Order to Cash Process
When companies take a hard look at their business model and the underlying process, what is the key objective that is motivating them?
1. Return on Investment
2. Increasing Sales
3. Cost Reduction
Although all of the above are good objectives that lead to healthier businesses, companies are also driven by the latest buzz words – the latest consulting mantra, industry trend, and a flashy new technology from a sexy software company.In the last year, there is no dearth of these trendy things.IBP and S&OP, Lean, Demand-driven are all hot. SAP has made it very cool to say Hana!Big Data, Predictive Analytics and In-memory computing have been dominating themes of many business conferences this Fall.
At times I wonder if smaller companies get driven by these trendy things and focus on the wrong things instead of fixing critical issues that are ailing their supply chain and their business model.
Do you have a good business process that will help you address the following questions:
1. Do you have a streamlined process from taking customer orders to fulfillment and delivery?
2. Do you know where your inventory is? How much of what? What is available to promise?
3. Do you have decent demand visibility so you can plan ahead?
4. Does your middle management meet monthly or weekly to look at key operational metrics?
Optimizing the basic Order to Cash process will yield the cliched low-hanging fruits and result in a more compacted Cash-to-Cash cycle.
What is your cash-to-cash cycle? Are you a trendsetter? Have you measured this lately?
Are you a rule breaker like Apple computer is – Apple has a negative cash-to-cash cycle of approximately 60 days?
Measure where you are and prioritize your building blocks:
1. Metrics and Score-carding
2. ERP and the Order to Cash Process
3. Sales Forecasting and CRM
4. Demand Forecasting and MRP
Then move on to the more esoteric initiatives in your maturity curve!
Best wishes as you start your Fall Season!
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