Any organisation can expect a margin of error in sales order entry. But at what cost?
Every business process error comes at a cost. Failing to offer great support can disenchant customers and destroy hard-won loyalty, and a poor online experience can turn them away in droves. A messed-up sales order is a sure-fire way to erode customer happiness – and drives up operational costs.
When you issue a sales order, usually as a response to a purchase order, it confirms the transaction between your business and your customer. You may choose to send a copy of the sales order to your customer or just use it as an internal document. Regardless, it must be accurate. It should correctly detail the customer’s name and delivery address, product codes and quantity ordered, the pricing, when it must be delivered, and more. It’s also used as the basis for the invoice you will send out – so the sales order and invoice should reconcile perfectly.
What are some of the most common sales order errors?
Let’s start with invoicing. An incorrect sales order can lead to billing and payment issues with your customers’ purchasing managers, invoice approvers and accounts payables teams grappling with sorting out duplicate invoicing and overcharging.
Generating inconsistent invoices based on a sales order due to a lack of a centralised source of the truth is another common problem. This can result in orders being sent to the wrong address (when a customer has several addresses listed) or invoices addressed to the wrong person (hey, they left last year). That inconsistency can also boil over to product descriptions, codes, and pricing – causing problems on both your and the customers’ side of the transaction.
If your team manually converts purchase orders to sales orders, there’s always room for error. It’s generally accepted (but not quantified) that the typical error rate in manual data entry is about 1% (although some offer 30% as a more accurate figure). However, based on the more conservative figure, the potential is that for every 100 keystrokes, one is wrong. That could be a product code, a quantity, a description, a delivery option or even the customer’s name. Any of which will have a negative effect when it comes to customer satisfaction.
Both missed communications and overlooked purchase orders are also common when there is a reliance on humans, resulting in orders not being updated, cancelled or fulfilled.
What will a sales order error cost you?
In most cases, the bigger the error, the higher the cost to put it right. Errors in the sales order process can impact you in a range of ways, including:
Lost sales due to picking errors (as the pick list wasn’t correct due to human error).
The impact of an incorrectly picked sales order can be larger than just that one mistake – it can significantly impact customer satisfaction and retention. They may have depended on the stock items for a ready-to-launch marketing campaign, to fulfil urgent backorders, or to gain a competitive advantage.
Cost of returns.
As well as being highly annoying to your customer who must ensure the incorrect stock is repacked or relabelled to return, and the time taken for your warehouse and shipping bay to manage the pickup, the cost to retrieve an incorrect order and ship it back to your warehouse or store comes straight off your bottom line. Plus, it also must be sorted on arrival and returned to the right place and correctly documented as stock in hand, or you will experience discrepancies in inventory.
Cost of making good.
An incorrect order not only generates a return cost but the expense of updating the sales order and picking list, approving and issuing a credit, picking and packing the order - again, and wearing the cost of sending the order out - again. So, the operational expense to deliver one order has tripled – and you are paying for two-thirds of it out of your pocket, and your warehouse handling and administrative costs have gone up.
Customer service costs.
As well as physically ‘making good’ (if that’s acceptable to the customer), the time to sort out an incorrect sales order includes fielding and troubleshooting the problem and following through with updated paperwork and case notes. Added to this is the time needed for your sales team to pour oil on troubled waters, smooth out a bumpy situation, and ensure that the wrong sales order doesn’t shorten the lifetime value of your customer to the business.
How can sales order automation save your bacon?
Sales order automation offers myriad business benefits - and most of them don’t require you to lift a finger. Automation eliminates many costly and inefficient manual processes (except, of course, picking and packing unless you are fortunate enough to have a robotic warehouse).
Automating your sales process allows customer orders to be managed seamlessly regardless of where the order originated. Here are some of the benefits you can expect:
- Speedier order processing. When you remove human input, you accelerate how quickly you can process orders. Additionally, you free up your sales and customer service teams so they can add value to the business, not devote their time to sorting out unnecessary mistakes.
- More accurate order data. An automated system can extract the data from customers’ emails, online orders, faxes and even paper and enter it directly into your financial system. The room for human data entry error is practically eliminated.
- Slash operational costs. As you’re saving time, it’s logical that you are saving money. Automation removes the need for most of the administrative time normally required, as well as duplicated effort. So, the cost of processing an order goes down.
- Faster payments. As you can process a purchase order more quickly through to the sales order and invoice stage, customer payments come in more quickly, so your cash flow is better.
- Amazing accuracy. By taking human intervention out of the sales order process and replacing it with highly accurate automation technology, the potential for errors is significantly reduced. Not only are customers happier, but the costs associated with returns are dramatically decreased.
- Never miss an order again. Unless you have a system outage, nothing ever gets lost. A sales order automation solution will also pick up cancelled and updated orders as soon as they come in, minimising returns.
- Manage inventory painlessly. When you have automated sales order processing, your system will immediately allocate the stock required to fulfil a customer order. As it works in real-time, it can also pinpoint which of your warehouses has the stock right now and is closest to the customer, making it more efficient and less expensive to despatch.
- Be more agile. With sales order processing automation, you have more visibility of your entire sales cycle. You’ll have fingertip access to reports on how long it’s taking to fulfil an order, to help identify and remove roadblocks, and be able to generate decision-making reports to help balance inventory levels with demand.
- Keep your customers happy. While they may not comment until something goes wrong, customers appreciate a seamless, fast and accurate sales order process. Their lifetime value is higher because you keep your end of the bargain - you deliver exactly what they ordered in the agreed timeframe.
Time to automate?
Sales order automation improves customer relationships, relieves your staff from tedious manual data entry and associated tasks, cuts down the delivery and operational costs of processing returns, and accelerates the payment cycle. There’s a lot to love.