Four Ways to Improve Order Processing

It is Cliche to say that processing orders quickly, accurately and efficiently is the cornerstone upon which a successful business can be built. If your customers don’t get what they order, or don’t get it on time, or it costs too much because your fulfillment costs result in your prices being too high, you won’t build your business. You have to give your customers what they want, when they want it, at a competitive price.

Once your company has received an order from a customer, it must be transmitted to the warehouse to be picked, packed and shipped.  But, before that, your system must be able to verify that the inventory is in stock and ready to be picked.  Your system must also offer the capability of confirming that payment has been received, or that the customer’s credit is acceptable, prior to shipment.  Items must be reordered when inventory is shipped.  This can be done automatically, or manually, but if inventory reorders are made manually, the information must be transmitted automatically and accurately to purchasing personnel.  Transparency and automation is the key to an efficient, accurate system.  An optimal system will allow you to increase accuracy, reduce processing time, ship more efficiently and improve your customer’s experience.

There are many aspects of your order processing system that must be considered.  Your investment isn’t in software, or a system.  Your investment is really in the team that you select to design, customize, implement and integrate your new system.  When you select a software provider they should be able to give you excellent and compelling answers about the following functional areas:

Communication

Orders must be received with as little duplicate data entry as possible and transmitted immediately and accurately to the warehouse.  A sophisticated solution provider will standardize the way that information / orders are received from your customers so that their orders are automatically received by your system.  This does not require that your B-to-B customers conform to an inflexible protocol.  A sophisticated software provider can receive the customer’s information in a variety of formats and transfer the information to a standard format in your order management system.  This information is easy for the customer to input, making their purchase experience simple and fast.  The information is then automatically and completely available to your customer service staff, so that customer inquiries are answered with complete and up-to-date information, including order and shipment status.

Database simplicity

Regardless of whether customers place orders through online marketplaces, your website, via mobile devices, or to your telephone operators, your order management system must be able to receive order information without problems from any source.  Then, all information in your order management system must be immediately available to your entire team – customer service, warehouse, accounting, etc.  It is imperative that your system be fully and functionally integrated – data must be accessible and transferrable seamlessly between all company systems.  Order information must be integrated with your accounting, warehouse activity, purchasing, customer service, shipping, sales, and other systems.  Customers frequently encounter problems with the interface between systems.  These problems can be very challenging for employees, suppliers and customers. When a customer service representative has to scan through a variety of screens, rather than having access to a single, detailed overview of the order, product, picking, shipping and billing information, customers cannot enjoy the excellent customer experience that we want them to enjoy.  The excellence of your order management system and the level of integration with your other systems will make the difference and that difference will translate into improved customer experiences and ultimately increased sales.

Inventory control

One thing you never want to hear is that you are out of stock on a popular item.  An excellent order management system will alert you to item velocity relative to on-hand inventory quantities and reorder / receipt of inventory timelines.  Inventory reorder processes can be automatic, or information can be transmitted to purchasing staff to manually reorder inventory.  A high level of customization will provide your company with the optimal level of inventory control and cost management – while simultaneously ensuring the highest level of customer satisfaction resulting from consistent inventory availability, without holding so much inventory that you risk accumulating non-saleable inventory.

Automation

The maximum level of automation will help you reduce errors, speed order processing and reduce cost.  An excellent order management system will provide the optimal level of automation, combined with the flexibility to allow your customer to place complex orders without frustration.

To accomplish all of these objectives, you need a sophisticated, experienced order management system provider.  There really is only one choice – Avectous Integrated Software.

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Improving Order Management and Fulfillment Efficiency

Process Approach to Improving Order Management and Fulfillment Efficiency

Let’s see how many of these challenges sound familiar.

Our orders take too long to process

Our orders are input inaccurately

Our orders and inventory records don’t connect in real time

Our orders are filled inaccurately

Our orders take too many warehouse workers to fulfill

Our orders take too much time to input

Our orders come from our customers in too many different formats

Our orders must be formatted in a way that makes it difficult to put new products into our system

And so on …

And these are just the challenges many businesses face that directly flow from their order processes.  Accounting reconciliation, item (new product) creation, marketplace (Channel) management issues, warehouse expense and shipping problems are also too familiar to many businesses.

