5 Key Order Management System Requirements

Companies that sell to – or through – distributors or extended value chains have unique order management needs. Their business model influences the specific types of information they need to collect, the business processes required to support their sales execution, and leveraging all of this information for demand forecasting and analysis.

Tensoft supports the supply chain needs of Electronic component and semiconductor manufacturers For nearly 20 years. During that time, we’ve heard a lot about the need for better sales order management and a demand management solution from our customers, because many of them sell through distributors or extended value chains.

When we actually started to build on and leverage this feedback to create a solution, we found that it was organized into these five specific themes:

1. Multiple clients:

One of the first requirements is the need to track more than one customer in the ordering process. End customer and sale to customer may be different – along with shipping to company and location. This type of information influences the business process, ordering, pricing management, forecasting and demand analysis. This is really critical and unique to the industry we work with, or at least the people who sell through distributors or through extended value chains.

2. Complex Shipping Terms:

We found another requirement related to the charging functionality. In the tech industry, it’s common practice to use your customers’ shipping accounts and customer shipping terms instead of your own. In other words, companies that sell through distributors often do not use their company’s shipping accounts. Shipping Terms may include specific requirements for customers based on the shipping locations to or from the shipping location, the weight of the shipment, and/or the need for return shipping. Shipping requirements must be communicated through the order and customer profile down to the shipping dock Shipping dock which may be an outsourcing fulfillment center in an inventory center, 3PL or even a major supplier providing logistics services. So the challenge is how to collect and capture freight terms for often complex extended value chains.

3. Flexible Pricing Models:

There’s a third area around pricing, which I’ve talked about a little bit really about that extended value chain. We can have a single customer, distributor or OEM with multiple price points for the same product where they may get a discount based on the end customer’s specific negotiating terms or a discount based on sales later. This prompts a requirement for different pricing models and terms for the same customer from shipping to the same product based on who the end customer is. Or based on what the value chain dictates, or later integration with resale data that tells us about the nature of the final sale.

4. Booking/Billing/Accumulation Metrics:

The fourth important area is the need for some metrics and management processes. This includes delayed booking invoices, capturing key change variables, looking at things like the on-time delivery history and measuring delivery performance against a schedule and commitment history to the customer. This is really important in the tech industry, where extended supply chains are common. In this industry, the means of production are often outside the direct control of the internal operations team. However, the team must manage external suppliers. Therefore, they need to set commitment dates that they can meet based on their plans. Then, they need to track how well they’re doing against these commitment dates as part of their customer delivery performance metric. They may spend several days a week managing these metrics manually. Being able to automate this is a huge help.

5. After-sales stock tracking:

The fifth important requirement is the need to track inventory after the sale. Inventory may go to a center, VMI storage facility, or distribution channel, for example. However, you still need to integrate point of sale (POS) information to show inventory declines or record inventory drawdowns when there is a JIT system consuming inventory. There may also be inventory turnover, right of return, price guarantee or discount privileges. Whatever the driver, the need to track post-inventory sales as a demand indicator, pricing checker, and feedback mechanism for the amount of inventory accumulated in the channel can be important information. Additionally, you may need to validate the end customer consuming inventory as part of both the pricing and demand analysis process. Finally, you may need to understand your potential liability for returns or rebates.

Tensoft DemandOps addresses the unique needs of companies that sell through distributors

These five themes constitute the primary core product vision of Tensoft DemandOps. In addition to these features, we see the potential to add more value in future releases. For example, forecasting is likely already part of your CRM system. But, if you’re forecasting by end customer, there’s a lot of data to filter through to compare the reality of your sales orders to your forecast plan. There is also a need to judge expectations and come up with forecasts for the supply chain team to use in their build plan. Tensoft DemandOps easily identifies and reports the specific data needed to simplify this process. Additionally, Tensoft DemandOps provides the data you need to support the new revenue accounting standards (ASC 606 or IFRS 15), which greatly impact how revenue is determined in this business model.

for more information:

For more information about Tensoft DemandOps, please visit our website at www.tensoft.com. If you have any questions, feel free to contact us directly as well.

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