How to Synchronize Distribution & Logistics
Distribution & Logistics, in close alignment with customer service and along with the oversight of order management, delivers the promise of On Time and In Full (OTIF) to the customer. Without an aligned hand-off from one function to another, we run the risk of failing to keep the promise we made as part of order entry. While the planned schedule for meeting the customer’s requirement is calculated in the order, it is executed in the delivery process.
When our order entry and management processes are not aligned with the fulfillment requirements of distribution & logistics, we risk a unsatisfied customer.
At any given time, a sales order arrives that contains the requested quantity, time and location of product to be delivered. Available to Promise (ATP) calculates the date the material needs to be physically available for fulfillment activities at the point in time the order is entered. Over the period of time between entry and the start of the fulfillment processes, production schedules or physically available stock can change.
Effective order management requires us to harmonize order fulfillment with distribution & logistics. Reveal utilizes its value-driven oVo® methodology to help organizations improve key customer satisfaction metrics including OTIF.
Advantages of Aligned Distribution & Logistics
The ultimate goal of On Time and In Full is a satisfied customer. When supply chain activities are aligned with promises in mind, the result is improved customer service levels that are informed by a greater visibility and trust in the data.
When team members are able to confidently trust what the system is telling them, the benefits are vast: increased customer satisfaction and retention, improved inventory turns, reduced potential for customer-imposed fines for late/short/inaccurate deliveries, increased operating efficiencies and realizing more value from your investment in SAP.
Distribution & Logistics Challenges
Supply chains in which order entry and distribution/logistics functions are not closely aligned require multiple touch points to answer a customer’s (or carrier’s) inquiry. This not only increases the workload for teams involved in those touch points, but it also increases the potential for delayed fulfillment and miscommunication and error.
If you find yourself consistently referencing that Excel spreadsheet or other personal information system, that is a good indication that your supply chain is not aligned, and order entry/management and distribution & logistics are not harmonized.
Orders that are not delivered on time and in full lead to increased labor and shipping costs and lower revenue due to lost sales, customer fines and lost customers. To meet the ever changing needs of customers organizations need to utilize a single source of truth to manage operations, leveraging SAP capabilities, and work cross functionally to ensure products are being shipped and delivered when the customer needs it and how the customer needs it.
Leveraging the capabilities in SAP for Distribution and Logistics leads to greater stability and predictability to deliver on customer promises improving customer satisfaction, experience and loyalty. Increasing customer retention by just 5% can increase profits from 25% - 95% and position your organization as a world-class supplier.
Whether it’s optimizing supply chain performance or implementing additional SAP functionality, Reveal helps organizations improve internal business processes, educate users and deploy the smart use of SAP to achieve sustainable, tangible value. By challenging organizations to move away from being transactionally driven and move towards information-users that manage the process and apply knowledge, improvements in agility, service, cost, and inventory performance are achieved.