When it comes to B to B - a shopping cart technology may not achieve your objectives
By Clinton Jones on October 1, 2012
I frequently get asked, is there some way I can use Winshuttle to load purchase orders or sales orders in my SAP system? And of course the answer is, it depends.
Electronic shopping carts have been around for quite a long time now and were pivotal in the ecommerce space in that they allowed customers to understand what the product catalog looked like and what the relative availability of inventory was like.
A lot of what you can or cannot do in the SAP world hinges on the secondary technologies that you may have deployed. I am talking here specifically about solutions to help in your environment to handle Order to Cash or Procure to Pay processes.
Shopping cart technologies are designed to leverage the power of ‘n’ users, so it makes complete sense when you want to avoid being dependent on any single individual or group of individuals to get the work done.
In the SAP world, you may have implemented SCM and CRM as secondary systems to support O2C and P2P processes, but these technologies often fall short of the expectations of the power user who is so accustomed to being able to load up a lot of line items into an order, and do it in seconds rather than minutes. This is especially true if that ordering activity has a lot of recurring traits like repeat order items.
In his book Warehousing in the Global Supply Chain – advanced models, tools and applications for storage systems; Riccardo Manzini pointed out that in one of his case studies of an Italian distribution company the average number of lines per order was 83.7 items. Admittedly this was for a wholesale distributor, but the number of items is significant. Do you really want a person to navigate to close to a hundred shopping cart items before placing an order?
Consider too, how you arrive at determining the number of line items per order on average is also important; do you use an average or a mode in determining the number of lines per order? I would argue that mode is a better measure than average because this speaks to the frequency of small orders rather than the dilution of the extreme scenarios. Average is interesting but only marginally useful for determining the appropriateness of shopping cart technology.
If you determine for example that 65% or more of your PO’s fulfill orders of less than $1000, you will quickly also determine that after applying activity based costing principles such as time spent doing the order, getting approvals and getting it to the supplier, your PO’s could be costing you as much as $100 each to simply process.
Then there are the post order errors which may result in credits, restocking fees etc. These can typically arise from people simply ordering the wrong stuff. If you find that most of your procurement activities are around a couple of thousand items then it is also likely that the average size of those orders is around one to two lines each. Under such circumstances, a shopping cart technology is probably a perfect fit.
This ecommerce type technology may handle 65% of your procurement activities, but what about the other 35%? The chances are that the others carry the bulk of the economic value of your purchasing activities and as such have a different requirement for massive order creation that is not well addressed by classic shopping cart technology. This is a space that many SAP customers face and one where Winshuttle has helped for a number of years with pushing data from Excel or Microsoft Access. Another option is to build a custom upload tool for creating shopping carts from sources like text or csv files but this usually involves some hardcore programming and can be prone to failure if it uses a web front-end.
If you’re embarking on a CRM or SCM project to implement portal based procurement or order entry be sure to find out what the options are going to be for you to do mass loads in the back office in particular, it is possible that there is a API that you could use but this will require subject matter expertise in that area to decide, configure and deploy . Take the time to do proper analytics on all aspects of your P2P and O2C processes. An analysis of past sales and purchase orders will help you to understand what your ratio of line items looks like and what percentage of all activity the shopping cart technology will address.
Trending will also help you to understand whether you can truly afford to commit an entire process to a shopping cart experience that can be notoriously poor performing.
About the author
Clinton Jones is a Director for Finance Solutions Management at Winshuttle where he has worked since 2009. He is internationally experienced having worked on finance technologies and business process with a particular focus on integrated business solutions in Europe, the Middle East, Africa and North America. Clinton serves as a technical consultant on technology and quality management as it relates to data and process management and governance for finance organizations globally. Prior to Winshuttle he served as a Technical Quality Manager at SAP and with Microsoft in their Global Foundation Services group.
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