Often, we try to solve meet these challenges one at a time.

Let’s speed up our order process.

Let’s improve the accuracy with which we input orders

Let’s connect our inventory records directly to our order processes

And so on …

Typically, the results are disappointing, frustrating and ineffective.

It’s a mistake to try to fix your business using the same approach you would use to fix your car.  Your car has been expertly designed so that all of the systems work efficiently and effectively together.  When your water pump goes on the fritz, your transmission is still working perfectly – and it’s working in perfect conjunction with your engine.  Therefore, you can simply fix the water pump and be confident that the car will run smoothly.

Your business may not be so predictable.

Instead of having a team of experienced automotive designers incrementally refine proven  historical designs and technologies to create a new model, your business has probably evolved over the years to “get the job done,” even though the systems are not perfectly integrated or aligned and optimal efficiencies are never achieved.  We are so busy staying in business that we sometimes fail to take the steps necessary to allow us to be as efficient (and therefore profitable) as possible.  When we encounter a problem, we fix the problem.  The business continues along, but doesn’t make as much money as it could if we were able to step back and look at the interconnection between our various systems and procedures and conceive better, more efficient and effective processes.

So, we address the problems as though they were independent of other business activities to which they are connected.

If our orders take too long to process, we add more order entry staff.

If our orders are input inaccurately, we offer a bonus to the employee with the highest data input accuracy.

If our orders and inventory records don’t connect in real time, we update an inventory spreadsheet every morning so the order entry staff can check inventory availability.

If our orders are filled inaccurately we add a quality control checkpoint between picking and shipping.

If our orders take too many warehouse workers to fulfill we set higher picking targets to encourage faster picking.

If our orders take too much time to input we create dropdown menus for easier data input.

If our orders come from our customers in too many different formats we create financial incentives for our customers to use our preferred order receipt format.

If our orders must be formatted in a way that makes it difficult to put new products into our system we try to modify the item descriptions to make it easier to add new items.

With predictably unsatisfactory results.

Our additional order entry staff still struggle to be efficient and instead of improving our order entry system, we achieve daily increased order entry at the cost of reduced individual efficiency.

Our data entry accuracy is improved, but with increased employee cost and we find that the best employees compete for the accuracy bonus, but the worst employees don’t improve performance.

Our inventory confirmations didn’t seem to get much better, because the spreadsheet we use to make sure we have items in stock becomes out of date within a few hours every morning.

Our order fulfillment got more accurate, but now we have a bottleneck at the pre-shipping quality control station.

Our higher picking targets caused frustration and resentment.

The dropdown menus helped sometimes, but limited our order input flexibility.

Some of our customers opted to use a different format to send us orders, but others wouldn’t switch and our order entry staff is still struggling to respond to a wide variety of order transmission protocols.

We can input new products into our system faster, but we have lost flexibility in the ability to describe the products in ways uniquely appropriate to particular products, resulting in a less persuasive presentation to our customers.

Why didn’t our solutions solve our problems?

Because you can’t fix a leaky boat by bailing out the water.  The root causes of the problems must be addressed.

A comprehensive, system-oriented solution is required.  There is a complex matrix of connections between every aspect of order receipt, entry and fulfillment activities.  Only by embracing a solution that addresses the complexity of these interactions can you hope to permanently improve the deficiencies in your systems and put yourself on the road to sustainable increased sales and profit.

Avectous has over twenty years of sophisticated experience in analyzing complex business systems and architecting simple, elegant and comprehensive solutions.  Our solutions are adapted to the effective and efficient parts of your business model and improve the less effective aspects, resulting in an easy-to-use “soup to nuts” system that gives you optimal efficiency and control.  You will be able to reduce employee population and inventory levels while selling more and filling more orders faster and more accurately leading to a dramatically improved user experience for your customers.

Avectous.

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How User Friendly is your OMS and WMS?

In addition to the ease of training new employees for optimal efficacy with your OMS and WMS, there are many other aspects to evaluate to ensure that you can really get all the benefits that your OMS and WMS claim to offer.

