Sales Order Automation: Enhancing O2C Performance

Denitza Velcheva, Sr. Product Marketing Manager @Hypatos
July 17, 2024
10 min. read

In this article, we’ll dive into the key aspects of sales order automation and its crucial role in the success of the order-to-cash (O2C) process for large organizations.

According to the 2024 SSON report on Generative AI in Shared Services, the Order-to-Cash process ranks among the top three key functions provided by Global Business Services centres (GBS), with 63% of respondents listing it as a key service. Its significance is hardly a surprise—smooth processing of sales orders can make or break organizations in terms of revenue generation, customer satisfaction, and cash flow management.

Understanding Sales Orders Automation

Sales order automation enhances the efficiency of sales order processing through technology. This process involves multiple steps that can vary from one organization to another.

1. What does the typical process look like?

A typical sales order process follows these steps:

• Order Placement: Customer places an order through their preferred channels (e.g., online stores, sales representatives, recurring automated requests). Automation enables seamless integration across channels, ensuring all orders are captured in a centralized system.
• Order Verification: Seller verifies order details, pricing, and availability. Automated systems quickly validate data against predefined criteria, reducing errors and speeding up the verification process.
• Inventory Allocation: Inventory is allocated to the order. Order status is updated. Advanced algorithms ensure real-time inventory updates, optimizing stock levels and order fulfilment.
• Payment Processing: Payment or pre-payment is processed. Automated payment gateways securely handle transactions, ensuring quick and accurate payment processing.
• Order Fulfilment: Products are picked, packaged, and shipped. Automation streamlines logistics, reducing handling time and improving delivery accuracy.
• Order Tracking: Both customer and vendor can track the order's progress through a management system. Real-time tracking systems provide visibility, enhancing customer satisfaction.
• Invoice Generation: An invoice is sent to the customer, detailing the products, prices, taxes, and payment instructions. Automated invoicing ensures accuracy and compliance with financial regulations.
• Returns or Exchanges Management: Returns or exchanges are managed through a system that updates the inventory. Automation simplifies return processing, ensuring inventory is promptly updated and customers receive timely service.

Sounds easy? Well, it isn’t.

Stripped of all potential challenges such as exceptions handling or malfunctioning automation tools, the process described above seems predictable, logical, and straightforward. However, in reality, the journey of a sales order—from its reception to its payment—is filled with detours.

2. What are the most common challenges?

• Data Validation: Effective sales order processing relies on excellent data validation. Ensuring quantities, product names, prices, and availability are accurately verified between the parties is crucial. Despite technological advancements, data validation remains challenging due to the variability in data sources and formats. This often requires manual interventions, leading to inefficiencies and errors.
• Matching Sales Orders to Sales Catalogues: Ensuring the items ordered align accurately with what you offer is essential. Customers often use different terms or units, making it crucial to interpret and match orders correctly to your product catalogue. Real-time harmonization between sales orders and the catalogue is necessary but doesn’t come by default.
• Matching Sales Orders to Quotes: Besides matching the order to the catalogue, it’s vital to ensure the order aligns with the provided quotations. This involves checking product details and pricing to match the terms of the quote, adding another layer of complexity to the sales order streamlining process.

While this list could go on, depending on the granularity we aim for, in our opinion, these are the top three culprits causing a sales order to get stuck early in the processing pipeline, costing organizations time, resources, and money.

Mastering Sales Order Automation: The Must Haves

To achieve efficiency in addressing these critical aspects, technology providers need to excel in the following areas:

1. Proficiency in Document Capture and Understanding

Capturing and understanding documents accurately is a significant challenge. Sales orders come in various formats, including emails, PDFs, and handwritten notes. Traditional Optical Character Recognition (OCR) technology is being significantly enhanced or even replaced by advanced solutions based on Large Language Models (LLMs).

For example, Hypatos' document comprehension AI achieves > 98% accuracy in data capturing, compared to a much lower percentage achieved with traditional OCR-based technology. These next-gen technologies convert diverse document formats into structured data, ensuring accurate capture and reducing manual entry errors.

2. Future-Proof Matching: Sales Order x Sales Catalogue

Accurate sales order processing relies heavily on matching orders to sales catalogues. Customers often describe products differently than vendors do, necessitating a robust system to match descriptions with actual products. Advanced AI solutions interpret and match customer orders with your product catalogue, ensuring accurate alignment and minimizing errors.

3. The Correct Approach to Human Intervention in Complex Cases

The hard truth about sales order automation is that client data is rarely consistent. Variations in product descriptions and quantities often require human intervention. This is especially true for large organizations with multiple locations. Incorporating human-in-the-loop (HITL) capabilities allows for seamless human intervention when needed. The system flags discrepancies, enabling quick resolution by your team. This hybrid approach ensures even the most complex cases are handled accurately.

At Hypatos, we accelerate this process with proven protocols that include HITL at the beginning to handle complex cases, gradually reducing manual intervention. Our embedded sales order processing LLMs, combined with RAG technology, leverage HITL to enhance AI self-learning capabilities, making them more autonomous over time.

Sales Order Automation - The Hypatos Way

To help our customers overcome the pitfalls of sales order automation, we’ve launched an AI Agent that accelerates the process while helping you avoid the most common traps. Join us on July 31st, 4 PM CET, to see it in action! We will demonstrate our approach to capturing and comprehending data, matching it to catalogues, and much more, expanding the automation journey into the accounts receivable department.