The challenges companies currently face are:
1. Process complexity – For a process where the order needs to capture the specific needs of the customers and may take multiple iterations before agreement, there must be balance between flexibility and enforcement of policies. The fulfillment and settlement of complex orders engenders a similarly complex end-to-end process. This involves a wide array of roles and functions.
2. Constraints and Rules – Even if one were to consider configured products, the rules and constraints are numerous from both an engineering and marketing point of view. The business rules and customer-specific preferences for the entire (Q2C) process are similarly cross-functional in nature and contribute to the “hairiness.”
3. Fulfillment network – The imperative to improve fulfillment lead times and reduce costs has in recent times created much more complex fulfillment networks as companies are experimenting with fulfillment from a variety of sources. This even extends to beyond the organization's walls as suppliers, partners and logistics providers are tapped for this task.
4. Settlement Processing – Settling the transaction is as important as the rest of the process. Correct and accurate invoices help compress the order to cash cycle times and improve customer experience.
Addressing these issues requires some foundational capabilities. The market has gradually shifted towards acquiring them, despite the considerable investments and change management needed. Some of these transition costs are falling because of the move to cloud-based applications that reduce the cost of ownership and provide an opportunity to simplify processes and enhance user experience.
The conventional way to look at the end-to-end process are the three stages -- the front-end order capture, fulfillment and settlement. We can then use this rubric to structure the action needed to realize the gains of a streamlined Q2C process.
1. Process – Have a clearly defined and system enforced process. This should meet all the business requirements. However, all attempts must be made to keep it simple to reduce errors.
2. Rules – The system used for quotes must be able to easily model the engineering and marketing rules and enforce them for new and modified documents.
3. Fulfillment – Businesses must capture and present the order information to support the various formats and bring all the parties on the same page.
1. Process – These set of process have the most spread since ability to fulfill is an important aspect of the commitment to the customer. Process flexibility and the ability to monitor it provide the best gains in operational efficiency
2. Rules – It is here that the rules need to be the most dynamic and leverage advanced analytics to determine the best fulfillment options. A variety of constraints related to product, geography and logistics have to be balanced.
3. Fulfillment – The process and tools should adequately link all the parties – internal and external – that are involved. Each needs to have the information and visibility to orders and inventory.
1. Process - Settlement and post-sale care should tie into the overall order management processes.
2. Rules - Monitor and enforce the customer preferences, organizational rules and policies for presentment and receivables.
Benchmark studies by PWC have found some of the benefits of Q2C optimization to be:
• Total Revenue - 10%-15% increase
• Sales per customer - 10% -15% incremental revenue
• Cross Sell and Up Sell revenue – 20%-35% increase
• Sales Cycle Time improvements – 25%-50% faster
• Order Processing Cycle time reductions
• Percentage of invoices created without errors – 15%-20% improvement
• Order change processing cycle time – 20%-30% reduction
• Cycle time to generate invoices – 10% reduction
Q2C operations typically are more complex than other business areas because they are almost always cross-functional in nature. The key to success when streamlining Q2C operations is to focus on the entire process – capture, fulfillment and settlement. Organizations who only focus on one portion of the process typically end up with sub-optimal customer experiences.
At Oracle, Rajat Bhargav is Director, Value Chain Execution Product Strategy, and Oracle Dave Shidler, is Senior Director, Value Chain Execution
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