Digital Tools Can Close The Order Management Performance Gap

Nilly Essaides

Automation makes a big difference in the performance of the order-management process. Companies that manually input most of their orders take longer, spend more, and have more errors. The Hackett Group 2017 benchmarking research analysis shows that world-class companies (in the top quartile) automate 64% of their orders, or 1.5X more than typical companies. They complete the orders in a third of the time and have 50% fewer errors.

Source: The Hackett Group 2017 Benchmarking Study Analysis

For a time, there was nothing companies could do about orders that came in via phone, fax, or email. An agent had to input and validate them. But digital technologies are opening new connectivity paths; these new tools reduce the need for human intervention, dramatically speed up the process, and make it more cost-effective.

Three digital routes: a use case

One fast-growing, $2 billion distribution company gets 65% of its orders via its website. However, the rest come in via email or fax. Those orders used to take about 10 minutes each to process and almost always required a follow-up call to confirm an address or part number. To reduce manual labor, the company adopted three digital initiatives:

  1. It acquired an artificial-intelligence (AI)-enabled solution that reads incoming faxes and emails if they arrive in a standardized format. It then directly enters them into the order management system.
  2. It set up the capability to work directly with third-party portals like Ariba, where the company’s catalog is already stored.
  3. It develops APIs to enable more advanced customers to establish direct machine-to-machine connectivity.

The results have been dramatic. Using the first path for only a portion of its customers, the company cut cycle time on orders from ten to three minutes, leading to significant savings of 50 person-hours per day.

According an executive at the company, artificial intelligence is the biggest buzzword, and everyone is going digital. Between AI and APIs, this company is taking advantage of digital technologies to simplify, automate, and lower the cost of its order management process. That’s the way of the future.

Going forward

Using the latest in digital technology, order management can improve its performance in three ways:

  1. It can automate the process of emailed and faxed orders through AI-enhanced systems that read more standardized orders and directly enter them into the internal order-management systems.
  2. It can rely on robots to bridge gaps between multiple systems including external portals.
  3. It can build APIs to connect its systems with those of its customers for direct machine-to-machine interaction.

Using such approaches, finance can greatly reduce the cost and increase the accuracy of the order management process, closing the gap between world-class order management organizations and the peer or median group.

For more on how automation and AI is transforming business processes, see How Digitalization Drives Automation In Finance.

Nilly Essaides

About Nilly Essaides

Nilly Essaides is senior research director, Finance & EPM Advisory Practice at The Hackett Group. Nilly is a thought leader and frequent speaker and meeting facilitator at industry events, the author of multiple in-depth guides on financial planning & analysis topics, as well as monthly articles and numerous blogs. She was formerly director and practice lead of Financial Planning & Analysis at the Association for Financial Professionals, and managing director at the NeuGroup, where she co-led the company’s successful peer group business. Nilly also co-authored a book about knowledge management and how to transfer best practices with the American Productivity and Quality Center (APQC).