Here's what we'll cover:
An order fulfillment system automates the order fulfillment process, ensuring that a production order is completed with the highest level of accuracy and least amount of lead time necessary. It promises high quote accuracy, fulfillment efficiency and billing management tools to maximize billing and order effectiveness. It is often combined with transportation management software and warehouse management software to create a supply chain execution system that promises real-time visibility.
Order fulfillment starts with a smooth quote-to-order-to-cash transition, so the user can deliver a quote to the buyer that is both accurate and achievable, the implication being that customers expect no deviation from the original quote provided to them by the supplier.
Once the quote offer has been accepted, the next step is order fulfillment, which comes with four potential degrees of flexibility:
|Made-to-stock (MTS) or build-to-forecast (BTF)||This option is for products that are mass produced in anticipation of future demand, and will be used by vendors whose products are in constant demand and never customized. The software would likely suggest recurring billing cycles to meet ongoing sales and purchase needs.|
|Build-to-order (BTO) or make-to-order (MTO)||BTO or MTO software is for standardized products that are produced only when ordered, but are never customized in the building process. This requires project-based billing, but simple efficiency, rather than customizability in the ordering process.|
|Assemble-to-order (ATO)||The ATO option is for products that are assembled to order from a select number of possible components. ATO allows only as much customization as the available components can deliver, providing the minimum amount of flexibility required in this situation.|
|Engineer-to-order (ETO)||The most customizable option, ETO gives the customer more control over the design of the product by engineering production to the customer’s needs. Order fulfillment software would likely assign time-based billing to ETO products and allow much greater overall functionality to meet the required customization.|
Finally, order processing software handles financial transactions through billing management, which prevents billing errors that would otherwise interrupt cash flow. The important thing for suppliers is to limit days sales outstanding (DSO) and obtain real revenue from customers. In this case, order fulfillment systems use accrued or deferred revenue recognition processes to keep track of accounts receivable and which customers have paid for products and services rendered.
Order fulfillment itself is often included as functionality within a slightly-broader order management system.
Obviously, the type of product(s) and degree of customization required will be the biggest deciding factor in evaluating order fulfillment software. A close second will be quoting billing needs, since quote accuracy and billing cycle requirements are such a key component of order fulfillment.
Consider the following when selecting an order fulfillment software vendor:
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