Precisely determining your organization’s cost-to-serve will help your company remain profitable in the wake of increased competition and industry consolidation.
Firstly, know how much your company spends to deliver quality services and goods. This is crucial in setting up your supply chains. The creation of new sales channels and the improvement of logistics to accelerate deliveries stems from a clear picture of your cost-to-serve analytics.
Why is Cost-to-Serve Important?
An accurate understanding of your cost-to-serve supply chain provides your organization not only visibility into crucial operational expenditures, but also a clear understanding of service expectations from both management and the consumer. Such clarity makes it easy to form and execute a framework for segmentation based on products, customers, shipping lanes, etc.
To calculate cost-to-serve, identify which customers have the highest number of order lines. (The more frequently they order, the more time and attention they take from your CSRs.) Now you can target who to onboard first. Formulate strategies, create new service levels, or make the necessary adjustments to your existing setup based on these customers.
However, recognize that your biggest customers can be your biggest challenge.
How to do a Cost-to-Serve Analysis:
Conexiom’s Sales Order Analytics solution provides you with the program to:
- Quickly pinpoint your customers who order the most frequently
- Analyze all the data you need to determine the burden of manual processing
- Accurately calculate cost-to-serve.
It’s available as a stand-alone platform. However, it derives greater value for high volume customers when paired with Conexiom’s Sales Order Automation solution.
Developing an accurate cost-to-serve model enables enterprises to dig deep per customer group or account, gauging and analyzing both the income and overhead processing costs associated with each account. This is essential as not all customers maintain the same business processes as when they were first defined. Unfortunately, exceptions and error handling involved with managing the customer’s business may ultimately impact productivity and profitability.
Conducting cost-to-serve analysis enables businesses to recognize both the most valuable customers and accounts that are a burden on productivity. So businesses are then able to adjust sales strategies accordingly. Moreover, they can reallocate resources to improve profitability, all while offering a personalized buying experience. This can increase profits by up to 20%.
Completing the Analysis
Analyze both structured and unstructured data from all touch points in the supply chain to reveal the true costs to business associated with serving each account. Then, compare these costs with the value the sales team provides to fully understand total cost to serve of your business. Then, prioritize adjusting order channels to improve overall operational efficiency and customer engagements – not all customers or transaction platforms are created equal.
Determining an enterprise’s cost-to-serve requires unhindered visibility into all stages of the supply chain. There is no absolute visibility without digital transformation. To get the full picture of your company’s cost-to-serve, your company must transform and embrace modern business processes.
Implementing digital transformation correctly affords your organization a comprehensive overview of customer purchasing habits and employee value. The valuable insights from a cost-to-serve analysis enables businesses to personalize customer experience and maintain efficient buyer-seller relationships. Ultimately, it also boosts profitability in an ever-changing digital landscape.
Manufacturers and distributors can optimize the functioning of their supply chain – without compromising the accuracy of order detail – with sales order automation. Sales order analytics allows enterprises to get a much clearer picture of their cost-to-serve metrics.
With touchless sales order automation, manufacturers and distributors get a powerful AI-driven platform. This platform drastically speeds up the processing of sales orders. Sales order automation also generates revenue, by significantly increasing order processing capacity, and enabling companies to deploy their CSRs to high-value customer-facing roles.
Standard Electric achieved this with Conexiom. Learn how they did that in our case study.