Wasting time and money: costs of sales order processing
100% of managers in finance, sales and procurement say that it is vital to be able to process sales orders quickly and accurately in today’s economy, yet the large majority of organisations still struggle with manual systems for handling sales order paperwork.
The resulting administration, such as manual keying and chasing information, costs companies on average £89,000 per annum. Despite this outlay; errors, bottlenecks and delays reduce profit. As a result 77% of managers currently believe manual sales order processing holds back the growth potential of their company, according to new research commissioned by business automation providers ReadSoft.
The study assessed the challenges organisations currently face when dealing with manual sales order processes, identifying a wide ranging lack of control and cost impact on business.
In a study of 203 professionals questioned from large (1,000 plus employee) organisations conducted by Dynamic Markets (25% C-level or above, 27% Directors, 49% middle level management and above) identified a number of the challenges of sales order processing software:
- 93% of businesses have to deal with some form of paperwork when processing sales orders
- 53% of businesses still receive orders in paper form through the mail
- 51% complain that sales order processing is time consuming
- On average it takes more than a week (51.4hrs) to handle paperwork for a single sales order
A loss of control in manual sales order processing:
- 27% admit sales order processing is error prone
- 23% admit to misplacing orders
- 21% state they have no way of measuring the efficiency of the sales order process
- 41% say handling sales order paperwork distracts them from strategic tasks
Costs of manual sales order processing
- 56% of organisations admit they do not know the cost of handling sales order paperwork
- 96% believe their company incurs costs associated with handling sales order paperwork
- When compared, organisations of 5,001-10,000 employees and those with multiple sites record the highest average total costs for handling sales orders
- The cost for manual work to handle sales order paperwork averages £89,000 per annum
Simon Shorthose, Managing Director, ReadSoft UK, says: “To regain control, companies need to embrace a working environment where automation begins to resolve these issues from the moment a sales order arrives, removing errors that are currently prevalent within manual handling. Only then can a business start to improve customer relations, deliver more profitable plans and reclaim strategic advantage within the market.”
Will Public Procurement Budgets Increase in 2021?
Procurement is more than just a private enterprise. COVID-19 reminded us that sourcing materials is an essential part of the government’s role. Throughout 2022, tiny departments sourced massive amounts of personal protective equipment (PPE), medical supplies, and emergency vaccines and testing kits. Even non-procurement professionals were pulled into the fray, as frantic timelines demanded nothing less.
According to Celeste Frye, co-founder and CEO of Public Works Partners, the crisis brought procurement to the attention of skilled employees who had never considered it. As non-procurement personnel stepped up to help their coworkers, many found that they’d stumbled upon a critical and rewarding job. “Existing public employees have seen the essential nature of the work”, Frye said. “[They’ve] gained some critical skills and possibly [grown] interested in pursuing procurement as a longer-term career”.
Small, Local Suppliers Take Charge
Frye, whose firm helps organisations engage stakeholders and develop long-term procurement strategies, thinks it well worth the effort to open one’s mind to new opportunities. Cooperative contracts, for instance, can help public departments and municipalities save money, time, and effort. By joining together with other towns or cities in the region, public procurement teams aggregate their purchasing power and can drive better deals.
These cooperative contracts have the added benefit of advancing equity. Smaller suppliers that struggle to compete with established firms for government contracts can act as subcontractors, helping big suppliers fulfil bits of the project. Once they get their foot in the door, small, local, and disadvantaged suppliers can then leverage that government relationship to take on additional projects.
Especially as governments start to pay attention to procurement resilience, public procurement departments must expand their requests for proposals (RFPs) to take into account innovative solutions and diverse suppliers. According to Frye, Public Works Partners—a certified female-owned firm—has benefitted from local and state requirements that specify diversity.
Post-Pandemic Funding Swells Procurement Budgets
And the pandemic won’t be the end of it. City governments need to build sustainable energy infrastructure such as solar panels, charging stations, and recycling plants, ensure that masks and medicines are never in short supply, and source new technologies to keep up with cloud and cybersecurity concerns.
Public procurement budgets will likely increase to match demand. As Peter Ware, Partner and Head of Government at Browne Jacobson, explained, “in a non-pandemic world, the [U.K.] government spends on average around £290 billion on outsourced services, goods, and works...anywhere between 10% and 14% of Gross Domestic Product (GDP). Post-pandemic, city procurement will only increase as national governments provide local divisions with emergency funding.
And in truth, government employees might jump at the opportunity. Frye noted that public procurement could give immediate feedback on new programmes: “[Procurement] is where new laws and policies ‘hit the road’ and are implemented”, she said. “Professionals in these fields get the satisfaction of creating real change and seeing quantifiable outcomes of their work”.