The mystery of Sales Order Stock

SAP Process Insights holds many spectacular insights, some of which can be observed in many customer system.

Today, let me talk about the mystery of Sales Order Stock : This can be observed at almost all customers that are running make to order processes. It can be described like this

Here comes the mystery : If companies run this process often enough, they will experience that while the sales order is completed, there is still Sales Order Stock.

So what does that mean?

The company produced something for a particular customer order, but did not sell it at the end.

We have seen occurrences where the stock value is in its millions of €. Hard to believe, isn’t it?

How can you find out whether your company suffers from this mystery?

The answer is pretty straight forward: Connect to your SAP SIGNAVIO Process Insights tenant, and navigate to your Lead to Cash area, selecting the Performance Indicators.

This is a screen shot from a Demo System. If you select this Indicator, you are presented the size of the mystery.

So what are possible root causes?

Think of the following example scenario:

A customers orders 2 identical machines in one sales order, due to supply issues only one machine can be produced immediately. It is shipped and billed.

A second production order is in the system to produce the 2nd machine, but it takes time.

Now the customer contacts you, stating that they cannot wait that long and reject the 2nd machine.

The sales person accepts the cancelation, and reduces the order quantity to 1.

Now, the sales order is completed, with one production order remaining, with no more customer demand. Since production is typically decoupled from the sales, production builds the second machine, and posts it into customer stock, where it will remain ….. until you find out with SAP Process Insights.

Arguably, you can imaging many more scenarios which lead to this mystery.

So, if you want to run the analysis in your system, it takes you 3 clicks.

Make sure you exclude sales order stock that was created during the last days to cater for some delay between production end and delivery.

  • Recheck your Process Documentation
  • Discuss with the Process Owner on what needs to be changed to prevent the problem from occuring in the future
  • Setup a strategy to deal with the mystery stock ( case by case decision )
  • Celebrate your process improvement

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So, how large is your Sales Order Mystery Stock ?