The ability to effectively use an OMS or WMS is predicated on the assumption that your staff will be comfortable with the processes controlled by these critical systems.  There are several key concepts that invariably come up when examining how user friendly an OMS or WMS really is.  These include:

Speed of implementation

Level of customization available

Language options

Ease of training

Flexibility

Customization for individual users

Access and restrictions

Let’s look at these one by one.

Speed of implementation

You don’t want to endure a lengthy implementation.  It is costly, disruptive and confusing.  Certainly, you will want to run parallel systems for a brief period of time to confirm system accuracy.  But, if the new OMS and WMS are designed well, the conversion should be very fast.  Assuming your old screens contained enough data for your requirements and your staff is comfortable with the look and feel of your old system, a new system ought to be configurable to appear sufficiently similar to your old system so that employees are “up and running” on the new system right away.

Implementation ought to be fast and easy.  By sharing the data with your OMS and WMS provider in advance, they should be able to configure the new system prior to implementation.  The new system should be installed quickly and the up-to-date data imported instantly upon implementation.  The key is to have a really good OMS and WMS supplier with extensive implementation and integration experience.  A really good OMS and WMS will supply not more than 80% of the functionality you require.  The remaining 20% is customized by your OMS and WMS supplier.  Anybody who tells you their system will do 100% of your requirements is offering you a system to which you must adapt, rather than a system that adapts to you.

Be very cautious about OMS and WMS suppliers offering a turnkey implementation.  Software sales people are notorious for offering functionality that their software developers can’t deliver.  There is a lot of truth in the old joke – what is the difference between a software salesman and a used car salesman?  At least the used car salesman knows when he’s lying to you.

The pre-planning is the most critical phase.  Know what you want.  Know how you want it to look and feel.  Have the implementation planned before the start of the actual implementation.  The OMS or WMS supplier that plans to arrive and begin the implementation from an out of the box software package is doing you a disservice.  The best partner will come with a sophisticated knowledge of the functionality of their software and will explore how that software can most efficiently be adapted to your operating processes.  The planning and conceptualization will succeed in direct relation to the experience of your software / implementation partner.  Once the software has been customized to meet your particular needs, it will be ready to plan the implementation.  Out of the box solutions are implemented in reverse, with painful results.

Once the customization has been accomplished, the final implementation should be fast and simple.

Level of customization available

Similarly, you ought to be very attentive to the level of customization that can be accomplished.  This relates not only to y our operating processes, but also to the integrations with the other software platforms in use in your company.

You should be able to describe your operating processes (for a WMS, these would include receiving,  putaway, inventory replenishment, picking, shipping, etc.) in step-by-step detail and the WMS you select must be able to automate those processes, rather than requiring you to adapt  your processes to the activities contemplated in an out of the box WMS.

-Language options

-Ease of training

-Flexibility

-Customization for individual users

-Access and restrictions

Caution is prudent when considering an automated order management system

How often are we driven by the projected financial benefits of a new process, only to be disappointed when the anticipated savings fail be realized?

And how often, in retrospect, was that because our rank and file employees never got on board?

The solution may be found, in part, by early involvement of the sales and order entry staff in the decision and evaluation process.  If it is possible to have the people with the most hands-on connection with the order management software (OMS) create a list of frustrations and inefficiencies and potential solutions to those challenges, it is possible that the implementation of a new OMS will be received as a cooperative response to their concerns rather than as a top-down initiative driven by financial concerns rather than by sensitivity to the needs of the employees and customers.  Clearly, an effective OMS will conform to the existing processes of your company.  But, equally clearly, it will change much of the data entry function – hopefully to everyone’s benefit.  Benefit doesn’t necessarily equate to enthusiastic acceptance and adoption.  People resist change simply because they are unused to new processes and procedures.  Change is more readily accepted if the employees feel they have been the architects of that change.  Dictatorial mandates for adherence to new procedures breeds resistance and damages morale.   Don’t forget that the people most frequently using your OMS are also the people with the most frequent and interdependent relationships with your customers.  We have all spoken with a sales, or customer service representative, who’s attitude screamed “I don’t know why management doesn’t fix this and I know it’s making all of our customers crazy!” 

