At first glance, the answer seems obvious – of course order management is geared toward customer demand. But a closer look finds that there are many factors, with variable scope and effects, that influence the alignment of order management strategies. Many organizations may not be aware of the misaligned processes and not-quite-optimized project management strategies that can disrupt the supply chain and impact a company’s capacity to develop business relationships or fulfill its customers’ orders.
Supply Chain and Order Management
It starts, really, with the supply chain as a concept. Spend Matters recently released some intriguing research by Pierre Mitchell, its chief research officer. In the report, “Putting the ‘Supply’ in Supply Networks,” he wrote about the gap between the ideal and the reality in supply chains, particularly in procurement, order management and overall network support. Of particular focus was direct procurement, a critical aspect of overall order management strategies. He presented data about the top objectives manufacturing firms have for their direct procurement strategies over the next 18 months:
- Cost reduction (74 percent cited it as a “pressing objective”)
- Continuity of supply (53 percent)
- Strategic partner collaboration (44 percent)
- Risk reduction (37 percent)
- Customer and stakeholder satisfaction (34 percent)
- Revenue and growth support (32 percent)
- Flexibility and resiliency (24 percent)
- Innovation (21 percent)
It’s interesting to see innovation on the (relative) back burner for so many firms. With the drive to continue spurring experimentation and optimizing every facet of the chain accelerating, it’s difficult for many organizations to rein in their focus to continuously enhance the foundation of their direct procurement and supply chain approach. It’s an issue, Mitchell wrote, that has stemmed from years of workarounds, less-than-productive divisions of labor and other stopgap measures that leave many companies lagging behind on technological, communication and cost-efficient fronts. In the effort to continuously reverse-engineer the supply chain in order to align with fleeting demand, many organizations have created obstructions between production and fulfillment.
“Historically siloed departments, processes, metrics, electronic data interchanges, supporting, enterprise resource planning systems – and a lot of spreadsheets – have created a brittle, shortsighted supply network that simply can’t be orchestrated efficiently and effectively to meet demand,” Mitchell wrote. “In this environment, the best demand shaping and sensing capabilities will only get you so far.”
Order management and direct procurement from the ground up
Another key point Mitchell made was that “spend” and “supply” can no longer be seen as separate from each other, from a procurement perspective. The indirect contributors to order management and procurement processes, including human resources, B2B partnership enhancement, employee self-service development, big data and project management – are just as crucial to the total cost of ownership of order management as the actual direct procurement production line.
In an article for The Strategic Sourcerer, contributor William Dorn wrote similarly about the need for more emphasis placed on the management of users, projects and spend that contribute indirectly to the overall supply chain. By breaking down silos, better distributing resources and using centralized order management strategies, companies can better leverage their order management practices – and their entire supply chain – to be better armed to fill demand, at less cost and headaches to the supply side.
“Companies are letting procurement spend more for human and electronic resources and they are looking for better ways to track their success and/or failures,” Dorn stated. “The huge increase in director and higher level positions being created efforts should be testament enough to how companies are starting to see procurement groups as more important to their organizations.”
How to accelerate alignment
Of course, uniting disparate elements of order and project management strategies is easier said than done. Order management solutions, such as IBM Sterling Order Management, can provide the foundation for increased connectivity and fulfillment performance all across the supply chain system. It provides the support for organizations to address the issues cited as most pressing by the respondents to Mitchell’s survey:
- A unified system ensures supply continuity and enables faster, more accurate orders
- Increased visibility improves accountability, which enterprises can leverage for stronger strategic partnerships
- Performance metrics allow businesses to deal with emerging variables and ensure the highest level of customer and stakeholder fulfillment
IBM Sterling Order Management
Another significant benefit of the IBM Sterling Order Management solution is that it can be easily integrated into current supply chain networks, connecting and optimizing in real time instead of grinding operations to a halt while the conversion is completed. This helps businesses not only address their pressing objectives, but innovate at the same time. A company can work with a services provider like Eliassen Group to look at its order management strategies from a fresh perspective – it may be that the once clear alignment between supply and demand has shifted as time has taken its toll. An experienced order management services provider can identify these areas and implement the centralized order management solution in a way that benefits both direct and indirect elements of procurement, giving companies newfound visibility into supply chain strategies and strengthening the links of the supply chain.
