Quote                   / Order To Cash (O2C)                                                                             ...
[ What is Order To Cash ?  Order to Cash normally refers to the Enterprise Resource Planning (ERP)   process in which tak...
[ Pressures Driving a Focus on O2C                              Pressure to reduce overall costs                          ...
[ Objectives of Order to Cash Improvement                       Reduce Days Sales Outstanding (DSO)                       ...
[ TYPICAL AREAS AFFECTED BY OTC CYCLE                     An “Integrated “ End to End Process          Customers        ...
[ Order To Cash Process                                    1. Request for Quotation (RFQ)                                 ...
[ Order To Cash Process                                    1. Delivery                                           Picking ...
[                          Simple Business View – Order to Cash                FINANCE (FI)                 SALES (SD)    ...
[ Symptoms of BROKEN Order To Cash Process   High order-taking error rates   High order-fulfillment error rates   High ...
[    • Pressures: External forces that impact an organization’s market position,      competitiveness, or business operati...
[PACE Framework Applied To Order To Cash  Pressures (P):     Reduce overall costs  Actions (A):          Streamline fr...
[ PACE Framework   Capabilities (C):           Standardized enterprise-wide procedures through quotation to             ...
[ PACE Framework  Enablers (E):          ERP - integrated order entry, procurement, production/resource           planni...
[ Key Metric’s For OTC Process       Quotation and Sales Order (SO) Management Aging       Order Fulfillment Period     ...
[ Performance Results:                                                    Best-in-Class (Top20%) 31% improvement in order...
[ Best-in-Class AR Technology Profile               60%                                     Best-in-Class        All Other...
[ Performance Results : Average (Middle 50%)  15% improvement in order-to-fulfill cycle time  88% complete and on-time s...
[ Performance Results : Laggard (Bottom 30%)  9% improvement in order-to-fulfill cycle time  83% complete and on-time sh...
[ Increasing Your Success on Order To Cash Implement or expand automation of the order-to-cash cycle. Standardize proced...
[ Key Take Away Items on Order To Cash Process   Why is Order To CASH so important?   What functional organizations are ...
[ Key Financial Take Away Items  Improving efficiency addresses both the top pressure (cost)   and the most-cited objecti...
[                                                                      ]                                           Thank ...
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2012 Asug Aberd O2 C Final

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End to End Quote/Order to Cash Process.

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2012 Asug Aberd O2 C Final

  1. 1. Quote / Order To Cash (O2C) A Brief Overview ] John Choate – National Chair Program Management & Maintenance Strategies (PMMS) SIG Scott Pezza – Research Analyst Aberdeen Group [ CHAVONE JACOBS ASUG INSTALLATION MEMBER MEMBER SINCE: 2003 [ COREY PEARSON[ ALLAN FISHER ASUG INSTALLATION MEMBER ASUG INSTALLATION MEMBER MEMBER SINCE: 2008 MEMBER SINCE: 2008
  2. 2. [ What is Order To Cash ?  Order to Cash normally refers to the Enterprise Resource Planning (ERP) process in which taking customer sales (direct from the customer ) orders via different sales channels, such as email, internet, sales person, fax or by some other means like EDI, and then fulfilling the order, shipping, logistic and then generating an invoice and collecting payment for that invoice and then receipt.  CASH IS KING !  It is also the lifeblood of any company and it flows through the order- to-cash cycle. Real Experience. Real Advantage. 2
  3. 3. [ Pressures Driving a Focus on O2C Pressure to reduce overall costs 67% Risk of customer non-payment or default 29% Customer demand to improve service levels 29% Inability to accurately forecast cash flows 21% Rising cost of servicing major customers 19% Customer pressure to extend payment terms 19% 0% 10% 20% 30% 40% 50% 60% 70% Percentage of Respondents, n = 140 Source: Aberdeen Group, The Order-to-Cash Cycle: Enhancing Performance with Process Automation (July 2011) Real Experience. Real Advantage. 3
