Supply Chain Transformation Blog

Supply Chain Transformation Blog

Opinions expressed on this blog reflect the writer’s views and not the position of the Capgemini Group

Why traditional Order Management will not survive in today’s digital world

Digitization is changing the world in a faster pace than you can imagine. Retail and Business-to-Business sectors are challenged to deliver goods and services as agreed and as promised. Customer requirements are significantly more demanding, putting substantial pressure on the Moment of Truth, which for a great deal is the result of an effective order management process. So how does a company fulfill an order perfectly?

Today’s challenges:

What is it that makes order management crucial in this fast changing era? Some challenges are:

  • Digital customers want easy access to order status information at any time
  • Promotion pressure in retail is growing, asking for state-of-art account based allocation and delivery management by manufacturers
  • The number of different order and delivery channels is increasing tremendously, with growing digital options
  • Supply chains are more globalized and complex than ever, yet there is an inability to get a global view on orders and inventory due to lack of integration and standardization
  • Roles & responsibilities between companies and even within companies between departments and functions are not clearly defined
  • The information available at hand is not good enough to make good trade-offs, for example delays in order confirmation or loss of allocation commitments for key customers
  • Growing connectivity means growing importance of timeliness and accuracy of order promises
  • Digital ordering needs seamless integration with back-end operational processes, as is key for omni-channel retailing

To combat these challenges…

We see several reasons why companies professionalize and harmonize their order management function, illustrated in the figure below.

Figure 1 | Rationale for professionalization of the order management function

So what can it bring?

Research shows that best in class performing companies have a low average order cycle time of 3 days, high perfect order performance of 95% and a high order fill rate of 98% (source: Logistics Benchmarks: Order Cycle Time, APQC 2012; Logistics Benchmarks: Perfect Order Index, APQC, Oct 2012). High performance is important since it improves customer loyalty meanwhile improving the financial parameters such as order-to-cash cycle time and operational cost.

In the end, it is not order management alone that makes the difference, it is the performance of the entire supply chain.

For the majority of companies, to become best in class, something needs to happen. Depending on the scale of the order management function and the way companies want to professionalize and transform, results can be as compelling as is illustrated in figure 2 (source: Capgemini Consulting experience):

Figure 2 | Results professionalization order management function

Our point of view

There are several different reasons why companies try to improve their order management function. Whether for reasons of visibility improvement or the need for process standardization, Capgemini helps companies to realize ambitions. Successful global order management transformation requires awareness, alignment, and commitment within and between business and IT on various organizational levels.

Also when it comes to IT packages, we help clients in the selection and improvement of applications in order to support required improvements. Examples are supply chain visibility, order orchestration, and allocation management tools to integrate forecasting and order processes.

Finally, we collaboratively design and implement shared service centers for order management.

About the author

Maurice Uiterweerd
Maurice Uiterweerd
Maurice Uiterweerd is a Managing Consultant at Capgemini Consulting. He is specialized in Supply Chain Management and has been working on transformation projects within manufacturing, consumer electronics, travel & transport and telco.

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