Ready for a story that might sound familiar? Owen is a wholesale company owner looking for an improved method of optimizing his order processing, routing, and shipping processes. He has recently noticed that he is paying the price for avoidable mistakes in orders not shipped and compliance chargebacks. He is considering whether back office support services will really allow him to streamline the overall process, saving money, and freeing up time for other important tasks. Through the identification and implementation of cost-cutting measures at every step of the order and invoicing process, can Owen eliminate those mistakes and even improve his company’s buyer experience so he increases his repeat business?
Processes Involved in the Order Cycle
Owen’s wholesale business follows the typical order and invoice processing steps in the order to cash cycle (OTC). This set of processes, when done well, can consistently fulfill a customer’s request successfully. Unfortunately, Owen has seen a lot of errors coming to his attention. These errors have cost him customers, money, and time. He wonders how his wholesale company can improve in these areas.
First let’s break down the processes involved:
1. Sales Orders
In Owen’s wholesale business, sales orders arrive in various formats and stages. His company may receive orders in the form of spreadsheets, EDI files, HFC or Bulk or confirmed orders, PDFs, handwritten orders, even photos taken on a salesperson’s cell. Each type of order requires different systems in place that provide checks and balances. If Owen wants to keep order processing in-house then he should create written procedures for the processing of each type of order received. He should make sure his software is helping rather than creating problems, including a system that alerts him when goods are oversold or not available within the delivery window.
Purchasing involves the creation of purchase orders but not all factory POs should be treated similarly. FOB or POE orders must be handled differently than orders for landed goods. He needs solutions and processes that distinguish between those types of orders, marries sales orders to factory orders when appropriate, and alerts him when delivery date changes impact specific sales orders.
Owen often see that containers arrive at the warehouse and a receiving doesn’t get entered into his system until a week later. Electronic file transfers can help but only if the warehouse does the physical work in a timely manner. Owen can set expectations with his warehouse and set automated alerts when receivers have not been submitted in time.
Another problem Owen faces is the “pre-receiving” problem. Sometimes goods arrive late and need to be allocated before they physically arrive in the warehouse. When his company “pre-receives” the goods he has lost control of the data. If the container comes in short goods he may not pick up the problem. He needs to create a tight process to track “pre-received” goods.
4. Picking and Packing
Allocation is a critical function. If inventory quantities don’t match order quantities, an item might not be available to fulfill an order. He needs a system in place to set priorities so that allocation decisions don’t happen by without intention. Just because an order has an earlier start ship doesn’t mean it should be given priority. Owen needs to establish criteria for allocation decisions or set up a system whereby he can make those decision with intention.
5. Routing and Shipping
Routing requirements are complex. Does he need to route 2 days before the start ship, 7 days before the in-store date, or 4 days before the cancel date? Is it a pickup or delivery? Do the cartons requires UCC-128’s or standard labels? Does he need to transmit ASNs and if so when? Owen needs a system, like a routing master, to help track each customer’s shipping requirements.
Once an order is shipped Owen wants to invoice that shipment immediately, and turn it into cash. If he uses a factor he wants to assign it immediately. If a warehouse doesn’t provide the BOL in a timely fashion he is stuck waiting. So Owen needs a system to track pending shipments so that he can follow up with the warehouse if a BOL doesn’t arrive when expected.
Solving Owen’s Dilemma
All in all, the biggest issues Owen has experienced are process and systems based. Solving them requires time to scope out written procedures, to hire qualified personnel, and upgrade his software.
Owen can set aside time for weekly meetings to address each of these areas and lay out written procedures. He can make certain that his software delivers both on the user level and in its reporting functions. He can spend the time necessary to find qualified personnel. Every few months he can review the processes and make improvements. If he is persistent, over time, his order processing can improve.
Alternately, every step of his order processing can be improved by utilizing experienced back office service providers. The right partner should have the experience, personnel, and software, to improve in each of these areas. Most times, back office support services providers, can even deliver these services while saving Owen significantly.
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