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Order Management System – 5 Key Requirements for Companies Who Sell Through Distributors

Order Management System – 5 Key Requirements for Companies Who Sell Through Distributors

Brands that sell through distributors or extended value chains have exclusive order management needs. The model of their business affects the specific types of information that the company need to collect, the business processes required to support their sales execution, and the leveraging of all this knowledge for forecasting and demand analysis.

SalesBabu has been supporting the order management needs of different vertical manufacturers like electronic components and semiconductor manufacturers for years. 

Over that time, we’ve experienced a great deal about the requirement for an efficient sales order management and demand management solution from our customers, since many of them sell through distributors or extended value chains.

Based on the feedback and our experience, we found that OMS is organized into these five specific categories:

#Multiple Customers:

In the ordering process, one of the foremost requirements is the need to track more than one customer. The end buyer and the sell to the customer may vary along with the ship to company and location. This information about different customers impacts the whole business process, the required order and pricing management, and the forecasting and demand analysis. This is actually kind of important and unique to the organization that we’re working with, or at least vendors that sell through distributors or through extended value chains.

#Complex Shipping Terms:

Related to shipping functionality we found another requirement. In the technology industry, it’s normal to use the shipping accounts of your customers and the customer shipping terms, instead of your own.  

It means companies who sell through distributors often do not use their own company’s shipping accounts. Shipping terms and conditions may include specific customer requirements depending on the ship-from or ship-to locations, shipment weight, and the need for re-shippers.  

The requirements for shipping need to be communicated through the order and the profile of the customer all the way to the shipping dock. The shipping dock may be an outsourced fulfilment centre in an inventory hub, or even a key supplier providing logistics services.  Therefore, the challenging part is how to collect and capture the shipping terms for these often complex extended value chains.

#Flexible Pricing Models:

Another important area relates to pricing. There can be a single customer, distributor, OEM with multiple price points for the same product where either they might get a discount based on specifically negotiated terms for end buyers, or a rebate based on sales later on. This pushes a requirement for different pricing models and terms for the same ship-to customer for the same product based on who the end buyer is.

#Booking/Billing/Backlog Metrics:

The need for certain metrics and management processes is the fourth important area. These incorporate booking billing backlog, capturing key change variables, looking at activities like a history of on-time delivery and measuring the performance of delivery to a schedule and commit date to a customer. 

In the technology industry, the means of production are often outside of the direct control of the internal operations team.  However, the outside suppliers must be managed by the team.  Therefore, they need to finalize commitment dates and meet is based on their plan. 

And then they need to keep track of how well they do against those commit dates as part of the customer delivery performance metric. Managing these metrics manually may need several days a week. Being able to automate these activities is a great help.

#After-sale Inventory Tracking:

The need to track inventory after the sale is the fifth significant requirement. For example, the stock may go to a hub, a VMI storage facility, or a distribution channel. 

However, you still need to integrate POS (point of sale) data to show the inventory status or record the pulls from inventory when there is a JIT system consuming the stock. There can also be the rotation of stock, right of return, the guarantee of price or discount privileges involved.  

Whatever may be the status, the need for inventory tracking after-sale as a demand indicator, pricing validator, and feedback mechanism for how much inventory’s building up at the channel can be crucial information. 

Additionally, you may need to validate the final end customer consuming the inventory as part of both your pricing and demand analysis process. In the end, you may need to understand your potential liability for returns or rebates.

Conclusion

These five themes form the initial core product vision for SalesBabu OMS. We see the potential to add even more value in future versions in addition to these themes. For example, forecasting is probably part of your CRM system already. 

But, if you are doing a forecast by the end buyers, there are lot of data to filter through to compare the reality of your sales orders to your forecast plan. To judge the forecast and come up with the forecast for the supply chain team to use for their build plan is also needed. 

We easily identify and reports the specific data needed to streamline this process. In addition, our software provides the data you need, which significantly impacts how revenue is determined in this business model.

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