Global Enabled Supply Chain Map Series: Order Management

[From iSource Business, September 2001] EDITOR'S NOTE: In this first of a series of articles, iSource Business tackles the starting point of the Global Enabled Supply Chain Map: Order/Demand Capture. In this first article, we focus exclusively on order management.

Every successful business has a lot riding on the next sales order. Speed, accuracy and the number of steps taken to fulfill an order all represent critical aspects of order management. The way in which organizations manage customer orders is every bit as important as the products and/or services sold. Your company may have the absolute best product in the world, but if it never reaches the customer, the product is worthless.

No one understands this better than the Boelter Companies, an $80 million Milwaukee-based distributor of equipment and non-food supplies to the hospitality industry, as well as to industrial organizations, such as printing and graphic companies. Its supplies range from table linens and cookware, to paper and chemicals. Because it is so focused on servicing its customer base and effectively capturing every customer order, Boelter brought the order desk directly to its customers before online ordering was popular. How? Boelter sales representatives carried laptop computers everywhere they went, allowing customers to order products, check inventory levels and product prices, and confirm the delivery status of pending orders. Then, as customers became more sophisticated, they began to check their orders via the Web.

Eric Boelter, CEO and president of Boelter, has a clear vision of the future: "We wanted to position [the company] to offer superior service in a business environment where we believe most of our customers will inevitably end up -- the Internet. But we also believed we really needed to give our customers the option because they are our most important asset and we didn't want to force them into new business methods," he says.

This "mobile order desk" was the result of Boelter's implementation of the Ironworks Internet electronic commerce system from Ironside Technologies, which is based in Pleasanton, Calif. Accessed through a standard Web browser, Boelter's online system provides a direct, real-time link to a customer's order management system, giving them up-to-the-minute accuracy regarding product availability, order confirmation and shipping details. In addition, a full electronic catalog gives customers complete product specifications to ensure that the proper supplies are ordered.

According to AMR Research, however, the maturing order management market provides only the most basic levels of necessary functionality. In fact, leaders in the field -- such as i2 Technologies, Click, NetVendor, Entigo and IBM -- are now looking to analytics and metrics to help distinguish their companies from others in the industry. The idea is to offer solutions that allow organizations, such as Boelter, the ability to gain insight into their customers' behavior. Some analytic and metric tools don't stop there, however. A core customer with the right order management tools can turn around and offer the same analytic and metric tools for their own customers to use in their supply chains.

In Boelter's case, Ironside's order management capabilities can help the company offer "online compliance reporting" to customers. For example, as is the case with many hotel and restaurant chains, while purchasing is decentralized, each location has a corporate standard to which it's required to conform, ensuring consistency and quality of service. Gauging how well companies conform to these standards has traditionally been difficult to accomplish. Now, however, a chain's management can simply visit Boelter's online system and generate reports on a location-by-location basis, showing the purchasing history for each individual product and giving a better understanding of a location's conformance to the corporate standard products. Ironworks' electronic commerce system provides an easy-to-access interface to Boelter's order management system, which then generates the reports. "It's a simple enough service to offer, but it can potentially save our customers a lot of time and money," adds Boelter.

Order Management "Ins" and "Outs"

Much of today's technology is limited only by the expertise of the person who controls it. The same can be said for the world of order management where the basic elements of the technology must be learned before its possibility can be turned into a reality for companies. AMR Research analysts like to tell users that order management provides a company with two distinct views. First, order management looks outward at your customer. Next, it looks inward at your own company. As a result, order management touches a wide range of business applications and rules, workflows, policies, and strategies in both directions.

Once a customer's order triggers activity, order management then places a demand on the inventory and manufacturing resources. In addition, an effective order management system conveys criteria for customer satisfaction, executing workflows. Finally, such a trigger will help provide input for supply and demand management through the order management system. In essence, order management captures all the relevant business rules and requirements that govern a customer's specific order.But how do you distinguish order management from customer relationship management (CRM)? After all, if order management simply deals with a customer's order, shouldn't this be classified as CRM? According to AMR Research, order management falls in the middle of CRM capabilities. "Customer support manages the customer relationship before and after order management by aiding front-end customer acquisition and post-sales support," says AMR Research.

The B2B Relationship Extended

As order and customer management becomes more powerful and sophisticated, there is a temptation to convert to a self-serve model. But a warning signal has sounded in the B2B space. Says AMR Research analyst, Joanie Rufo, "Wheras business-to-customer (B2C) relationships often begin and end over the Web, most B2B relationships have existed for decades the old-fashioned way: on paper, through the mail, via the phone or fax, or in person."

Rufo cautions that Web-based customer management and support will fail if it doesn't recognize the existing relationships crafted and nurtured in the B2B environment. She offers some solutions for companies so they won't miss out on the opportunities customer and order management can bring. First, she warns companies to be wary of using B2C justifications, approaches, or solutions in developing B2B self-service strategies. Next, she suggests that companies evaluate current customer and order management procedures, including customer support patterns and needs. This will help you determine what your company can deliver over the Web.

From the information gathered by these assessments, determine which systems need to be integrated or developed to bring support online. She suggests a phased approach to expedite the self-service launch. Finally, and most importantly, Rufo's advice is to "communicate with customers early and often through the process of creating and rolling out self-service. Understand that the process will be iterative, as customers become more knowledgeable about how self-service can benefit them. Be prepared to offer training or incentive programs to encourage adoption."

Market Direction

Analysts, consultants and others in the thick of the order management market suggest that most of the activity is coming from the major enterprise resource planning (ERP) and supply chain software suppliers, as evidenced by Manugistics' purchase of SpaceWorks this past June. The acquisition gives Manugistics a solid and proven order management application, causing the company to compete with i2 Technologies as both supply chain enablers move aggressively into the sell-side e-commerce application market.

"We see ERP players heavily involv-ed in the order management space," says Ken Martin, senior vice president for TSC, a Chicago-based consul-tancy and systems integrator company. "ERP players are aligning themselves in industries where optimum order management is critical."

Martin further suggests that this activity by the veteran software providers will only increase. "The market is ripe for this kind of activity. Traditional enterprises are not backing off on their CRM or order management investments, knowing that they can find a true return on investment in these areas."

This makes sense, he and others suggest, because chief information officers are more critical than ever of their software investments and what areas can truly produce returns for their organizations. Every competitive company wants to find and retain good paying customers. Order management supports this.

As the order management market matures, also watch for more suppliers to provide the analytics and metrics that will distinguish them from the competition and give detailed insights into customers' behavior. These features will allow certain software suppliers to gain a foothold on the growing private exchange market, according to AMR Research.

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