Integrating the quote-to-cash process across the enterprise Serving customers faster at lower cost

 
Integrating the quote-to-cash process across the enterprise Serving customers faster at lower cost
Stockholm, 11 February, 2010

                                                           Syncron International AB
                                                           Östra Järnvägsgatan 27
                                                           SE-111 20 Stockholm
                                                           Sweden
                                                           PHONE:    +46 8 410 802 00
                                                           FAX:   +46 8 21 96 54
                                                           E-MAIL:   info@syncron.com
                                                           www.syncron.com
                                                           VAT. NO:   SE556573889401
                                                           REG. OFFICE:   Stockholm

                          Integrating the quote-to-cash
                          process across the enterprise
                               Serving customers faster
                                           at lower cost

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Executive Summary
As companies become more global in nature the ability to effectively manage
a network of warehouses is becoming a required core competency.
Unfortunately, a surprisingly high number of companies that currently
practice multi-site distribution are experiencing real challenges in this area
impacting profitability and customer service levels. One reason is that the
quote-to-cash process often spans across multiple organizations, geographies
and business systems but there is no end-to-end visibility or global
optimization. In such an environment, quoting, order promising, tracking and
fulfillment are complex and labor intensive.

Do You Recognize this Situation?
A company may have a rule that all orders for northern Germany are shipped
from the Hamburg DC. If that DC is out of stock of a certain item, it will be
back-ordered, and the customer must wait to receive it. Or, if the customer is
important enough, a manager may decide that the entire order will be routed
to another warehouse where there is stock, even though freight costs would
have been lower if the order had been split and shipped from two different
facilities. In the first case, customer service suffers; in the second, logistics
costs are disproportionate.

How to Automate the Quote-to-Cash Process
If the company had an automated and well integrated approach to their
quote-to-cash process in combination with defined business rules optimizing
the fulfillment options, money is saved and the customer is kept happy.
Syncron offers leading technology that has proven to improve the quote-to-
cash process from capturing customer request, converting them into orders,
through sourcing, and invoicing as well as payment tracking across trading
partners.
Our Global Order Management solution leverages your existing systems to
automate the quote to cash process. It provides the capability to manage
quotes and orders from multiple channels and coordinate fulfillment across
multiple inventory locations, suppliers, partners and business units. The
Business Process Platform helps model, automate and monitor the end to end
supply chain as well as establish — and meet — performance goals across
your key processes.

Results You can Achieve
Key benefits of automating and integrating the quote-to-cash process with
Syncron Global Order Management include:
      Improved revenue and profit
       –      Improved cash operating cycle up to 50%
       –      Reduced quote-to-cash processing costs by up to 80%
       –      Free-up staff time by as much as 70% so they can focus more on
              customer service
      Improved responsiveness and customer service up to 40%
       –      Resolve problems faster with real-time visibility across your supply
              chain
      Shorten quote-to-cash cycles and achieve 99% perfect order
       performance
      Lower inventory levels by order brokering and direct shipment

Remember, a 3 percentage point better perfect order correlates with
1% of additional profit margin.

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Table of Contents

1   The need for Effective Quote-to-Cash Management ..................... 5
1.1   Primary Process in Focus: Quote-to-Cash........................................ 5
1.2   The Challenge ............................................................................. 5
1.3   The Potential ............................................................................... 6
2   Removing Obstacles for Automated Quote-to-Cash Processing ... 7
2.1  The Technical Evolvement ............................................................. 7
2.2  The Organizational Involvement .................................................... 7
3   First, a Streamlined, Easy to Understand Quote-to-Cash Process 8
3.1   What is Included in the Quote-to-Cash Process? .............................. 8
3.2   Basic Current State Process Components ........................................ 8
3.3   Issues with the Current Quote-to-Cash Process ............................... 9
3.4   Key Business Impacts .................................................................. 9
4      Automating and Integrating the Quote-to-Cash Process ........... 10
5   Syncron’s Solution ..................................................................... 11
5.1   Syncron Solution Portfolio ........................................................... 11
5.2   Syncron Global Order Management .............................................. 12
5.3   Why is Global Order Management Important to the Manufacturing
Industry? ........................................................................................... 12
5.4   Key Components of Global Order Management .............................. 13
5.5   Syncron Global Order Management Benefits .................................. 16
6   Proof of success ......................................................................... 17
6.1   Case Study: Atlas Copco ............................................................. 17
6.2   Case Study: Volvo Construction Equipment ................................... 19

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Abstract

This white paper examines the challenges faced today by organizations that
operate a manual quote-to-cash process across dispersed ERP installations,
as well as the outcomes of an automated and integrated quote-to-cash
process. It is a resource to help businesses gain efficiency and improve
customer service in today’s competitive business environment.
The document is structured to guide the reader through the quote-to-cash
process with its main sub-processes.
This paper is designed to assist CIOs, sales managers, order processing
managers and ERP system administrators in learning about, planning for and
evaluating quote-to-cash processing integration and automation.

