Automated Sales Order Processing for Order-To-Cash Performance with ERP Systems
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WHITE PAPER Automated Sales Order Processing for Order-to-Cash Performance with ERP Systems www.esker.com ESKER DELIVERYWARE WHITE PAPER Table of Contents Introduction .......................................................................................................................................................................................3 Streamlining the Order-to-Cash Cycle ......................................................................................................................................4 Automated Order Processing .......................................................................................................................................................7 The Esker DeliveryWare Solution ...............................................................................................................................................8 Sales Order Workflow with Esker DeliveryWare .................................................................................................................10 Esker DeliveryWare Automation Benefits .............................................................................................................................12 Case Study: Leading Appliance Manufacturer ....................................................................................................................14 Creating a Successful Implementation ..................................................................................................................................15 About Esker ......................................................................................................................................................................................16 ESKER DELIVERYWARE WHITE PAPER Introduction Business performance depends on how well a company manages its internal processes. Companies with effective business process management in place are able to analyze key performance indicators to monitor efficiency of day- to-day activities and employees against operational targets. Many companies have implemented enterprise resource planning (ERP) applications to standardize enterprise operations and support business process management strategies. ERP solutions empower companies to automate many business processes formerly done by hand. But to achieve full return on investment in ERP solutions, businesses need to automate the documents that drive business processes. Some companies have also implemented technologies to automate document exchange, but often only to a limited degree. To the extent that a business process is manual, relying on paper and lacking transparency for a view of daily activities, effective management of the process is a time-consuming challenge. Nowhere is this more apparent than in sales order processing. And the situation is particularly acute for businesses entering orders into ERP applications. When companies examine ways to gain efficiencies and competitive advantages in a constantly evolving business world, order processing within the order-to-cash cycle emerges as an area offering significant potential for improvement. If there’s a single characteristic that distinguishes high-performing companies, it is efficiency in the processing of customer orders. Reducing the time it takes to turn an order into money in the bank offers strategic benefits to the company while strengthening customer relationships. Beyond cost savings, companies converting to an automated order processing system can realize efficiencies throughout the order-to-cash cycle. Along with reducing operational costs, freeing staff to spend more time on customer service activities Improving Customer Satisfaction and improving accuracy, automation of sales order Companies today recognize that they must deliver out- processing gives companies more control and insight standing customer service in order to acquire new custom- into what is happening on a daily basis. These factors ers and retain existing ones. The ability to process and ship help companies better manage customer and supplier orders accurately and on time, and to provide quick feed- relationships, manage inventory and production, comply back to customers about the status of their orders, is at the with regulatory requirements, control finances and sales core of this service model. forecasting, bring visibility to business processes and With manual sales order processing, customer service suffers improve overall profitability. from the large amount of time spent on picking up, collating, delivering, entering and tracking orders throughout every This white paper examines the challenges faced today day. Companies often have a backlog of several days by organizations that are still manually processing sales to enter orders. Human error is also a concern, as manual orders, as well as the outcomes of automated sales order processing results in orders being entered incorrectly and processing — including time, labor and cost savings as returns being made. Orders or parts of orders can easily get well as customer satisfaction. In highlighting a unique “lost in the system.” And as the volume of customer orders platform that integrates end-to-end automation of sales increases, the level of staff must increase. order processing with ERP solutions, this paper covers: § Inbound customer orders as part of the order-to-cash cycle § Key challenges: receiving, preparing, entering, validating, routing and storing orders § Overcoming those challenges: process improvement through automation § What the solution looks like As a resource to help businesses gain efficiency and improve customer service in today’s competitive business environment, this paper is designed to assist CEOs, CFOs, CIOs, order processing managers and ERP system administrators in learning about, planning for and evaluating inbound sales order processing automation. 3 ESKER DELIVERYWARE WHITE PAPER Streamlining the Order-to-Cash Cycle What is order-to-cash? Order-to-cash is a generic term used to encompass the business cycle that starts with reception of a customer sales order and ends with collection of accounts receivable generated in the sale of the final product. There are several sub-processes within the order-to-cash cycle, including: receiving orders, entering sales orders, approving sales orders, fulfilling orders, billing for the orders and collecting payment. Conventional order-to-cash Using manual processes to orchestrate order-to-cash operations creates heavy administrative burdens along with the potential for incorrect shipments and cash collection delays. Manual processing of sales orders is inherently labor- intensive, time-consuming and error-prone, requiring valuable resources to manage each part of the process. Using conventional methods, it can take hours to prepare, enter and store a sales order. And one wrong keystroke during data entry, such as inputting 100 units instead of 10 units, could become a nightmare for you and your customer. All activities down the line, including invoicing, will be affected — and cash collection can be delayed. Inevitably, human errors cost companies both time and money. Within the order-to-cash cycle, sales order entry needs specific attention as it represents potential bottlenecks that can cause huge inefficiencies and significant costs directly affecting the bottom line. SALES ORDER ORDER APPROVAL INVOICING PAYMENT ENTRY FULFILLMENT Sales order bottlenecks Integrity of the sales order is crucial to achieving and maintaining high efficiency throughout the order-to- cash cycle. If you begin with inaccurate or ambiguous information, performance will suffer. All activities are affected by the information that is pulled from the sales order. When companies receive customer purchase orders, the nature of the processes they use to create sales orders in the ERP system and handle workflow can determine how much efficiency they are capable of achieving. Once the information is entered into the ERP system, there are issues of how to handle exceptions and how to keep track of order status. And when customers call to find out if their orders have gone through or to check the status of their orders, it means tracking down whether the order is still on the fax machine, with the rep, already entered into the system, etc. Archiving Companies also spend a significant amount of time retrieving orders and order data for internal or external audits and to satisfy the requirements of regulatory frameworks such as the Sarbanes-Oxley Act. Receiving orders automatically can enable companies to archive orders electronically, whereas in the past orders may have arrived via fax with the risk of getting lost at the fax machine and thereby delayed. Automated archiving offers major benefits in helping companies support regulatory compliance and avoid the hassles of filing and retrieving order documents. 4 ESKER DELIVERYWARE WHITE PAPER A maze of manual touch points In many companies, sales order processing travels through a labyrinth of departments and manual touch points for order preparation, data entry and archiving. Upon the arrival of a sales order, staff collect orders from a shared fax machine or printer, collate them, keep the paper copies and store them along with associated documents for later retrieval as needed. Manual data entry is required for sold-to number, quantities, part numbers and other key fields. Sales representatives and administrators can only hope that none of these manual touch points cause misplaced orders, delays in