  4. 4. [ Objectives of Order to Cash Improvement Reduce Days Sales Outstanding (DSO) 54% Improve cash flow forecasting/guidance 42% Reduce receivables processing cost/time 36% Reduce customer-to-cash or order-to-cash 35% cycle Improve transaction efficiency 34% Manage credit risk, losses from bad debt, and 30% collections expense 0% 10% 20% 30% 40% 50% 60% Percentage of Respondents, n = 140 Source: Aberdeen Group, The Order-to-Cash Cycle: Enhancing Performance with Process Automation (July 2011) Real Experience. Real Advantage. 4
  5. 5. [ TYPICAL AREAS AFFECTED BY OTC CYCLE An “Integrated “ End to End Process  Customers  Sales and Marketing  Customer Service - Order Entry  Finance and Accounting  Operations  Distribution  Customers (Cash) Real Experience. Real Advantage. 5
  6. 6. [ Order To Cash Process 1. Request for Quotation (RFQ)  Sales Order with quotation reference  Product Allocation (ATP/gATP)  Credit Limit Check  Service charges  Bill of Material (BOM) Real Experience. Real Advantage. 6
  7. 7. [ Order To Cash Process 1. Delivery  Picking with automatic transfer order creation and confirmation  Picking with manual transfer order creation  Confirmation  Packing  Posting goods issue  Invoice  Payment by Customer (Cash) Real Experience. Real Advantage. 7
  8. 8. [ Simple Business View – Order to Cash FINANCE (FI)   SALES (SD)   WAREHOUSE (WMS)               Quotation     Sales Order with Ref. to         Quote Credit Limit Check       Availability Check and Allocation Unlock Sales Order             Delivery Approved             Pick         Pack         Post Goods         Ship Bill         Payment         Real Experience. Real Advantage. 8
  9. 9. [ Symptoms of BROKEN Order To Cash Process  High order-taking error rates  High order-fulfillment error rates  High DSO (Days Sales Outstanding) rates  High cost of dispute resolutions  Inefficient/ineffective collection processes  Long-term losses due to customers going to better managed companies for product/services Real Experience. Real Advantage. 9
  10. 10. [ • Pressures: External forces that impact an organization’s market position, competitiveness, or business operations (e.g., economic, regulatory, technology, competitive, etc.) • Actions: The strategic approaches that an organization takes in response to industry pressures (e.g. product/service strategy, target markets, go-to- market, and sales strategy) • Capabilities: The business process competencies required to execute corporate strategy (e.g., skilled people, brand, market positioning, viable products/services, financing, etc.) • Enablers: The key technology/solutions required to sup-port the organization’s business practices (e.g. development platform, applications, connectivity, user interface, training and support, etc.)  Note: Aberdeen utilizes a proprietary research framework called PACE to systematically and objectively develop its research findings. Real Experience. Real Advantage. 10
  11. 11. [PACE Framework Applied To Order To Cash  Pressures (P):  Reduce overall costs  Actions (A):  Streamline front and back office administrative processes to remove non-value steps.  Automate process flows with electronic workflow technologies. Real Experience. Real Advantage. 11
  12. 12. [ PACE Framework  Capabilities (C):  Standardized enterprise-wide procedures through quotation to order, order to delivery, and credit/cash collection.  Up-to-date order, delivery, and billing information is available in real time, on demand.  Manufacturing and/or service operations are integrated and coordinated with customer service, logistics, and delivery organizations.  Real time measurement of on-time delivery, inventory, DSO, profitability, and cash position. Real Experience. Real Advantage. 12
