Bottom Line: Closing performance gaps in three critical areas of Order-to-Cash can deliver more margin than a series of price increases, promotional offers, or special deals combined.
The answer to winning more sales and driving revenues during a global supply chain shortage needs to start by discovering and closing gaps in Order-to-Cash (OTC). Leaks across every OTC process cost organizations more margin than any competitor could ever take on their own. By improving OTC to the process level, manufacturers don’t have to rely on price alone to win deals. Instead, they can sell higher performance and have greater visibility and control to deliver it.
The latest Institute for Supply Management (ISM) Index is trending positive on eight of eleven factors, reflecting a booming manufacturing sector today. So now is the time to concentrate on improving visibility and control, finding breakthroughs to long-standing gross margin and profit challenges, and getting roadblocks standing in the way of delivering a better customer experience. Closing gaps in Order-to-Cash using ERP Process Mining is where manufacturers need to start.
Three Areas Where ERP Process Mining Is Protecting Margins
Capitalizing on what makes each manufacturer’s revenue cycle unique, ERP Process Mining looks for how each OTC process can be streamlined, made more efficient, and ultimately more transparent. As the primary revenue generator of any business, OTC spans pricing, contract management, quoting, order management, fulfillment, invoice management, payment, including credit and collections. Retaining and growing margin in highly competitive manufacturing markets takes speed and insight ERP systems alone can’t deliver.
The following are three areas are where manufacturers can begin using ERP Process Mining today to identify and improve the more margin-intensive regions of their operations:
- Improving quoting visibility & control across all channels using ERP Process Mining to find disconnects across distribution, channel partners, and direct sales. It’s common to find manufacturers with multiple quoting, pricing, sell-side contract management, and product configuration systems across the divisions of their companies. ERP Process Mining can help identify the disconnects between sell-side contract management, quoting, and pricing methods and show which systems can be consolidated into more scalable, configurable quoting and pricing systems. A recent Gartner survey of manufacturers using CPQ systems found that manufacturers who are the first to deliver a complete quote win 70% of the deals they compete in. Using ERP Process Mining to improve the accuracy and speed of delivering quotes will drive more won deals and protect margins.
- Unlock hidden opportunities to improve margins by finding cost and time leaks between product costing, sales, and marketing standard costs and variances. The minor variances that aren’t tracked accurately in large-scale ERP systems gradually drain margins from cost structures and, over time, lead to significant gaps in profitability. Knowing where those leaks are, what’s causing them, and how to redefine processes to alleviate them is essential to staying profitable and growing. For manufacturers grappling with their costing to the Bill of Materials level and its relation to their QTC process, ERP Process Mining can uncover areas in processes that are causing excess cash to be wasted. The more in-depth process mining goes into a series of operations, the more apparent how vital cross-team collaboration and information sharing are. The costs of not having collaborative workflows for the product, marketing, and selling cost variance analysis become more measurable when process mining techniques are applied to them.
- Not leaving money on the table in deals by using ERP Process Mining to identify if and why Special Pricing Requests (SPRs) are working or not. Instead of giving away margin, manufacturers have relied on bundling, extended terms, and warranties to keep customers paying the same or higher prices. Relying on these proven strategies to sell more and preserve margins helps. However, gaining more insights and contextual intelligence is better. Uncovering why and how a given Sales Operation or broader OTC process can be made more efficient and deliver more margin is the future of Sales Ops automation. ERP Process Mining helps improve SPR workflows, identifying where and how process gaps drain margins on pricing deals and showing how to close them while increasing sales.
Closing gaps in the Order-to-Cash needs to start in the areas that deliver the most margin today. That’s where manufacturers need to begin building a business case for ERP Process Mining. Achieving greater visibility and control across all channels while ensuring quoting, pricing, and special pricing request workflows are consistent and not draining margin is vital. The upside is the opportunity to sell more by having a more efficient, proven process for handling special pricing requests. Improving visibility and control across channels, delving deeper ito cost variances than ERP systems allow for, and discovering how to make pricing requests scale start with greater contextual intelligence that Process Mining can deliver.