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1                The need for Effective Quote-to-Cash
                 Management
In today’s business environment, processes and organizations rarely stay the
same long enough to release value from investments in monolithic IT
architecture, like ERP solutions. ERP systems are also, due to the complexity,
rather poor in interacting with other systems. Increasing requirements for
added connectivity, information transparency and, most importantly, speed in
change, have driven the need for reliable Business Process Management
(BPM) based solutions. Even the monolithic ERP strategy can, and most often
should, be supported by a BPM based solution to reduce cost and risk.

1.1              Primary Process in Focus: Quote-to-Cash
The quote-to-cash performance is at the heart of your business. Quote-to-
cash is a term used to encompass the business cycle that starts with
reception of a customer request generating a quote which can be turned into
a sales order and ends with collection of payment generated by the sale of
the product. There are several sub-processes within the quote-to-cash cycle,
including: creating quotes, receiving and validating orders, entering sales
orders, approving sales orders, fulfilling orders, generation of purchase
orders, billing for the orders and collecting payment.

1.2              The Challenge
Businesses face quote-to-cash challenges in the areas of visibility,
productivity, accuracy, cost control and implementation. Companies need to
know what goods are available where and to what price to be able to reply on
customer requests and achieve an optimal order fulfillment. Companies need
to be able to pull up orders and answer customer questions immediately as
well as eliminate non-value-added tasks and human errors that drive up
costs and customer dissatisfaction.
In today's economic landscape businesses need to deliver the expected levels
of customer service in order to retain existing customers and acquire new
ones. Highly effective order management is absolutely crucial to this
objective. Along with reducing operational costs, freeing staff to spend more
time on customer service activities, automation of the quote-to-cash process
gives companies higher order scores, less shortages and quality deviations in
the delivery process.
Key challenges companies are facing:
            Disparate ERP systems resulting in
                   o      a lack of a single repository for orders
                   o      problems acting as one company to all customers —
                          worldwide
            Mergers and acquisitions resulting in complexity in order
             management processes due to disparate order processing systems
            Order fulfillment processes that concentrate on individual orders
             rather than the holistically viewing order fulfillment

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1.3              The Potential
When companies examine ways to gain efficiencies and competitive
advantages in a constantly evolving business world, the quote-to-cash cycle
emerges as an area offering significant potential for improvement. Any
incremental improvements resulting in improved order capture results in
sales revenue uplift. In addition, the process of capturing the order and
fulfilling the order is a major area of opportunity for cost improvements.
Following the progress turning orders into money in the bank offers strategic
benefits to the company while strengthening customer relationships.
Companies converting to an automated order processing system can realize
efficiencies throughout the quote-to-cash cycle.
By leveraging technology, industry best practices, and domain expertise, we
have helped supply chain leaders across industrial manufacturing sectors
achieve impressive results in their order fulfillment processes.
For example, a mining and construction company saw a substantial business
growth after integrating and automating the quote-to-cash process. The
managing director at one of the sales companies stated that the
business had grown 200% over the past years without having to hire
a single person in order administration. They can now focus on selling
and forget about administration. This was a direct result of the
implementation of a common platform that makes it possible to consume
data between different enterprise applications, unifying the order fulfillment
process, and enabling a single order interface for their customers via the
Group’s e-commerce solution.
All of the above factors help companies better manage customer
relationships, manage inventory and improve the order score, bring visibility
to business processes and improve overall profitability. The quote-to-cash
process is by far, the single-most important end-to-end process as it drives
the customer experience, revenues and margins.
Industry benchmark1 data reveals that quote-to-cash performance is strongly
linked to overall business performance, both for cost containment and
sustainable growth:
A single percentage point improvement in demand visibility
correlates with 2 percentage point improvement in perfect order
performance2. A 5% point better perfect order correlates with a
2.5% better Return on Assets, and a 3 percentage point better
perfect order correlates with 1% of additional profit margin. Finally,
a 2 percentage point better perfect order correlates with 10 cents in
Earnings per Share.

1
    AMR Research Supply Chain Execution Software Is Vital to Delivering the Perfect Order
2
   ―Perfect Order‖ is a discrete measurement traditionally defined as the percentage of orders that are delivered in
full and on time to the request and/or commit date; arrive damage free with no product quality issues; and match
the customer documentation (invoice, PO, and receipt).

