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Shrink Order-To-Cash Cycle to Expand Profits

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To succeed in emerging markets, your brand must conquer the inherent nuances specific to these markets. Mastering the art of the perfect order-to-cash cycle is a good place to start. For any brand plying its products in emerging economies, the opportunity is obvious: billions of consumers, and billions in potential revenue. But here’s the challenge: serving and managing thousands of distributors and tens of thousands of retailers.

Take India as a case in point and as a perfect example where you cannot lose out on hitching on to the growth wagon. In India, large format convenience stores and supermarkets do only about 5 percent of the US$ 450 billion retail business. The rest of the population is still served through millions of small retail shops, which account for 95 percent of the retail business. One could make a business case that these small retailers actually impact a few percentage points of your brand’s total global revenues. And that’s why you need to place each step in the order-to-cash cycle under the scanner. Here’s how: Cut down time and error in order capture.

The way we know it, the distributor sales representative visits different retail stores to take orders and then goes back to his office to update orders — often, he updates it the next day. And he can’t visit every store in an area . This manual and time-consuming process could lead to delayed or infrequent demand capture. What then is the answer? Internet ordering maybe, but it solves only part of the problem and may not really cut ice with small retailers. But they do have low-cost mobile phones. Have you thought about mobile ordering?

With multiple intermediaries in the distribution channel, it’s not easy to gain visibility of products as they move across the distribution network. Disparate and inadequate technology solutions used by distributors leads to inconsistent, incomplete and delayed insight on the ground. If you’re thinking of a run-of-the-mill local ERP solution to solve this problem, think again. With hundreds of distributors attached to your brand, you need a radically different ERP for your distributors.

Your distributor sales force could be more productive while on the go. How? By transferring store orders in real time from the field to the distributor office and by removing dependency on physical docking at the of day. To submit all orders, the sales person can be out longer and further thereby increasing coverage. The reverse flow of information onto the seller also helps with  near real-time view of the inventory to service demand better.

Your service levels and fill rates could be lower than desired. One possible reason is delayed or inaccurate order placement by distributors. Distributors unaware of promotions place more orders than they need to, or get the product code wrong, or place multiple orders. If you have the right analytics to study parameters like sales history, available inventory, seasonality, etc, you could actually recommend orders to your distributors thereby making every-one’s life easy.

If you’re all too familiar with issues around cash realisation cycles, it should be clear that a smarter, affordable and an omni-present technology solution can change the way you go about payments and collections. One that can help plug inefficiencies associated with manual handling and can shrink your order to cash cycle considerably.

About the Author
Sanjay Nambiar is Head – Platforms – Micro-Commerce, Infosys Edge

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