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12

Jul

The right-first-time sales order fulfilment experience, do your staff and customers get this?

The orders are in… and now comes the hard part – ensuring that you meet your obligations with your trading partners and accurately account for the myriad of discounts and promotions. 

If you fail to get these things right you can lose hard fought for shelf space in the grocery environment, or potentially have a less than accurate view of margin on products due to a disconnect between the capture of on-and-off-invoice discounts and promotions.

First and foremost is the double-edged sword of EDI. By double-edged we mean the sometimes one-sided demands (where your partners get automation benefits and you don’t) and the fact that setting up EDI has a cost and requires some dedicated effort to clear “certification” testing with your partners. The good news is that when you have a reasonable volume of orders, you should get a positive return on investment.

The second element of getting things right-first-time is to use a system that allows you to capture all elements of any transaction. The simplest element is off-invoice discounting, as this normally allows you to report on the gross potential revenue, then net off the discount to help you understand the impact on margin.

The hard part is discounts or promotions that are not directly attributable to the items on an invoice, as many systems leave these costs “hanging” outside where you need them – in your mini P&L reports by SKU, product group or category.

What we help achieve in this area is to both accrue for these expected costs, allowing these costs, and in some cases revenue flows, to be connected back to the right part of your product tree. This allows you to see the true margin and impact of specific promotional investments right across your portfolio of products. Whilst this level of complexity in price management is predominantly driven by the grocery sector, the level of cost and margin visibility you can achieve will go hand-in-hand with the product insights your sales team need.

Using business intelligence, this information can be correlated to other retail intelligence you gathered – for instance what the impact of certain store positioning achieves, or how a particular price point versus your competitor drove sales of a specific product category. The ability of your sales team to share these stories with other customers will allow you to find ways to repeat high value promotions that benefit your customer just as much as your bottom line.

Here are some best practices for sales order fulfilment, and something for you to focus on:

  • Get your back-office ERP data quality and process sorted – EDI can quickly expose weaknesses in these areas to your trading partners
  • Avoid hard-wiring each EDI stream directly to your ERP system. Instead, consider a cost effective middleware solution that is built to transport, transform and monitor EDI messages
  • Ensure you take full benefit by including as many EDI flows back into your system as possible, as this is where you maximise your productivity benefits
  • For grocery orders, automated order confirmations lock you in to a fulfilment commitment, so this might be an area where you need to tread carefully to avoid your solution to this problem being higher than necessary stock-on-hand
  • If you use an EDI middleware solution, look past the first trading partner implementation to consider your ROI. You need to consider the manual effort and therefore cost to process each order versus the one-off and any ongoing costs to digitise this process

There is a certain crossover point, in terms of the number of EDI transactions with a trading partner, that drives a worthwhile productivity return (ROI) – if you don’t know this we are happy to share this metric.

“What that means operationally is that order entry happens in half the time – actually, generally the team spends a lot less time on data entry, giving them more time to focus on more important aspects of their jobs. And the ability to instantly review the status of orders, rebates, pricing and many other metrics is invaluable.” Director - Pavé Group

If you’re facing these challenges and know it’s time for change download our food and beverage industry whitepaper now, or reach out to us so we can help you in your journey from good to great. More predictable profitability awaits you - let us help you by delivering tomorrow’s business advantage today!

Posted by: Steve Scarbrough, General Manager Dynamics Solutions | 12 July 2017

Tags: mobility, data insights, Food and Beverage


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