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2                Removing Obstacles for Automated
                 Quote-to-Cash Processing
2.1              The Technical Evolvement
The possibilities to automate and collaborate between ERP systems did not
exist some ten years ago. Over the last decade, interoperability standards
and technologies have emerged enabling the extended enterprise using
business process management technologies. Easy coupling and decoupling of
trading partners and systems in a constantly changing business environment
is now possible through common business process standards and
frameworks.
The industry analysts recognize that underperforming companies with limited
quote-to-cash capabilities perceive their competitor’s service level as a top
challenge. Their issues are related to complexity in quote-to-cash processing
due to disparate order processing systems and order fulfillment processes
that concentrate on individual orders rather than a holistic view of fulfillment.
These issues result in the need for an integrated quote-to-cash process.
Providing a common window to the end customer throughout the quote-to-
cash lifecycle is the key capability of this process. Aberdeen’s hypothesis is
that in response to increased customer service demands, high-performing
companies are using business process management technologies like
Distributed Order Management Software, Supply Chain Visibility Software,
and Multi-Site Warehouse Management Software to achieve superior levels of
customer service, while maintaining comparatively low levels of inventory. 3

2.2              The Organizational Involvement
Given that quote-to-cash management crosses functional and enterprise
boundaries, most sales process integration and automation initiatives need to
involve a coalition of participants collaborating across functional areas that
normally rarely work together. To succeed, this will require a common ground
for collaboration and a new attitude towards information sharing. Successful
companies realize that business improvement, and thus achieving a
competitive edge, is directly related to the willingness of sharing information
across the traditional organizational boundaries.
For example, an international industrial equipment company decided to
create completely transparent order information across each point in the
order-to-delivery chain. The objectives of this initiative were to achieve faster
order processing time and improve the delivery quality by automating the
process. Early warnings at deviations were crucial. Now, instead of passing
the orders between involved parties like hot potatoes, customers, sales,
customer service, procurement, logistics and shop floor staff have access to
the same transparent order tracking information and alerts at deviations.

3
    Perfect Order, Happy Customer: Managing the Order-to-Delivery Cycle, Aberdeen Group, February 2009

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3                First, a Streamlined, Easy to
                 Understand Quote-to-Cash Process
3.1              What is Included in the Quote-to-Cash Process?
Quote-to-cash covers the business process for creating a quote for a prospect
or customer, order entry, fulfillment, order management, invoicing and
payment receipt. The functionality is highly integrated with Supply Chain
Management.

3.2              Basic Current State Process Components
The quote-to-cash process crosses multiple functional and enterprise
boundaries that often operate within their own silo. Using manual processes
to orchestrate quote-to-cash operations creates heavy administrative
burdens along with the potentially inefficient order fulfillment and cash
collection delays. Manual processing of sales orders is inherently labor
intensive, time-consuming and error-prone, requiring valuable resources to
manage each part of the process. The following are the basic current state
components and sub-processes for the quote-to-cash process:

       Order                   Order        Order       Order         Invoicing
      Capture                Validation   Brokering   Management

Order Capture
      Quotes are computed manually by sales personnel or quoting specialists.
       –      New and existing customers have to be recognized with complete
              billing and shipping address.
       –      Products are selected from product catalogues or are configured.
       –      Price and availability have to be validated to be entered on the quote
              or directly on the order entry form.
      Quotes are often manually converted to a sales order upon customer
       acceptance.
      Orders are created/booked in the local ERP system.
Order Validation
      Pricing and contract confirmation for large customers has to be validated.
      Finance need to check the customer credit for approval.
      Complex product needs to be manually validated.
      Products are checked for warranty regulations.
Order Brokering (fulfillment)
      Orders are sent to one sourcing point for fulfillment.
      Order promising including order acknowledgement and confirmation
       takes in many cases longer than the customer accepts.
      Orders are processed. This includes inventory reservation, picking and
       packing, ship confirmation as well as distribution.
      Generation of purchase orders for additional supplies when needed are
       handed over to the purchase department.
Order Management
      Customers call and request information in their order status.
      Customer request order changes.

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Invoicing
      The customer is billed for the products, services and shipment.
      Account receivables are reviewed to validate settlement.

