Improving receivables with a better Days Sales Outstanding (DSO) is a direct measure of an organization's order-to-cash process efficiency. It's a no brainer that an efficient Order-to-Cash (O2C) process starts with fixing the customer data to be correct. Ensuring accurate, valid and current customer address, and contact details including their receiving / billing info with appropriate credit limits and reviews improves the efficiency of the delivery and billing process. Also, maintaining standard & approved payment terms, and International Commercial (INCO) terms as part of customer master records aligning to the organizational policies & guidelines, directly impact when revenue would get realized as part of order-to-cash process. Sound strategies of customer segmentation with focus market categorization & classification, and hierarchy definition & accurate depiction of the same as part of customer master records, would also help improve sales and marketing programs, generating revenues and profits.
Optimal payables with a better Days Payable Outstanding (DPO) is a key measure of an organization's procure-to-pay (P2P) process efficiency. Ensuring accurate, valid and current vendor data including address, and contact details including their banking and payment information improves the efficiency of the procure-to-pay process. Also, maintaining standard and approved payment terms, banking info as part of vendor master records aligning to the organizational policies and guidelines directly impacts payables as part of procure-to-pay process.
Striking a balanced and optimal level of inventory that avoids stock outs and does not call for excessive inventory levels is a key challenge as part of forecast to fulfill process. It requires visibility on inventory levels, demand management and replenishment processes managed properly by a state-of-the-art inventory management system, which in turn will require an accurate material master data capability. Material master data describes how a product & its raw materials or components are planned, procured, stocked & managed in the warehouse, sold, categorized, cost accounted, and phased out. Effective and efficient MRP runs, physical inventory & cycle counting practices, value and volume based categorization that are hallmarks of a sound forecasting and fulfillment process directly depend upon accuracy and timeliness of material and product master records.