As with many things, business processes evolve over time and therefore are never perfect; one can be left wondering; why is it done that way, surely it can be improved?
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Wholesale change is rarely an option; there are too many stakeholders with vested interests as well as legacy systems involved that have to be integrated. All this is especially true of any process that involves interacting with third parties as so many do. Quocirca has spent some time recently looking at a particular process that exists in all companies, the order to cash (OTC) cycle.
In a nutshell, this is what happens between a customer (a retail store, restaurant or hospital etc.) placing an order with a supplier (a manufacturer, distributor etc.) and an invoice being accepted by the former and the latter being paid. In general, the shorter the OTC cycle the happier the customer and the supplier’s finances will be healthier.
Because the OTC process also involves logistics services providers (men in trucks and vans) there are usually a minimum of three parties involved, sometimes many more; all have their own systems and way of doing things. This means OTC processes can only ever be adapted, not replaced.
This does not mean big improvements cannot be made – they can and quick wins can be gained through better automation at various stages of the cycle. This is the subject of a recent Quocirca report “Customer automation management”.
The report explores the four elements that define customer automation management:
- Support for multi-format processing (e.g. of orders and proof of delivery notes)
- The creation of intelligent business rules
- Improved master data management
- Accelerated exception management
It looks at how each helps shorten the OTC cycle and explains why a single electronic data interchange (EDI) standard has never arrived and never will.
That many incremental improvements can have a major high-level impact is explained through looking at how days sales outstanding (DSO) can be reduced. This is a key metric for finance managers and, in public companies, one that can affect share price for better or worse.
Quocirca’s report “Customer automation management, dealing with diversity: there is more to serving customers than EDI” is free to download here http://offers.omprompt.com/quocirca-customer-automation-management-report
Quocirca will be presenting the findings of the report at a webinar on November 27th 2013, for information and registration follow this link Beyond the Visibility Gap Webinar.