3.3              Issues with the Current Quote-to-Cash Process
Seamless and structured as they may seem, the steps involved in the quote-
to-cash process run into a number of challenges, owing to the number of
geographies and lines of business involved. The quote-to-cash process is
predominantly manual and siloed with no single owner, despite sales,
operations and finance playing key roles. The following is an overview of the
issues that companies often face in the quote-to-cash process:
Order Capture: The lack of data visibility of customers, products, product
availability, lead time and net prices creates the inability to serve the
customer effectively. The customer is often treated differently depending on
the sales channel used or due to personnel knowledge at the order desk.
Quotes cannot be converted into orders leading to extra administration. Since
no structured order capture process exist, customers sometimes shop around
to find the best price and service both within and outside of the company. All
this can lead to revenue leakage and lost customers.
Order Validation: This step usually contains many manual tasks conducted
by different departments. Risk exposures due to high credits or wrongly
configured product are costly mistakes.
Order Brokering: Companies engaged in multi-site distribution face a
number of challenging decisions regarding how to use their network of
distribution centers to effectively fill orders on a line-by-line basis. Making
sourcing decision, order splitting and allocation of orders across an extensive
supply network including local stock locations, distribution centers,
manufacturing plants, and suppliers, manually without full visibility is
impossible. Traditional Warehouse Management Software (WMS) and ERP
systems often do not offer adequate solutions to this challenge.
Order Management: Since many companies have dispersed IT systems and
operate in silos it can take days to gather throughout order status including
backorder recovery and delivery status. Exploring the possibility to accept a
request for order change may take many phone calls due to no visibility of
the order status. Inappropriate decisions may lead to production re-planning,
increased inventory and missed promise dates.
Invoicing: Invoice creation and payment review is done on a monthly basis
by accounting and finance which is a complex issue across multiple entities
and systems.

3.4              Key Business Impacts
Siloed quote-to-cash processes result in revenue leakage because of
inefficient order capturing, order fulfillment and order management
processes; higher cost-to-serve because of inefficient planning and execution
of orders; and increased working capital requirements driven by errors, and
delayed payments from customers.
According to Aberdeen Group, companies that implement an integrated and
automated order distribution based on business process management
concepts have reduced their order fulfillment costs year-over-year. These
companies have also reduced their inventory carrying costs year-over-year
as well as achieving 99% or more complete shipments4.

4
    The Challenge of Multi-Site Warehouse and Order Management, Aberdeen Group, April 2007

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4                Automating and Integrating the
                 Quote-to-Cash Process
Incoming request for quotes or sales orders launch the quote-to-cash cycle.
Fast response to questions like, When can it be delivered?, What is my total
net price?, helps businesses increase customer satisfaction. When the sales
order has been placed it needs to be sourced and fulfilled in an optimized
way to ensure on-time delivery rendering timely customer payment. Up-to-
date information on the status of customer orders and inventory, no matter
which sales channel the customer turns to, is crucial for effective customer
service, sales management and forecasting.
To optimize the quote-to-cash processing in a heterogeneous IT environment
across departments, automation and integration is required. These essentials
must be considered:
      Order Capture: All types of quotes and orders are entered through one
       portal or are atomically collected from all other type of sources.
       Customers and products are recognized automatically by workflows
       containing defined business rules that are integrated with source
       systems. Price and availability is checked in real time based on the
       customer agreements, order type and class as well as the optimized
       sourcing point for the product. The products are sold at the same price
       no matter from which warehouse they are being sourced.
      Order validation: Workflows and business rules automate the processes
       of validating the products, customer credit approval, customer contracts,
       and warranties.
      Order Brokering: Leverage the entire network to fill orders and practice
       sales order splitting. By filling orders on a line item basis, network
       efficiency can be maximized while still meeting customer service
       requirements. Companies with this flexibility can perform fulfillment line-
       by-line, filling each component of an order in the most efficient way
       possible, factoring in freight cost, lead time, and inventory levels at each
       warehouse. This functionality is sometimes referred to as Distributed
       Order Management (DOM).
      Order Management: Starts with visibility of inventory, orders and
       delivery. The order throughout status, order splitting and merging as
       well as backorder and recovery is reported from a single point, and order
       changes can be applied.
      Invoicing: To speed up the collection process invoices are created
       automatically and payment reception is tracked and traced.
Automation and integration minimizes the amount of manual labor and the
number of manual touch points required to complete order processing. By
introducing order splitting and merging the inventory levels are reduced as
well as the numbers of backorders. These capabilities can yield millions of
dollars in savings by minimizing the number of touch points at each step in
the process, and by providing the ability to optimize the inventory utilization.
And businesses can improve the customer experience by increasing speed
and responsiveness.