Recognizing this dynamic demonstrates another important consideration when evaluating a new OMS.  The integration with your CRM must support instant access to all the data that a customer service person might need.  On premise systems and cloud-based systems with insufficient horsepower to deliver data instantly will cause frustration for your personnel and your customers.  When assessing a new OMS it is imperative to have a thorough and professional evaluation of your data delivery infrastructure.  If you do not have employees with the knowledge and experience to evaluate this critical feature, it is imperative to work with a qualified OMS provider who can offer the necessary expertise.

Assuming you’ve got employee buy-in to the project and the requisite infrastructure to support it, another critical consideration is the training of employees.  Look for an OMS that is simple to use and configured to conform to your business processes.  An off-the-shelf system may appear to be less expensive, but the contortions required to adapt your business processes to the new system and the retraining required to get your employees up to speed can rapidly wipe out any perceived savings.  You should have a goal that a new employee can be trained to function independently in less than two hours.  If the training is projected to take longer than that, pick a different system.  Remember, this isn’t just a one-time challenge.  Every time you get a new person, he or she will have to be trained.  This is a challenge you will face for a long, long time.  Be clear with your OMS provider that you want a system that is so simple and intuitive that new employee training can be accomplished quickly and easily.  Drop down menus, and other controls can help, but you must be careful not to allow those restrictive elements of your OMS to limit the data management.  Again, the OMS you choose should conform to your business practices, not the other way around.  An OMS that is advertised as a “plug and play” is a bad idea for a business of any significant complexity – now and in the future.  Remember, you aren’t acquiring an OMS for your current business level.  You are acquiring a tool that will assist you to grow and become more profitable.  Roughly speaking, an OMS should have about 80% of the functionality you require and your qualified OMS provider should be able to customize the remaining 20% of the functionality you need to optimize your current and future business processes.  This customization – what we at Avectous call “the critical 20%” – should contemplate the ongoing training necessary to make the customized functionality easily accessible to current and future employees.  Talk with your OMS provider and ask them for their plan to accomplish this.

It is very important that your OMS provider isn’t just a provider of technology.  They should have business process experts on their team.  These individuals should be able to look at your business processes and translate them for the technical product developers.  It is obvious, but frequently overlooked, that the best programmers in the world are seldom well versed in business processes.  Does your OMS team have that depth?

How customizable are the reporting functions of your OMS?  How integratable is the OMS with your CRM, accounting, inventory and other systems?  How complete and simple is the data transferability between these modules?  Your OMS should be written in the most modern language available to ensure that it will communicate simply and effectively with your other software.  Be certain to ask precisely what language was used to create the OMS you are considering.  If you do not have the in-house expertise to evaluate the response, retain the services of an outside professional to help you gain certainty that you are working with a modern, flexible OMS.

Can your OMS grow with your business?  What is the expense associated with increased users or increased activity volume?  Confirm with your OMS provider what the future cost associated with your software license will be as your company grows.

The bottom line is – you can get a cheap, inflexible OMS, but it will cost you in the long run.  It will cost you in the opportunity to grow and in employee and customer frustration.  Recognize that your orders are the lifeblood of your business and your choice of an OMS is one of the most important decisions you will make.  Find an expert in customization and complex implementation.  Find the OMS provider that can offer you the critical 20% that gives you a simple, intuitive, yet powerful system that allows for fast, easy training of employees.  Work with your OMS provider early in the process to design the system in cooperation with your existing personnel to ensure their enthusiastic adoption of the new system.

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How can I handle returns, exchanges and back-orders?

There are an enormous number of issues to anticipate when considering an OMS or WMS.  One that you ought to spend some time on is how will you handle returns, exchanges and backorders?

First, if you look at the most successful retailers (Nordstrom, Zappos, etc.) they have very generous return policies. The most important customer is the one you already have. You could spend a lot of money trying to recruit new customers, or spend a little money providing extraordinary service to the customers you already have. Every business is different and it’s possible that returns could cost you more than somebody else, but generally, across many retail environments, returns represent are a small cost in most operations.  You have to be able to predict of instituting a generous return policy, but in most cases, the positive customer experience you offer will more than outweigh the expense associated with allowing “no questions asked” returns.

If you allow returns without questions, your customers will probably be happier.  But, it’s critical to maintain real-time records of returns and manage credits, return-to-vendor activities and return-to-stock activities, if items can be repackaged and made available for resale.

