Automate revenue capture to mitigate economic turbulence
It’s been a tough year for the electronics industry. Back in March, IPC surveyed 5,400 member companies, and found that 69% of respondents had received warnings from their suppliers about shipment delays. 62% of company representatives said they were bracing for a sales slump in 2020.
Written by Judd Marcello, EVP &CMO, Conexiom
More recently, ECIA found in a series of surveys that, despite a slow return to stability, “concerns have increased in many sectors of the supply chain and segments of the market… the ability to manage the pandemic continues to be an ever-present factor for supply chain managers as they look forward.”
How can electronics distributors and manufacturers mitigate the impact of this economic turbulence? By automating revenue capture. One of the most successful ways to do this is to automate the processing of sales orders.
The digital transformation imperative
COVID-19 has shown leaders that digital transformation can no longer wait. Distributors and manufacturers need to modernise their processes and remove non-critical expenses as soon as they can.
However, digital transformation takes many forms, and everything cannot happen at once. DT happens most effectively when it happens one business process at a time. The sensible place to begin is with those business processes that most directly impact revenue.
Typically, this will also be related to that stage of the supply chain that enterprises can control: that section where the delivery is from their own warehouses to their end customers.
The burden of the manual
In 2019, around half of all US manufacturing and distribution sales were manually processed. That's $8.4 trillion in business-to-business sales. In other words, sales orders were handled the same way they were thirty years ago: By hand, one by one.
Manual order processing is terribly inefficient. A time-intensive, low-value process, it distracts Customer Service Representatives (CSRs) from actual customer service. Across the distribution and manufacturing sectors, CSRs spend around a third of their every workday manually converting purchase orders into sales orders.
Aside from harming customer service, manual order processing is highly prone to clerical mistakes. Backlogs pile up, causing delays. It takes overtime to process them as quickly as you need. All of this sees costs add up. The processing cost reaches an average of $26 per order. The net effect? Revenue capture is slow, inefficient, and full of gaps.
The many benefits of automation
By automating sales order processing, you can automate a key element of the revenue capture process.
Using digital order automation, the manual approach can quickly be modernised. With the right SaaS platform, distributors can implement the automatic conversion of emailed purchase orders into sales orders. The orders are entered into the company's ERP in moments, with zero CSR involvement, and with 100% accuracy. This technology exists in the market; onboarding it takes 30 days or less.
Moreover, the revenue capture benefits compound. Once deployed, sales order automation dramatically reduces the workload of CSRs. With many hours in their workday regained, CSRs can focus on the activities that minimise churn and maximise retention - protecting revenue capture by proxy. They have time to engage patiently with customers, and troubleshoot in depth. They have the time to systemically upsell and cross-sell.
The customer service benefits are even more valuable in the time of COVID-19, when many distributors have abruptly shifted to remote working arrangements, and good customer service is harder to deliver than ever. During a pandemic, the companies that keep standards high will thrive. Sales order automation makes doing this easy.
Capturing maximum revenue
As the COVID-19 pandemic was unfolding, Sandy Shen, Senior Director Analyst at Gartner, said: “This is a wakeup call for organisations that have placed too much focus on daily operational needs at the expense of investing in digital business and long term resilience. Businesses that can shift technology capacity and investments to digital platforms will mitigate the impact of the outbreak and keep their companies running smoothly now, and over the long term.”
Processing sales order faster, more reliably, and more accurately speeds up revenue capture. At a time when electronics supply chains are so rattled, this is crucial. The coming months are set to be unpredictable, with a COVID-19 vaccine still a long way off, and the possibility of second waves very real. In this uncertain climate, leveraging automation to create new business efficiencies is a must.
The manufacturers and distributors that achieve true business resiliency, and emerge strongly out of a strange 2020, will be those that don’t leave any revenue on the table. Swapping the dated, for the modern creates the future-proof processes that create resiliency. When the next crisis comes, the enterprises that optimised their operations now will be the ones that can handle any future.