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5                Syncron’s Solution
There is no need to rip and replace existing systems that are managing a
local process effectively. However, lack of centralized visibility and an
optimized quote-to-cash process can hamper any enterprise-wide efficiency.
Companies often choose to simply live with the problem rather than ripping
out each application and replacing it with a single system. With the
technology and best-of-breed solutions available on the market today which
can be placed on top of the existing IT solutions there are alternatives to a
monolithic IT architecture. The complexities of the quote-to-cash process
spanning across technical and organizational borders can be addressed with a
scalable business process management platform based on Service Oriented
Architecture (SOA) with an integration framework. These applications are
flexible and easy to configure to meet the customer requirements, no
compromising, as well as reduce IT costs, decrease the time and effort
required to modify applications, and drive business innovation through IT.
In some cases, choosing a single ERP system might be the right choice.
However these projects are most often proven to be costly both in time and
money. Acquiring new businesses will again disrupt the single choice. In
these situations a best-of-breed solution can be the answer ensuring that
your quote-to-cash process is kept intact throughout the roll out of your ERP
system and during your integration of new acquisitions. This way you can
faster and with less risk get your quote-to-cash process up and running and
then roll out a standard ERP minimizing the customizations needed thereby
increasing speed and decreasing cost.

5.1              Syncron Solution Portfolio
Syncron solution portfolio is an integrated and complete application set for
deploying industry-specific supply chain processes across applications,
leveraging existing enterprise IT assets. Syncron solutions are standard
software developed to support complex supply chain processes and allow for
agile design of workflows, business rules and system integration according to
each customers unique requirements.
It provides the tools, framework, and pre-built components needed to
integrate disparate applications and link cross-departmental business
processes. In today’s rapidly evolving business climate, a flexible
reconfiguration of the business processes is a definite requirement. The
drivers for this can be new business arrangements, new compliance
regulations, outsourcing, meeting competition, mergers and acquisitions, just
to mention a few.

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To meet these requirements the Syncron Business Process Platform (BPP) is
based on SOA and has strong Business Process Management (BPM)
capabilities. All Syncron products are built on the Business Process Platform
and utilize the platforms support for orchestrating the business processes
including monitoring, traceability and optimization of the business processes.

5.2              Syncron Global Order Management
Syncron Global Order Management (GOM) manages the global order
processing, in one unified process from quote to cash. Through a single order
interface, integrated with internal and external business systems, you can
provide your customers with real time Available To Promise (ATP), net pricing
and complete visibility no matter how complex your supply chain or IT
infrastructure is.

              For Flexibility                    For Ef f iciency and        For Responsiveness
               and Reuse                               Quality                and Optimization

           Service Oriented                          Business                      Event &
             Architecture                           Modeling of                  Performance
                                                     functions                    Monitoring

                  Global process orchestration
                  Order               Order            Order           Order
                                                                                 Invoicing
                 Capture            Validation       Brokering      Management

                 Integration and collaboration

5.3              Why is Global Order Management Important to
                 the Manufacturing Industry?
Syncron’s Global Order Management addresses several key issues the
manufacturing industry face and provides compelling benefits. It offers the
industry the best of both worlds — the ability to leverage existing IT
investments and the flexibility to easily incorporate acquired companies or
new applications as well as support quote-to-cash process innovation needed
in the evolving business environment. Key benefits of automating and
integrating the quote-to-cash process with Syncron Global Order
Management include:
      Improve revenue and profit. All quotes and sales orders, independent
       of sales channel, are placed and tracked in one system. Orders are
       automatically routed securing an intelligent allocation and sourcing
       decision, freeing up time to focus on selling.
      Improve responsiveness and customer service. The Syncron Global
       Order Management solution provides quick and consistent responses to
       customer requests related to ATP, price, order status etc. The solution
       has a complete follow-up on the sales and purchase ordering process,
       from one single source.
      Shorten quote-to-cash cycles. Enable collaboration, synchronization
       and visibility across all trading partners involved in a customer-centric
       fulfillment. Quotes can directly be converted to orders and all orders are
       visible for involved parties allowing you to follow the progress on the
       order from quote to payment.

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       Lower inventory levels by order brokering and direct shipment.
        Global availability of parts everywhere in the world in combination with a
        strategic business model to source and fill orders line-by-line optimizes
        inventory utilization. Incorporating your suppliers in the order process
        gives possibility to have direct shipment to your customers.

5.4                 Key Components of Global Order Management
Syncron Global Order Management leverages existing systems to automate
the quote to cash process. It provides the capability to manage quotes and
orders from multiple channels and coordinate fulfillment across multiple
inventory locations, suppliers, partners and business units. The solution
supports different order types in the common order book such as customer
orders, supplier orders, replenishment orders and return orders. Different
business rules are applied for managing the different order types in an
optimized way. All information from customer sales orders to the tracking of
payment is consolidated in the system.

