Although the US economy is improving, businesses remain focused on both increasing sales and minimizing or reducing SG&A costs. The "Order to Cash" (O2C) functions of a business continue to represent a significant part of a company's SG&A expenses and are under pressure to achieve long sought goals: to reduce costs and improve productivity, while maintaining or increasing customer service levels. Corbus regards O2C as including the functions of credit management, order processing, logistics/carrier management, returns processing, billing and collections, and reporting and analytics. Prior to the recent recession, these functions could be found sharing or spread across multiple functional areas and budgets. However, as the recession progressed, much of this changed. Businesses often adopted a strategy of separation and identification - that is, segregating these functions organizationally and financially as a way to apply management focus, create accountability and achieve goals for cost reduction/productivity improvement. In many cases these steps led businesses to greater clarity for measuring costs and productivity as well as to establish shared services centers and preposition for outsourcing. While cost savings can result from separation and shared services, cost optimization is best achieved by engaging with a compatible outsourcing partner. Under the right terms of engagement, an outsourcing partner is more easily held accountable for delivering results and attaining challenging goals to adopt efficiencies and improvements, and much more quickly. The partner needs to share mutually beneficial goals, provide intellectual property to add value, and have demonstrated experience in successfully performing the functions to be outsourced under similar conditions. The results can be staggering, with cost per savings on the order of 30% or more while achieving 2:1 productivity improvement and customer service gains. Looking to the future, Corbus sees growing interest in outsourcing, particularly in the area of O2C. Experience during the recession has shown businesses that it is possible to achieve the goals listed above: to reduce costs and improve productivity, while maintaining or increasing customer service levels.
Mark Davison is a Senior Director, Order-To-Cash Services for Corbus. He is the author of Corbus' proprietary "Cost Optimization Methodology," the firm's implementation strategy for order-to-cash services that enables clients to expedite transition and minimize startup costs when outsourcing order processing services.