  13. 13. [ PACE Framework  Enablers (E):  ERP - integrated order entry, procurement, production/resource planning and execution, and financial management  Event management (triggers and alerts)  Electronic interfaces to banks and customers  Web-based and electronic sales order management application  Credit management solution  Electronic Invoice Presentation and Payment solution  ERP features or extensions:  Customer Relationship Management (CRM)  Advanced Planning and Scheduling (APS)  Available to Promise (ATP) Real Experience. Real Advantage. 13
  14. 14. [ Key Metric’s For OTC Process  Quotation and Sales Order (SO) Management Aging  Order Fulfillment Period  On Time Delivery (OTD) - %  Perfect Order  Finance/Accounting  Invoice  Payments  Collections Real Experience. Real Advantage. 14
  15. 15. [ Performance Results: Best-in-Class (Top20%) 31% improvement in order-to-fulfill cycle time 97% complete and on-time shipments  33.5 DSO  3.3% of AR past due  1.3 days for payments to clear the AR ledger  16.2% of invoices require manual intervention  2.6 days from completion of product/work to invoicing Sources: Aberdeen Group, The Order-to-Cash Cycle: Enhancing Performance with Process Automation (July 2011); Aberdeen Group, The Order-to-Cash Cycle: Integrating Business Processes to Improve Operational Performance (March 2008) Real Experience. Real Advantage. 15
  16. 16. [ Best-in-Class AR Technology Profile 60% Best-in-Class All Others 50% 50% 47% 43% 43% 40% 37% 37% 33% 30% 26% 23% 23% 20% 18% 12% 10% 0% Integrated BI / Electronic Performance Event Customer Order-to-Cash Analytics Workflow Dashboards Management Portal Systems Source: Aberdeen Group, The Order-to-Cash Cycle: Enhancing Performance with Process Automation (July 2011) Real Experience. Real Advantage. 16
  17. 17. [ Performance Results : Average (Middle 50%)  15% improvement in order-to-fulfill cycle time  88% complete and on-time shipments  48 DSO  8.6% of AR past due  4.1days for payments to clear the AR ledger  44.9% of invoices require manual intervention  3.9 days from completion of product/work to invoicing Sources: Aberdeen Group, The Order-to-Cash Cycle: Enhancing Performance with Process Automation (July 2011); Aberdeen Group, The Order-to-Cash Cycle: Integrating Business Processes to Improve Operational Performance (March 2008) Real Experience. Real Advantage. 17
  18. 18. [ Performance Results : Laggard (Bottom 30%)  9% improvement in order-to-fulfill cycle time  83% complete and on-time shipments  58 DSO  16.1% of AR past due  11.7 days for payments to clear the AR ledger  79.9% of invoices require manual intervention  6.1 days from completion of product/work to invoicing Sources: Aberdeen Group, The Order-to-Cash Cycle: Enhancing Performance with Process Automation (July 2011); Aberdeen Group, The Order-to-Cash Cycle: Integrating Business Processes to Improve Operational Performance (March 2008) Real Experience. Real Advantage. 18
  19. 19. [ Increasing Your Success on Order To Cash Implement or expand automation of the order-to-cash cycle. Standardize procedures for quotation and order management. Integrate order entry, credit, billing, and collections. Investigate benefits of event management and automated alerts. Centralize customer risk information in a single location. Keep up on regular scoring of the A/R portfolio. Continue growing electronic volumes of POs, invoices, and payments. Real Experience. Real Advantage. 19
  20. 20. [ Key Take Away Items on Order To Cash Process  Why is Order To CASH so important?  What functional organizations are key to the integrated process?  What are symptoms of a broken process?  What is PACE?  Name 2 key metric’s for the O2C process.  Where does your company rank ?  Best-in-Class  Average  Laggard Real Experience. Real Advantage. 20
  21. 21. [ Key Financial Take Away Items  Improving efficiency addresses both the top pressure (cost) and the most-cited objective (DSO)  Improvement comes from streamlining internal processes and making it easier for customers to work with you  Understanding your current and prospective customers can help reduce non-payment risk and tailor collections strategies  Communication, between departments and with your customers, is key to efficiency and visibility into cash flows Real Experience. Real Advantage. 21
  22. 22. [ ]  Thank you for participating  PMMS SIG / Aberdeen Group Real Experience. Real Advantage. 22
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