Posted by Roy Wildeman on May 7, 2010
Recently, one of Forrester's packaged food clients contacted me on the topic of no-touch orders, e.g., receiving, processing, and shipping customer sales orders electronically without human involvement. After talking with this client and doing some further digging on what others have done to improve their processes to enable this kind of automation, it struck me that a simple and visible metric like the % no-touch orders is a close-cousin to the perfect order concept (a long-standing research area at Forrester). Why do I say that? Both improvement goals drive amazing clarity on some fundamental opportunities to improve your Order Management Cycle, such as:
- Aligning functional silos that stand in the way. By the nature of the Order Management Cycle, success for both no-touch and perfect orders requires nearly every company department - Sales, Marketing, Customer Service, Engineering, Purchasing, Finance, Operations, Logistics - to coordinate the intricate details of planning, generating, cost estimating & pricing, prioritizing, scheduling, fulfilling, and billing orders. However, all too often individual functional fiefdoms are competing - not collaborating - to show the value of their operations. So whether you start to measure % no-touch or % perfect orders, enterprises will need to also start aligning key reporting structures and incentives towards end-to-end order management processes.
- Increasing confidence and value from your Order Management Hub apps. When users have low confidence levels in the system, it's only natural that they try to pad lead times, plan for supply outside the system, and regularly tweak individual order data rather rely on master data - activities that obviously preclude the ability to process orders automatically, but also cause much too much variability in order to consistently meet perfect order expectations.
- Dealing more effectively and efficiently with complex order types. As manufacturers add higher-margin service offerings such as warranty plans, installation agreements, or training alongside their product catalogs, the fulfillment and ongoing order completion challenges steadily rise. Regardless of whether you pursue increases in no-touch or perfect orders, you're going to need additional capabilities, such as contract & claims management, labor scheduling, spare parts logistics, etc., to successfully execute and complete these complex order types.
Of course, I can see some subtle differences between these measures as well. For example, no-touch orders may be more feasible in B2B environments, where master data and order terms are a bit more stable, versus B2C environments - yet the perfect order concept is robust to both. On the other hand, it seems relatively straightforward to correctly incentivize more no-touch orders (e.g., allocate internal costs such that no-touch orders are free to the business, but charge a processing fee for each order that requires manual intervention) and much trickier to incentivize perfect orders given the combination of activities and responsibilities required.
So, the question remains: which is a BETTER improvement measure: the perfect order or no-touch orders? What do you see in your organizations? I look forward to your comments on this blog.
And if you are interested in receiving more Order Management research from Forrester, I would encourage you to fill out this quick survey on your experiences with Order Management applications, as we'll be sharing the findings of the subsequent report with all who participate.