“Electronic connections to customers is correlated with better DSO, cash-to-cash, and SCM costs” according to a January 2007 AMR Research article entitled “Benchmarking B2B eBusiness: The Value is in There.” by Bill Swanton and Debra Hofman.
They go on to say that the leaders take 87% of their orders electronically while the laggards only take 14%. In our experience, that’s really the difference between the laggards being forced to do EDI with their largest customers and then interacting via phone, fax and email with the rest of them.
What I think is really meaningful, is that of the 70 manufacturer’s that were benchmarked for this study, the companies that have more electronic communication with their customers have the following:
- 13% shorter days sales outstanding (DSO)
- 37% shorter cash-to-cash cycle times
- 19% lower total supply chain costs (including manufacturing), which translates to a whopping 5% of revenue
So forget just banking on the direct efficiences that you get from needing less labor to process those orders, you free up real cash from your supply chain as well!
I love it!