April 2018 | Commentary | Viewpoint: Logistics & Supply Chain Analysis

Keeping Order Changes in Check

Tags: Food Logistics, Logistics, Supply Chain

Angela Fernandez is Vice President, Retail Grocery and Foodservice, GS1 US, 609-620-0200

Today, retailers face not just competitive pressures, but also heightened consumer expectations for convenience and a wide product selection. As a result, the retail grocery industry is working to increase flexibility in the supply chain and clean up disjointed practices that add unnecessary cost and, ultimately, negatively impact the consumer experience.

Recently, a retail grocery industry workgroup examined operational efficiency and found one of the most obvious areas of improvement in supply chain operations is managing order changes. Under the guidance of GS1 US, the workgroup created a new guideline outlining best practices for dealing with inevitable changes originating from both supply and demand-side partners.

Advance Ship Notices To the Rescue

Using advance ship notices (ASNs) can ensure systems, transactions, and trading partners remain electronically up-to-date and aligned, the group found.

An ASN is a notification of pending deliveries, similar to a packing list. It is usually sent in an electronic format and is an electronic data interchange (EDI) document used in retail supply chains. ASNs can boost the retail supply chain's ability to quickly and accurately deliver what the consumer wants.

The ASN is underutilized in everyday supply chain transactions. An ASN can provide structure in lieu of manual processes, especially in the case of order changes. By leveraging ASNs, companies are less focused on the minutiae of the actual physical shipment, and are able to maintain a holistic view of their order management processes.

Typically, a buyer submits a purchase order (PO) to a supplier and, if there are no changes to the order, an ASN is created based on the PO. The physical shipment matches the PO and the ASN. When order changes are necessary, however, a common approach across industry has been to process them manually with a phone call, an email, and/or a revise of the PO.

The core flaw in such an approach is that while the shipment may arrive with expected contents, the companies' payment systems are not up-to-date with order quantities and other details. This approach results in errors that ripple downstream. It causes further manual exception processing, which can delay payment and absorb man hours.

Change management issues impact much more than ASNs, causing errors and inefficiency throughout the order-to-cash cycle—from receiving all the way through to invoice and payments.

Best Practices

The workgroup recommends this best practice: Leverage ASNs more, and ensure POs and ASNs match. The source of the mismatch can vary depending on when each trading partner updates its systems. Also, communicating the change needs to be done quickly. This attention to detail can help isolate errors before they permeate other parts of the supply chain.

Ultimately, order changes don't have to slow down the supply chain. Moving forward, supply chain professionals who want to support their company's overall innovation goals should pay close attention to these types of seemingly small adjustments. They can make a world of difference.






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