Taming Order Complexity in the Supply Chain to Boost Profits

The supply chain industry is the economic engine that ensures goods and services flow around the globe when needed and on time.

Collectively, it drives economic growth and connect global markets.

Those who work in the field face what seems like an endless set of challenges. Global disruptions continue to rear their heads. Rising costs, stricter customer demands, and growing scale lead the way and contribute to the rise of complexities and the challenges to address them.

Error-filled orders are quietly harmful to the business. Poorly executed orders disrupt operations and reduce profitability. Due to too much inaccurate data entry, manual processes and incorrect quantity specifications, a growing number of orders fail to meet specifications and customer expectations.

Order errors are bad business

How do flawed orders cause harm? Let’s examine their impact. First, mistake-filled orders increase operational costs, as the team must take time away from productive tasks to identify the root problem and fix it. Next, there are the sunken costs. When order issues occur, companies have to resort to expedited shipping and reworking orders. Wasted resources are bad enough, but it’s also not a great look to customers.

Orders that contain errors lead to unhappy customers and a loss of trust. Too often, accurate order processing is an overlooked objective across the supply chain. Minimizing order errors offers high-value benefits, including streamlined operations, improved customer satisfaction, and, most importantly, higher profit margins.

Order management, distributors, and the supply chain

Distributors play a vital role in connecting the flow of goods between manufacturers, retailers, and consumers. Distributors make the flow of goods from production to market–when and where they are needed–possible.

Business stakeholders know how critical accuracy and efficiency are when managing orders. Even minor errors can cause substantial profit loss.

There are many issues leading to order problems, including product variety, customized requirements, and geographic dispersion. Collectively, they each bring layers of complexity to ensure order accuracy. Add in manual data entry mistakes, inaccurate data, and outdated systems, and you quickly find an order system mired in frustrated customers, high return rates, and shipping delays.

To better understand the challenges, here are the leading reasons for poor order profitability:

●      Customer dissatisfaction. Incorrect shipments or delays frustrate customers and harm business. Orders full of mistakes increase return rates, negatively impact supply chain partners, and quickly erode trust.

●       Lost profits. With margins razor-thin, incorrect orders often result in inadvertent undercharging for goods. This equates to unrealized profits of an average of 5% from flawed orders. 

●       Shipping delays. Order processing errors caused by manual approaches are sure to result in a host of delay issues, including missed deadlines, angry customers, and revenue left on the table.

●       Cost of correction. Fixing order errors is a huge waste of resources, requires increased customer support, and invokes hasty technology investments.

●       Reputation damage. Being a trusted supply chain partner is critical to long-term success, and continuous errors make attracting and retaining customers more challenging than necessary.

Like any problem within the supply chain lifecycle, steps can be taken to address complexity and inaccurate order management.

1. Automate processes. With the emergence of artificial intelligence (AI), more intelligent platforms are available to reduce manual processes and greatly lower human errors. From enterprise resource planning (ERP) to order management systems, you’ll have clean data that is easily monitored and can identify potential issues proactively and with great speed.
2. Automate order verification. Many ERP platforms can cross-check order details against inventory data. Take advantage of these capabilities by running regular verification tests to reduce errors and ensure accuracy before orders are processed further down the supply chain.
3. Conduct regular audits. Be proactive and review your order processing workflows to catch errors and inefficiencies before they impact the bottom line. Regular audits help with process improvement and provide the data you’ll need for protocol updates.
4. Open collaboration. Strong relationships still matter, and it’s imperative to partner and collaborate with your suppliers and customers to maintain quality control, reduce errors, and enhance profitability.

Supply chain complexity can lead to flawed orders, quietly sapping profit margins and lowering customer trust. By elevating awareness and taking proactive steps, you’ll be on the road to identifying and correcting errors before they get out of hand.