                                 Order                 Order              Order                 Invoicing
     Order Capture
                               Validation            Brokering         Management

    • Customer             • Product            • Sourcing         • Order Visibility      • Invoicing
      Recognition            Validation
                                                 o Decision &       o Throughout           • Payment
    • Product              • Pricing and           Splitting          Status                 Tracking
      Recognition            Contract
                                                 o Cross-Docking    o Order
                             Validation
     o Catalogues                                                     Split/Merge
                                                 o Allocation
                           • Credit Approval
     o Favorite parts                                               o Backorder &
                                                 o Purchase
                           • Warranty Control                         Recovery
     o Previous                                    Order
       Orders                                      Generation      • Inventory
                                                                     Visibility
    • Quoting                                    o Drop Shipping
                                                                   • Order Change
     o Net Price                                • Promising
                                                                   • Delivery Visibility
     o Availability                              o Acknowledge-
                                                   ment
    • Order Entry
                                                 o Confirmation
    • Returns

In order to effectively embrace a quote-to-cash process, the solution offers
out-of-the-box integration capability. The Syncron Business Process Platform
has a well defined and extensive integration framework including standard
adaptors to ERP systems.
The quote-to-cash process flows through the following steps:
Step 1: Order Capture
Sales orders and quotations request can reach companies in many various
ways. Some customers call the internal order desk, others might use an
online ordering system, email or enter a store. Quotes and sales orders can
be entered in any existing system or through the Syncron interface. There is
a wide range of data which must be recognized, approved and monitored;
customer identification, product availability with supersession and replaceable
options, the pricing with discount options, are automatically looked up in the
source system by Syncron Global Order Management. Quotes can directly be
converted to orders when approved by customer providing the basis for
win/loss analysis. Immediate confirmation, with net price and delivery dates,
can be sent to let customers know that their orders have been received.

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Step 2: Order Validation
Based on your specific criteria, Syncron Global Order Management captures
sales order information and routes it to the corresponding source systems or
representatives for validation if necessary. Validations are done for warranty
control, product configuration, credit approval or pricing and contract
approval.
Step 3: Order Brokering
Order Brokering also referred to as Distributed Order Management (DOM),
optimizes order sourcing by routing the order to one or more sourcing points,
internal or external in the supply chain. This enables your business to
increase the on time deliveries and fulfill orders in the most cost efficient
manner. Syncron Global Order Management contains an order placement
model which consists of sophisticated rules used to define from which
warehouse the parts should be shipped to get the optimal sourcing set-up –
providing synchronization and control of all internal and external processes
tied to order fulfillment. The order routing model is flexible and easy to
reconfigure through a web based Graphical User Interface, supporting you in
enhancing and changing sourcing strategies over time.

                                                      Start

                                                     Try to          Business specific
      Get next           Store all                  allocate         allocation sequence
     compatible         allocation
        part             results

                                          No       Allocation             Yes
                                                      ok?

                               Yes        Any             No
                                       locations
                                          left?

                                                    Create best
                                                   possible result
                                                      for item

                              Yes                    No                         Compare all
                                        Any                                                    Split order
                                                                                 parts and
                                     compatible                                               lines where
                                                                                choose the
                                     parts left?                                                 needed
                                                                                   best

The order placement rules operate on a per order line basis, which means
that the goods can be sourced from various warehouses. Each order line
easily follows a unique process based upon any order-related attribute or
business rule. The solution will provide the capability to make intelligent
allocation, sourcing and re-ordering decisions based upon current stock,
current demand, in-transit inventory and fulfillment lead times. As important
as splitting the order is merging the order, keeping both the consolidated
order information updated as well as cross-docking for shipment.
The order placement model provides the support for splitting out order lines
containing for example hazardous materials which can only be stored in
certain warehouses or which are not allowed to be sent together with other
goods. Based on your requirements and supply chain set-up you can define
direct shipment from the external supplier to your end customer when
applicable. Syncron Global Order Management will automatically create the
required purchase orders and communicate them to the suppliers involved in
the fulfillment either by a direct integration, Electronic Data Interchange
(EDI) interface or via email.

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Order promising including order acknowledgement is done automatically
when the sourcing decisions are made.
The business rules are easily reconfigured so you can quickly respond to
changes in the supply chain. This will optimize the stocking of goods, but also
cut freight costs and support a green supply chain.
Step 4: Order Management
No matter how the order was placed Global Order Management captures all
fulfillment activities throughout the supply chain, end-to-end, and provides a
single transparent view of order information and order status across all
parties involved in the fulfillment. This helps you react quicker to deviations
in delivery, monitor delivery performance and consequently improve
customer service.
In complex demand driven supply chains, and particularly 'build-to-order'
scenarios with long delivery lead-times, companies suffer from a poor
overview of the delivery progress and an inability to quickly react to delays.
As a consequence, delivery performance is poor and inventory cost tends to
increase.
Syncron Global Order Management provides you with a complete,
transparent and real-time view of the delivery status and fulfillment activities
as well as a consolidated view of the company's delivery performance. It
enables companies to present a single face to the customer by allowing
information about any order, from any channel or division, to be made
available when and where a customer needs it. It also simplifies
administration and maintenance of customer orders, allowing a single record
to be accessed, modified or cancelled through simplified integration between
any order capture system and the Syncron Global Order Management
application.

