Combating Costs Within the Supply Chain

Companies involved in the production, movement or sale of physical goods all must deal with organizing their increasingly complex and global supply chain. Although it is not a fun part of the operation, it is a necessary evil to get the products to market around the world. Understanding so, companies seek to lower the costs, reduce the time and improve the quality of shipping. By doing so, they can improve margins, reduce hassles and improve net profits. Specifically, there are a few ways to secure lower costs in supply chain management that are often overlooked.

One of the most common costs are order entry errors.

Workers that manually place the wrong orders can cost their firms thousands or even millions of dollars. These simple errors frequently occur and have a huge impact on the financial performance of the firm. They cause massive delays and increased costs.

For example, an employee at a cheese company receives an order for Feta cheese from overseas but accidentally ships the customer Gouda. When the shipment of Gouda is received and the mistake is realized, it is too late. The cheese cannot be sent back or it will spoil and there is a very limited opportunity to sell the cheese at a loss in the export market. The company is out the money they paid for the cheese as it was their mistake. This order entry error produced a large and unnecessary cost that ultimately pushed back the sales cycle and caused production to slow.

Picture1This is just one reason more companies are investing in automated order entry software. Rather than save a little bit of money, the firm avoids the potential for huge errors that set the company back months and potentially millions in sales. Instead, managers are using order processing tools that provide complete transparency along the entire requisition process. All people involved in the order can track its progress and immediately identify any errors through online dashboards. In addition, wrong orders are flagged if they do not fall in line with other orders.

On the customer side, order processing tools reduce costs substantially for supply chain management and increase efficiency. These systems create an entirely automated production tracking process, beginning from the customer order to the ERP plan to tracking production and monitoring efficiency. These tools have been shown to reduce time to process an order by 80% and reduce costs by 50%

For example, a semiconductor company may receive an order to create computer chips for a line of computers. When the order arrives, the system automatically puts in place the downstream orders of supplies necessary to fulfill the requisition. Shipping and logistics information is automatically planned and entered into the ERP system as well. Management enacts these plans and begins the production process. If production goes off schedule, the system will immediately flag management and key personnel of the problem. Simultaneously, they are able to follow the order through online dashboards to understand the status of the production.

Finally, the computer chips will be completed on time to the exact specification required. The ERP system will have ensured that the delivery is on-time as well. Using this system, 99% of manual errors are eliminated. Costs are reduced dramatically and cash flow is improved. This is just another example why more and more companies are adopting order processing automation systems.

Download Advocating for Order Processing Automation to learn more about the multi-faceted strategist of a Supply Chain Director.

Ari Widlansky

Ari Widlansky has over 10 years of experience working in various positions in the areas of Sales, Business Development, and Channel Management within the technology sector. Ari has worked with fortune 500 organizations, government agencies, and universities to deliver hundreds of SaaS and on-premise technology solutions. While with Esker for the last three years, Ari has worked with customers to gain greater returns on their ERP investment while decreasing their overall cost within the order-to-cash and procure-to-pay processes.

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