The food and beverage (F&B) distributor community is under increasing pressure as customers – especially large ones – seek the economic benefits associated with streamlined, efficient, one-touch distribution networks. Many large distributors have responded by delivering better cost efficiencies and more reliable and responsive supply chain characteristics. This trend has served to inflate customer expectations for large and small F&B distributors alike.
To pass efficiencies on to customers, distributors have focused on IT system modernization, particularly around ERP. The order management capabilities within modern ERP systems like SAP Business One have helped F&B distributors improve customer service and cost efficiency. In fact, in a recent annual report by Sysco, a top strategic priority was “transforming business systems with a particular focus on ERP.”
What is Order Management for Food Distributors?
Order management is the administration of business processes related to order guides (automatically generated lists of items customers have ordered over specified time periods). Order management automates and streamlines order processing by continuously updating inventory data and all related information, including a vendor database, customer database, history of all customer returns and refunds, billing and payment histories, order processing records, and general ledger information.
By providing real-time inventory data, order management enables the complete fulfillment cycle. When an order ships, the system automatically accounts for inventory allocations and makes the associated deductions. You can use it to process orders, ship orders, and generate packing slips and items associated with pre-pick, pack, and ship. Not only does order management automate these core fulfillment processes, it also transforms fulfillment into a real-time process flow that aligns with your other business processes. Instead of waiting for batch processes to run before your team begins fulfilling orders (usually the next day), you can now fulfill orders as soon as you receive them.
According to Ray Wang of Constellation Research, "Order management is a key transaction to any business operation. You can relate that back to ERP, supply chain, and everything else – everything an organization does is going to be driven off that order. It feeds your revenue and your accounts receivable stream, which will feed the rest of the downstream processes and eventually convert it into cash. It's also going to be part of your forecasting."
The Benefits of Order Management
With a minimal investment of time and process mapping, your business can gain both operational and financial benefits that affect profits, cash flow, and employee morale. From a profit standpoint, the complete visibility into inventory positions, the true cost of that inventory, and customer order/payment histories clarify the value of your current inventory. Having this information at your fingertips helps you negotiate terms and pricing more effectively.
Readily available data makes your customer service and account management teams faster when they need to react to fulfillment issues. There’s no bigger morale killer than an angry customer calling while your support personnel lack the data necessary to solve the issue. Order management’s visibility into the entire fulfillment lifecycle keeps your staff abreast of the status of each order and its associated items.
Finally, by streamlining the entire fulfillment lifecycle and connecting to ERP financials, customers receive invoices in a more timely manner – that is, you’re billing earlier and getting paid faster. When customers receive invoices that correspond to recent and complete deliveries, they tend to pay on time and dispute invoices less frequently, all of which add up to improved cash flow and a stronger working capital position for your business.
Order Management Makes F&B Distributors Better at Sales and Marketing
Given that order management provides order guides, it yields valuable data for moving beyond order taking and fulfillment to other areas of the business, such as advanced cross-selling and up-selling. The best insight into a business comes from what its customers are doing, and the key to capturing that valuable information lies in order management technology. By capturing both trend data and a wide range of information at the time of order, order management gives you better insights into customers' anticipated behaviors based on their buying habits. Thus, you can target the right marketing offers to the right customers at exactly the right time. When this happens, sales volume and sales margins increase, yielding a growing and more profitable pattern of business.
To find out how easily SAP Business One can deliver on the promise of ERP-integrated order management, contact us today. One of our F&B experts can help you evaluate the best way forward.