Why Centralized Inventory Data is critical for effective Order Management Platform
Of late, my interactions with regional and global business community, colleagues and ex-colleagues bring out immense interest in the next-gen Platform BPO solutions. While some speak about Cloud computing and some talk about SaaS, etc., many who prefer looking at Business relatively holistically, combining people, process and Technology aspects together, are using this term 'Platform BPO' frequently - they don't mind calling it Business Platform summarily, this is my observation.
In reality, there are many implementation complexities in today's supply chain. Centralized Inventory visibility is one of the most Critical Success Factors for Effective implementation of Order-to-cash process through a Platform BPO solution today.
This is more applicable for the Manufacturing, CPG, and Retail Industry - particularly if they are global corporations, have multiple inventory locations, managed by multiple parties including 3PL players who use various Inventory management systems in the distribution network. This multi-location decentralized inventory management by multiple parties has evolved due to a plethora of Supply Chain planning and execution challenges.
On the other hand, particularly in the advent of e-commerce and increasing B2C business, it has become an enormous challenge for implementing Platform BPO based effective and efficient Order-to-Cash processes to deliver Order Accuracy, Pricing and Billing Accuracy, Perfect Order Delivery, Reduced DSO, Order-to-Cash Cycle time and Cost, Reduced Inventory, Flexibility and Adaptability, etc.
The Platform BPO service providers should and may be trying to build standardized processes based on industry best practices driven by business rules and automated workflow, and taking ownership of outcome through SLA.
Real time Inventory visibility (both on hand and in the pipeline) is of utmost importance for checking inventory availability, based on which either order confirmation and fulfillment process or sourcing decisions take place. Distributed Inventory management systems as mentioned above create a series of problems for Order-to-Cash processes if the Order Management system is not integrated with a single online Inventory system - Performance of the electronic network and online availability of the inventory data (for checking and updating inventory) is not in control of the Platform BPO service provider. Interaction with the multiple and different inventory management systems to check and update inventory data becomes cumbersome. If there could be a centralized inventory database synchronized real time with the distributed network of inventory systems, it would have solved the problem. But more the number of inventory systems and parties involved in the supply chain more will be the risk of inaccuracy of Inventory data.
The SMEs in Manufacturing, CPG and Retailer business, who are looking for Order-to-Cash transformation program, according to me should keep in mind this aspect of real time centralized inventory management system - there may very well be a distributed network of warehouses, but they should update the same central database real time. Multi Channel order fulfillment, e-Commerce, Customer and Supplier connectivity, and Straight-Through-Processing will demand real time inventory access.