Credit processing ought to be independent of inventory management processes.  Automate the credit process, if possible.  Remember, you have already accepted the cost as a customer service enhancement strategy.  Certainly, a small percentage of your customers will take unfair advantage, but that is a part of the cost you have already accepted.  Process credits automatically and immediately.  Your OMS should create frequent reports to alert you to increases in return activity.  These reports should relate back to your vendor and the particular items being returned.  Even the most generous return policy needs to be monitored so that you can quickly identify real problems and address vendor management issues or concerns about particular products.

Similarly, with exchanges, it’s important to keep a close eye what is being returned and establish metrics to help you understand why.  For example, is a particular apparel product being returned for exchange at a disproportionate rate because of sizing issues?  Identifying a popular item and providing helpful sizing advice for customers can help you sell more, with a lower cost associated with returns and exchanges.  A well designed OMS will allow you to customize reports that help you focus on the exceptions and make fast and well-informed decisions.

Your WMS should have the capacity to accept returns without unnecessary administrative oversight, but with the ability to input data about why particular items are returned, and as mentioned above, to accumulate that data into customized reports that show trends and exceptions as they relate to particular vendors and / or products.

Your WMS must also allow refurbished and repackaged items to be returned to inventory.  It is important to consider how the cost information associated with these items will impact your average costing. It probably won’t have a significant dollar impact, but it might have an adverse system impact.  It is important to understand how  your system maintains average cost and ensure that items returned to inventory will not disproportionately effect those records.

Your WMS must also be able to disassemble kits.  If, for example, an order is returned for refund or exchange and there were 5 items that had been assembled into a kit (e.g., a telescope, an eyepiece, a tripod, a filter and a case) and only one of the items was defective (the case was damaged) the other 4 items must be disassociated from the returned order and returned to inventory, while the defective case must be addressed and a decision made concerning its disposition.  The order might be repackaged with a new case and assembled into a new kit for redelivery.  The order might be cancelled.  Your OMS and WMS must communicate effectively to maintain data integrity.  Often, an integrated WMS and OMS is the best solution.  Does your OMS provider also offer a sophisticated WMS?  There are many software options that do, and Avectous Integrated Software is a solid candidate for your consideration.

During the processing of these activities, does your WMS have a way to identify where the inventory items are?  Is there a “returned inventory hold” location?  Are value added process accounted for?  Again, your WMS ought to be sufficiently customizable that it can reflect the processes in use in your business.

If your WMS assigns “receiving functions” to locations and personnel, it is a good idea to assign priorities to processing returns and exchanges.  It is all too easy to handle the hottest emergency first and when the truck backs into the receiving dock, that is always the hottest emergency.  A WMS with a “personnel load” function is attractive, because it not only tracks receiving activities, but allocates them in accordance with personnel and location availability.

Your WMS will manage all warehouse activities in accordance with a warehouse map in two or three dimensions.  When mapping your warehouse, make realistic forecast as to the amount of space you will need for processing and storing returns and exchanges.  The location of the area to be set aside should correlate with the putaway location for the returned merchandise.

Another consideration when choosing an OMS and WMS is how you will handle backorders.  The integration of your return / exchange process and your backorder processes is worthy of some consideration.  First, if you get a return that can be repackaged and put back into inventory, is there a way to associate that information with your backorder log?  If the item can be sent directly from the return processing department to the shipping department, several time consuming steps can be avoided.  Second, if an item is subject to a disproportionate number of exchanges (where a replacement item is sent to the customer) it may result in inventory shortages of that item.  Again, a WMS and an OMS that allows the synthesis of this information and the creation of custom reports can help you to respond quickly to “out of the norm” rejections, to allow you to manage suppliers quickly and with accurate information to help them solve problems and help you to avoid them.

Avectous Integrated Software can meet all of these challenges.  Please call us to discuss the challenges you face and how we can help you address them.

Take Control!

Thanks for reading, don't forget to follow us on Twitter, Facebook, and LinkedIn for more company updates and look out for our next weeks blog!

TEL. (714) 656-2898 | info@avectous.com 

http://avectous.com

https://www.facebook.com/pages/Avectous-Integrated-Software/639813786077803

https://twitter.com/avectous

https://www.linkedin.com/company/avectous-integrated-software