As important as order visibility is the inventory visibility which is a
prerequisite for Order Brokering. Syncron Global Order Management collects
or accesses and harmonizes information from all inventories, internal and
external, across a dispersed and often outsourced supply chain. This provides
an instant view of all inventories across multiple locations and in transit, both
within the organization as well as those belonging to customers and
suppliers. Immediate and accurate inventory information makes it easy to
make re-distribution decisions and re-allocate orders in real time. The
solution will provide you with a complete and accurate view of your
worldwide inventories, in real time, across all your various business systems.

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Step 5: Invoicing
Receive faster payments by automated invoice generation to be sent at the
same time products are shipped to the customer. Syncron Global Order
Management triggers the finance system to have the invoice created and
populated with complete order information. The sent invoice is linked back to
Syncron Global Order Management consolidating the order view.
Payment tracking allows you to keep track of your customer payments and
having it fully linked to the order for reporting and credit approval. All
information and activity related to that order is now contained in a single
repository — presenting a single version of the record.

5.5              Syncron Global Order Management Benefits
Effectively eliminating manual processes and integrating dispersed IT
environments, Syncron Global Order Management optimizes the whole
process from quotation to sales order generation and fulfillment to payment
of the invoice. Businesses running Syncron Global Order Management placed
on top of their existing ERP applications are driving tangible results and are
able to:
      Improve the customer service up to 40%
      Improve the cash operating cycle up to 50%
      Reduce quote-to-cash processing costs by up to 80%
      Reduce lead time to end customers up to 40%
      Free-up staff time by as much as 70% so they can focus more on
       customer service
      Increase order fill rates, achieving 99% or more complete shipments
      Reduce capital tied up in inventories
      Reduce number of backorders prolonging lead times
      Reduce returns, which directly affects the bottom line
      Increase the percentage of orders and order line items captured
       electronically

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6                Proof of success
Syncron Global Order Management is a proven solution for sales order
processing, with a long list of references and a solid track record of success in
addressing challenges for companies within the industrial manufacturing
sector. The application is used in make-to-stock and make-to-order as well in
combination of the two scenarios. Two customer stories are presented in
more detail, describing how Syncron Global Order Management has improved
the efficiency of the company’s quote-to-cash process as well as increased
the service level.

6.1              Case Study: Atlas Copco
Atlas Copco is a global industrial group headquartered in Stockholm, Sweden.
The Group, which was founded in 1873, employs today close to 33,000
people and manufactures products on 83 production sites in 23 countries on
five continents. Atlas Copco companies develop and manufacture electric and
pneumatic tools, compressed air equipment, construction and mining
equipment, assembly systems, and offer related service and equipment
rental. The products are sold and rented under different brands through a
worldwide sales and service network reaching 160 countries.

6.1.1            Global solution unites Atlas Copco Group
With multiple order systems serving separate market places, Atlas Copco had
a very complex and inefficient ordering process. Syncron helped Atlas Copco
to integrate their existing systems through a single global order management
solution which led to increased customer service, significantly less order
administration, and more efficient order management.
Atlas Copco’s IT infrastructure comprising multiple ERP installations and
supporting systems, had grown in complexity through acquisitions and
organic growth. Kris Feys, Atlas Copco Group’s Enterprise Application
Integration Manager reports, ―When serving different markets worldwide, it is
important that Atlas Copco Group can act as one company to all our
customers.‖

6.1.2            Fragmented IT infrastructure
Previously, each business area had an independent order management
system, which created problems. ―Each time a customer placed an order with
more than one area of the business, they had to access multiple systems.
This caused fragmented ordering and a great deal of administration that
affected our ability to deliver great customer service‖ explains Kris Feys.
When Atlas Copco Group began to explore the different solutions to their
problem, they had very clear criteria that they needed to meet. ―It was vital
that the solution would be 100% reliable with no down-time, would require
no administration work, and could be integrated with our existing systems‖
says Kris Feys.

