Clean Order – the “Right Way” to Run Your Business By Chaz Hanisch, Sr. Management Consultant, Pragmatek As customers get even more demanding, companies are under greater pressure to get their complete “Order to Cash” process right. As the pace of commerce has dramatically increased, the patience of customers has similarly decreased. "Better, faster, and cheaper" just isn't good enough anymore; customers today are demanding clean orders, shipped and delivered on time to the minute, at a cost that barely leaves any margin for error – or profit. Unmet clean order consequences Every company faces the same crucial challenge: Your customer expects clean orders and shipments every time – can your supply chain deliver them, every time? If you can't, then your company faces the consequences of invoice deductions, lost sales and even lost customers if your customer's expectations are not met.
Failure to deliver on any of these rights can be costly because business customers are just like consumers – they prefer to do business with companies that can deliver clean orders and shipments every single time. Anything less is simply unacceptable. Perfect vs. imperfect order differences The requirements for a clean order can be daunting; yet despite the challenges, companies can achieve high Perfect Order Rates. The Perfect Order Rates has become an important indicator in measuring supply chain performance and we will cover it in a future article. Companies that boast some of the highest Perfect Order Rates carry less inventory, experience shorter cash-to-cash cycle times, and have significantly fewer stock-outs than their competitors. Imperfect orders lead to increased labor costs for shipping, the need to provide replacement product, and lower revenue due to lost sales and customers. By minimizing imperfect orders, companies can achieve greater efficiencies and increase customer satisfaction. In our next article in this series we will begin discussing how you can identify if you have “clean order” issues. |
At issue is the definition of a "Clean Order." According to Edward Marien, long-time director of supply chain management programs at the University of Wisconsin, customers are asking for these rights:
