Managing Automation - February 2009 - (Page 42) [TRANSFORMATION] card report to ser ve equally geographically dispersed order for 10,000 widgets to be produced in customers. Orders come in via channels its factory in Mexico. But if there is a strike ranging from websites, to brick-and-mortar in Mexico, the manufacturer should be able stores, to distributors, to e-mail, to phone/fax. to act quickly to mitigate the problem, for exConsumer product manufacturers are learnample, by sending 5,000 orders to China and ing to be retailers, as they make private-label 5,000 to the Czech Republic and thus meetgoods. In many industries, the number of ing its on-time commitment to its customer. components has mushroomed, so assembly Manufacturers able to demonstrate such is another major under taking. Once the flexibility stand a better chance of executing a product is assembled, an army of third-party logistics providers “Now we spend less time reconciling dis(3PLs) delivers the product. puted invoices and processing memoranda.” Manufacturers in all vertical in— CF Industries’ Christine Dingman dustries now play in the global sphere, where regulator y rehigher percentage of what experts like to call quirements can be complex, “perfect orders.” Not surprisingly, companies and sustainability is yet another that come close to delivering the right prodpuzzle piece. uct, at the right price, in the right time frame, Against this backdrop comes in the right quantity, using the right delivery an urgent need for as much opmechanism reap dividends in higher cusKEY METRICS erational efficiency as possible tomer satisfaction and retention levels, acCompanies should judge their order management in order to reduce costs and cording to Wang (see table, p. 43). Achieving performance based on a variety of key perfordrive profits to manufacturers. a perfect order requires enterprises to revisit mance indicators (KPIs), including: At the most basic level, this how existing order processes support multi● Availability-to-promise visibility means improving cash flow. ple selling channels and multiple fulfillment ● Order status across all stages Manufacturers use a variety of scenarios across functional areas, Wang says. ● Picking error rate technologies to automate the orIn 2004, to improve the accuracy of its or● On-time delivery percentage der-to-cash cycle, including ERP ders and invoices, CF Industries installed a ● Cases shipped vs. ordered ratios modules; electronic exchanges, multi-channel order management and ful● Type and percentage of unsellables many in specific vertical marfillment software suite from Sterling Com● Days of supply kets; and most recently software merce (then Comergent). The system, which ● Order cycle time as a service (SaaS) order manCF Industries dubbed Promise (Providing ● Shelf-level service ratios agement offerings. Order Management, Invoice, and Ser vice ● Warehouse-to-store fill rate Excellence) gave customers access to CF’s ● Order accuracy percentages THE PERFECT ORDER order management processes via Web por● Accurate and timely invoices percentages Beyond improving cash positals. The benefits of the new system quickly ● Percentage of data synchronization tions, order-to-cash excellence became apparent. ● Stakeholder satisfaction can provide a competitive advan“That was a huge improvement for us,” ● Lifetime monetary value of stakeholder tage in industries where the prodDingman says. “We created more front-end Source: Forrester Research uct is highly engineered or the visibility, and we have improved our pricing item is valuable but has a short and invoice accuracy.” shelf life, according to AMR Research analyst The sales staff now does more than just Jane Barrett. High tech and aerospace/detake orders. And customers appreciate the fense are two vertical industries that fill the bill. visibility the system gives. “Some companies just take orders and “Now, we spend less time reconciling disthen it’s not such a big deal. But where the puted invoices and processing memoranda,” order is for very large, custom-built equipDingman says. “We have a billing run nightly. ment and machinery, the ability to get that Customers receive their invoices electroniquote out quicker and more accurately is cally the next morning, and the information an advantage,” Barrett says. is accurate.” In addition, end-to-end order management The benefits accrue to CF Industries’ cusoffers visibility, which, in turn, increases tomers, as well. The system provides reports business agility. “I can reallocate inventothat help them manage their business, such ries, do production where it makes sense as automatic notification of how much product — all of that stuff you should have been able they are entitled to order against a specific to do but couldn’t do because the systems contract. The system also sends invoice-due were not flexible,” says Ray Wang, princireminders and vehicle-sighting notices. For pal analyst at Forrester Research. example, if a customer’s barge is in transit Let’s assume a manufacturer receives an up the Mississippi River, that customer will February ma 42 2009
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