The costs to fulfill customer orders include order taking and customer service, storing and maintaining inventory, shipping and product tracking to ensure delivery. Understanding how a company manages and processes orders and the cost to do so, allows business owners to create budgets, monitor employees and determine where cuts can be made to simplify the process to save time and money.
The two major cost centers for Accounts Receivable are the cost of processing an order and the cost of collecting the amount due. These two measurements are intertwined. Incorrect orders not only add to the cost of order processing, they also add to the cost of collections as customers query invoice accuracy. Producing the perfect order will not only decrease the cost of order processing, it will streamline collections.
The perfect customer order consists of:
- Right quantity
- Damage free
- Arrives on-time
- Arrives at the right location
- Is filled completely on the first call
- Is entered correctly
- Is communicated via a customer-specific medium (e.g. EDI, fax, phone, Internet, etc.)
- Has no invoicing or collection errors.