise Solutions Corp, uses case studies of successful organizational transformation to offer four ways to improve the Order-to-Cash (O2C) process.
With many different ways to improve processes, it can be difficult for organizations to decide where to start. For those that want to be able to outpace competitors in global process improvement, even small changes to existing processes can deliver significant benefits through lower costs, greater productivity and reduced risk. Based on case studies, here are 4 ways organizations have successfully improved order-to- cash processes.
1.Automated order handling reduced processing costs by 72%
A leading worldwide manufacturer of electrical products, tools and hardware wanted to improve its manual order handling process. Orders were received by fax or email, which required operators to key the orders into the system manually. This process sometimes led to errors that caused problems in order fulfillment. Exceptions had to be resolved by routing orders to different departments for review, and managers had no way to tell how long it actually took to process the order from time of receipt to when it was finally fulfilled. The company opted to improve its order handling through a combination of automated order capture and workflow.
The company decided to scan orders as soon as they were received. Order information was automatically captured using Optical Character Recognition (OCR) and then validated against customer and pricing data in SAP systems. In-house operators were able to make any necessary corrections. Where possible, the company decided to increase its use of electronic order submission, either through XML, EDI or an online customer portal. This helped the company to process almost 200 hundred orders in less than five minutes. Previously, this process took more than 2 days.
The company was able to reduce overall order processing time by 8 days and processing costs by 72% by leveraging SAP workflows to automatically route orders from the initial capture through the order fulfilment process. This also enabled the company to accurately measure how long it took to process orders, helping managers to assess whether the company was meeting or exceeding its customer service goals and find new ways to improve the order handling process.
2.Digitizing order and deliver documents reduced buyer inquiries from days to minutes
A global designer and maker of communication and navigation products wanted to improve the speed of its buy cycle by reducing the time it took to answer buyer inquiries. Before implementing O2C process improvements, it took the company up to 3 days to answer a customer inquiry. When a case was opened, the customer service representative would spend time collecting the order information and supporting delivery documents, many of which were paper-based and filed in various locations. This problem was compounded when the manufacturer sold into large retail outlets which had teams of buyers raising multiple issues with large complex orders. At times, a single inquiry worth as little as a few hundred dollars could delay payment on a bill worth hundreds of thousands of dollars.
The company decided to digitize the order documents so users would have the ability to readily access and retrieve documents. By adding a scanning and document indexing solution to its existing SAP environment, the company was able to put all of its important sales documents online. The indexing solution made it easy for users to find relevant order information quickly and bundle them into packages for distribution, helping customer service representatives to reduce the time to resolve buyer inquiries from days to minutes.
The company also decided to use cloud archive storage, helping them store order information for as long as required to manage warranty and tax audit requirements at a lower overall cost.
3.Templated-based process simplified payment from large retailers
A world leader in imaging, precision equipment and instruments with an extensive retail-side of the business wanted to simplify the remittance process for eight large retailers so it could reduce costs, improve processing time, and reduce the risk associated with these large payments.
While smaller retailers generally submitted remittances by check or through an online portal, larger retailers often submitted large payments electronically and submitted the remittance advice separately from the payment – generally through email.
Each retailer also had a custom remittance process and provided information to the company in different formats, meaning the company had to hire separate individuals to handle each large retailer, increasing the overall cost of processing payments and putting the company at risk when those employees were out of office.
The large and complex remittances advice documents could reach up to 70 pages in length. The company quickly discovered that OCR, even with a very high match rate (90% or more), could not provide the accuracy the company needed to quickly match the payment information.
It was decided to use a template-based approach to reliably achieve a 100% match. A solution was implemented that would automatically receive and map the remittance advice documents from the large retailers. The information was then mapped into the SAP application where the AR staff would quickly review the remittance and match the payments. This approach reduced the time to process these large orders from multiple days to minutes, and meant specialized AR staff could be moved on to more value-added tasks.
4.Centralizing payment processing quickened time to payment
A leading maker of medical devices for home, hospitals and laboratories had multiple locations processing 29,000 remittances each month. In addition to processing a large volume of monthly payments, the company struggled to increase the accuracy of its payment process – over 30% of payments had an exception, which required additional processing time and delayed time to payment.
The company decided to leverage its SAP system to centralize payment processing. It implemented a third-party add on solution to automatically capture and process remittance advice documents. The solution validated remittances against the data in the SAP application, detecting any potential exceptions as soon as the document was received. The solution then automatically routed the exceptions to the correct AR team member for resolution. If the payment and remittance advice matched, the solution was able to automatically clear payments without additional effort from the AR team.
Centralizing the remittance process provided the company with greater insight into cash flow across the entire organization. It also enabled the company to lower its payment processing costs significantly. With less manual work processing payments, the AR team was able to resolve exceptions quickly and the team worked with customers to devise new ways to improve the accuracy of future payments.
If you are looking for ways to drive improvements in O2C, contact Brian.Shannon@dolphin-corp.com for more information.
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