Creating a Premier Order-to-Cash Process

This is not what I would consider an extremely fascinating topic.  I tend to be more fascinated with decision sciences.  However, I think this topic deserves a simple, comprehensive perspective on what makes an O2C process a good one.  A premier O2C process possesses the following hallmarks:

1) Standardization.  That is not to say that all orders are treated in the same way, but that you have determined beforehand what types of orders you will receive and how each type will be handled.  Standardization applies to how orders are anticipated, qualified, promised, priced, allocated, fulfilled, invoiced, collected and serviced.

2) Automation.  How information technology is used to automate this process so that it can be done fast, cheaply, and providing customer service equal to the goal for each type of order.

3) Integration. O2C cannot exist in a vacuum. Manufacturing, distribution, customer service, and planning not only surround O2C, but must support it without gaps or interruption.

4) Visibility.  You probably already have a view to orders internally.  In most cases, customers will need to view their orders as well.  In both cases, the most advantageous scope of visibility should be provided with the least amount of effort.  In some cases, suppliers may need to see orders as well.  Certainly, third party logistics service providers may need this.

5) Performance Management.  How will you measure O2C success?  Is it cost-based, or service-based or both?  A measure of perfect orders will most certainly apply (on-time, quantity complete, damage free, defect free, invoice accuracy, etc.).  In addition, you may want to include some of the following:

  • Days Sales Outstanding (DSO)
  • Cash-to-cash (C2C)
  • Revenue and margin (by various dimensions like customer, product family, etc.)
  • Order cycle time
  • Line fill rate
  • Order fill rate
  • Order service level

About Arnold Mark Wells
Industry, software, and consulting background. I help companies do the things about which I write. If you think it might make sense to explore one of these topics for your organization, I would be delighted to hear from you. I am currently employed by Incorta, but I am solely responsible for the content in Supply Chain Action.

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