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Reducing The High Costs of Order Errors

Posted on August 23, 2018 by Cassandra Smallman
    
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There are few more significant frustrations in the B2B sales and procurement world than order errors. Whether caused by miscommunication on price or merely a typo on a form, errors can be costly on both sides of the transaction. For the supplier, it can go beyond the customer credit amount. It can also affect the reputation and credibility of your business. In order to fully understand the full cost of an order error, it is useful to look at a common error. Here is a real-life example of an order error that took place at a garden center at the peak of their busy season.

Order error example

Trevor is a manager of a medium-sized garden centre. He placed an order over the phone with one of his suppliers, requesting. two pallets of 2 cubic feet bags of mulch. When the shipment arrived, he realized he had been delivered two pallets of 3 cubic feet bags of mulch in error.

With no copy of what was said during the call, the supplier has little choice but to absorb the cost of the error and issued the garden centre a credit of $1.10 per bag, representing the difference between the cost of the request and what was delivered. Taking into consideration the cost of loss of revenue and man-hours for both the customer and supplier, this single error cost $660. That is an expensive miscommunication and one that could have easily been avoided. 

Correcting an order error could cost a company 50% to 125% of the cost of product in the first place.

When processing customer orders by phone, email, fax, or in person, the responsibility of the order error often rests with the suppliers as they manually enter the orders into their system. As orders increase,, the risk of and size of order entry errors grows dramatically. This example is just one way a simple miscommunication on the phone can cost hours of time and money on both sides of the transaction.

Three way to reduce order errors

To reduce order errors, it’s important to look at the process in which the orders are being taken and submitted. Identifying which methods have the greatest frequency of errors, often those placed by phone or fax,  and then reducing your reliance on that ordering method is the first step in the right direction.

Manage all product information in one place

Paper catalogs, order forms, and pricing lists are only accurate until your first transaction. Once a sale is made, or inventory is damaged, those documents  become outdated. Consider that manual entry can lead to a 10% or greater error rate on catalogs and you can quickly see that print material can be setting your order accuracy up for failure. By digitally managing all your product information in one place and providing your sales team, admins, and customer access to that up-to-date product data and pricing information will reduce errors. Digital management also ensures customers always use your most updated pricing, reducing any client relation risk in the process. Another huge advantage of digital product information management is that an error can be corrected instantly and across the board. It would never be possible to make that thorough of a correction with print material

Promote digitally submitted orders.

Digital customer ordering helps provides clear and convenient access to product, pricing, and inventory information to reduce order entry errors and back orders. Through online ordering, your customers can enter and submit orders themselves, placing the responsibility of the order accuracy on the customer and reducing the risk for the supplier. Customer entered digital orders reduce chances of miscommunication or misunderstanding that can arise when an order is placed over the phone or other means.

Integrate online ordering with internal systems  

Orders submitted digitally by customers and sales reps eliminate the need to enter orders into the supplier's internal system manually. The elimination of this step in the order management process reduces the chance for typos and other errors while decreasing operational processing and fulfillment time per order.

Unnecessary order entry errors are not only costly to your business’s bottom line but can be costly to well-established business relationships. Technology offers wholesale suppliers the ability to provide their customers and sales teams with accurate product information and user-friendly online and mobile ordering, reducing manual entry and order errors. Online ordering and product information management solutions like LinkGreen for wholesale suppliers and distributors reduce order error, increase efficiency, and help build great customer experiences. As you consider the cost of order, errors consider how your business could benefit from technology in the future.  

    
LinkGreen Online Ordering Management Process

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About LinkGreen

LinkGreen is a company devoted to making wholsale ordering more efficient and effective by providing wholesale buyers and suppliers a better way to process orders.

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