6.1.3            Syncron - a perfect fit
Atlas Copco selected the Syncron Global Order Management (GOM) solution
as it fully met the pre-requisites of the project. The solution provides a
common platform that makes it possible to consume data between different
enterprise applications, unifying the order fulfillment process, and enabling a
single order interface for their customers via the Group’s e-commerce
solution.
―The business has grown 200% over the past years without having to hire a
single person in order administration. We can focus on selling and forget
about administration‖

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6.1.4            Clear results
Atlas Copco now experience one global ordering process for their customers,
which allows each of the Group’s business areas to work as one; customer
orders are no longer manually entered into different systems.
The Syncron Global Order Management solution receives peaks of 180,000
transactions per hour and 3 million transactions per day, which is increasing
20% year on year. The solution connects over 150 supporting systems and 5
main different ERP systems and is supported entirely by just two staff. ―Our
close relationship with Syncron was a key factor in the project being
successful‖ says Feys. ―We regard Syncron as a partner not as a supplier.‖

6.1.5            Future plans
The Global Order Management solution will continue to play a business
critical role in Atlas Copco’s continuing growth. Kris Feys explains, ―Syncron
are a key partner when it comes to our future growth. Our acquisitive
strategy is now completely supported from an IT point of view because of the
GOM solution.‖

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6.2              Case Study: Volvo Construction Equipment
Volvo CE is a global enterprise headquartered in Brussels. Its product line
includes wheel loaders, compact equipment, wheel-mounted and crawler
excavators, motor graders, and articulated haulers. The company
manufactures its products on four continents and distributes in more than
200 countries via dealerships and rental outlets.
Volvo’s history of mergers and acquisitions created various order systems,
which prevented efficient management of global ordering.

6.2.1            The need to act as one global company
For Volvo CE, various order systems inhibited efficient management of global
ordering. Syncron helped Volvo CE merge support systems in various
regions, which led to increased customer service, less administration and
improved order management. Now, Volvo CE has secured the necessary
prerequisites for its future growth.
Volvo CE is the oldest industrial company in the world that is still active in the
construction machinery segment. Its fragmented IT environment was the
result of many mergers and acquisitions; this made global order
management difficult for Volvo CE staff and dealers. Kenneth Bergström,
coordinator for Volvo CE’s Division Customer Support order system, reports:
―With our full product line, which is manufactured, serviced and supported
worldwide, we must be able to act as one global company with a common
order structure.‖

6.2.2            Tough solution requirements
Historically, all regional Volvo CE regions hosted their own independent order
and warehouse systems, which created problems. Each time dealers wanted
to place orders, they had to access several warehouses. Also when newly
acquired companies were getting integrated into the enterprise structure, the
process took too much time. When Volvo CE Division Customer Support
started its search for a solution that could unify its diverse systems
environment, it had already dismissed a joint ERP system. Why? Because an
ERP implementation would have been an expensive, time-consuming and
complicated process. Volvo CE’s Division Customer Support requirements
were the opposite — it wanted a fast implementation with extraordinary
capacity — a solution that enabled integration of a new warehouse system in
no more than six months.

6.2.3            Easy and fast implementation
After investigating various vendors, Volvo CE Division Customer Support
selected Syncron and its Global Order Management (GOM) solution, whose
main benefit was ease of implementation: it required no changes to internal
procedures, it operates independently of IT infrastructure and ERP support
systems, and it could be implemented at a fraction of the cost of an ERP
solution. During 2004, the GOM solution was implemented at Volvo CE in
Europe and shortly thereafter in North America, Singapore and Korea
followed by China, India and Brazil.
―All in all, the implementation ran smoothly,‖ says Bergström. ―In Singapore,
we literally swapped systems from one day to another, without problems.‖
One success factor was the excellent Volvo–Syncron teamwork. According to
Bergström, Syncron made a true effort to understand Volvo CE’s specific
requirements.

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6.2.4            Clear results
Volvo CE now enjoys one global process, which allows all geographically
spread units to work as one company. Dealer orders are no longer tied to a
specific warehouse: Syncron provided a single, integrated web interface to
manage all ordering, price and availability, part information, order placement
and status.
Syncron’s solution also enables integration with Volvo’s suppliers. The GOM
solution led to improvements in customer service—plus cost savings
associated with more efficient order and maintenance processes.
The solution is flexible so ―We can now change the Volvo CE environment
according to our wishes – new and existing systems are effortlessly and
seamlessly connected in various ways as the order process evolves‖ says
Bergström.

6.2.5            Future plans
Volvo CE’s assertive growth plans cannot be fulfilled through organic growth
only, so acquisitions will continue. Going forward, managing the entire order
structure during integration of these companies becomes business critical.
―Thanks to Syncron, Volvo CE Division Customer Support now has the
necessary logistic prerequisites in place to easily grow and change its order
structure,‖ says Bergström. ―And most important of all, the investment in
Syncron secured our future growth.‖

Issued by: Ulrika Olsson
Version: 2.0
Latest changed: 11 February, 2009
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