Order management at today’s small businesses is a sorely underinvested area – whether you’re a retailer, a wholesale distributor, or any other volume order based business.
I’m not talking about just the processing of a web order, or shipping a product, or sending out an invoice. I’m talking about optimizing the whole process - from soup to nuts. Most small businesses often focus on solving a piece of the puzzle – whether making their shipping process a little more integrated with the carrier, or maybe by moving to electronic invoicing. But very few look at it from a whole process perspective, and that is where a big part of the value often lays, and it’s the secret to achieving a scalable order management process as the business grows.
In fact, if you take a whole process view, the payoff can be a staggering. The potential benefits break into a number of areas:
- Efficiency. One analyst estimates that enterprises can recoup 5% to 17% cost savings by optimizing order management processes. This comes from a number of areas, including reducing headcount devoted to manual order re-entry processes between web, fulfillment, finance and support systems, as well as lowering cust omer returns through mis-processed orders.
- Customer Satisfaction: Similarly businesses have reported up to 20% increase in customer retention, and an increase in order sizes. The reason is due to faster order processing times - from cart to invoice, more accurate orders, more accurate invoices, and improved order visibility (for the customer, and for employees).
- Reduction in Fraud: Taking a whole process view means baking fraud protections right into the order process, and reducing the amount of time spent manually screening orders. According to the Merchant Risk Council, fraud exposure can run as high at 1.5% of revenue – driving this number down through better management of Ecommerce processes, payment processes, and more rigorous (and more efficient) order screening processes translates to real revenue.
Taking a whole process view is going to get much more important in the coming years. With online retail sales in the United States set to double its share of the overall retail market, with order volume increasing (together with the downside of increased online payment fraud exposure), and customers becoming increasingly fickle, it is becoming really important to build a scalable, efficient, and accurate order management process.
So what does a fully integrated order management process mean exactly, and why is achieving it a challenge?
- End to end order flow. Tracking the customer and their order information through each stage of the order process – from marketing touch, to order, to invoice and support. In many businesses this information crosses multiple systems, and multiple stakeholders. Which means data is often rekeyed between systems (which means errors, and overhead), and also stakeholders at each stage may have limited visibility into other areas of the order flow. It also means protracted order fulfillment times, with orders effectively changing hands many times until they are finally invoiced. Unfortunately many businesses have grown into this issue over time, by deploying systems incrementally – such as QuickBooks or Great Plains, a homegrown website, a separate customer service system etc. To get an integrated and scalable flow, the order needs to flow through each stage – with minimal rekeying from department to department, and allow each stakeholder to get comprehensive order and customer visibility – not just a view into their own silos.
- Order process analytics. The only way to improve order fulfillment time, accuracy, or reduce fraud exposure is to put key measurements in place across the process, for continual improvement. However, it’s often a challenge to achieve these measures when data is fragmented. Key measurements include:
Of course there are other key measures to analyze – but by analyzing across the process you can build a picture of where to tune – and where issues may be causing a domino effect further down the order management process. However, for businesses with an “order management hairball” – i.e. homegrown web site, systems like QuickBooks, separate fulfillment systems and customer support systems it is a major challenge to analyze the whole process – and trying to overlay conventional analytical tools (or spreadsheets) is often an onerous and error prone process by itself.
- Cart abandonment – i.e. the % of orders abandoned in the process.
- Order capture effectiveness – i.e. the % of orders captured with the right information.
- Fraud effectiveness – the % of fraudulent orders screened out.
- Resource effectiveness – order processing resources as a % of order volume.
- On-time fulfillment – the % of order fulfilled on time.
- Order completion – the % of orders completed on time.
- Order settlement – the % of invoices received with net time
- Stakeholder visibility. Simply, enabling all stakeholders to get both the visibility they need to perform their role, and enable to answer customer questions that may be outside of their role – i.e. through self service, and also provide them with the opportunity to identify upstream bottlenecks that may be impeding their department’s performance. Any order will always straddle multiple departments – the sales and marketing team, the accounting team, fulfillment and service team - and so can any customer question. It’s key that a customer service rep, a sales person, or a fulfillment specialists can answer basic questions about an order without having to bounce around the organization having to hunt down the right information. When was the order placed? When did it ship? What was the invoice amount? When did it arrive? Providing stakeholder visibility improves efficiency and improves customer satisfaction. Stakeholder visibility also extends to the customer – providing them clear self service web based visibility to their whole order. However, this too is hard to achieve when contending with an order management hairball of separate applications, different client tools, and local databases.
Solving the order management process with a single business suite makes sense – because a suite approach integrates and centralizes the key data and treats the whole process in a coordinate way. However, the problem is that many suites have one or more of the following problems:
- Many still don’t include tightly integrated Ecommerce functionality
- They often require an expensive on-premise deployment – and you’ll end up spending more time maintaining the system than improving the actual process.
- And many still don’t provide built-in analytics, let alone real time analytics.
NetSuite takes a much more holistic approach to driving the order management process – from Ecommerce, through to financials, through to shipping, invoicing and service. However it’s with a much more pragmatic deployment approach – cloud delivery. This translates to a much faster deployment than a traditional on-premise approach, and without the hassle of ongoing maintenance (which can otherwise become pretty onerous – and costly, with a cross-functional on-premise business suite). And it means your stakeholders can access their application – and role based analytics from everywhere, through just a web browser, improving their productivity while lowering your desktop support costs.
If you get the process right it can pay big dividends. I recently conducted a webinar with an Ecommerce company, ClickStop, who are a rapidly growing multi-brand, multi-channel merchant operating in several specialty categories, with a dozen Ecommerce stores. They integrated their order management process and are now managing four-fold the order volume - which would have required 50% more employees with their old QuickBooks centric approach. Mountz, a designer and manufacturer of torque control products, is saving 2-3 hours per day with an automated vs manual process, together with achieving 25% cost savings versus running the old system.
It’s time to take a step back and look at how your orders flow through your business – and consider the benefits of taking a whole process view to improving performance!
Posted on Tue, November 30, 2010
by Paul Turner filed under