Order Execution

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SEF Reference Guide G19  |  Manufacturing OpEx Maturity Assessment

What it is

Order execution is everything that happens between “the customer sent an order” and “the goods arrived and the invoice was right.” It covers order receipt, entry, checking, acknowledgment with a promised date, scheduling, production, shipping, transport, invoicing, and keeping the customer informed when something changes.

The wider process is often called order-to-cash, because it ends when payment is collected. The assessment focuses on the operational core: a standard system, a single point of entry, coverage of logistics and transport, and early warning to customers. A 1992 Harvard Business Review article, “Staple Yourself to an Order,” made the case that following one order through every handoff is the fastest way to see how a company really treats its customers. That is still the best way to start.

Most order problems are not caused by the plant. They are caused by orders that enter the business in several ways (email, phone, portal, a salesperson’s spreadsheet), get re-keyed, and lose information at every handoff.

Why it matters

• Delivery: Orders that enter wrong or late start behind. Every re-key and handoff adds days and errors.
• Customer trust: Most customers can plan around a late delivery if they hear about it early. A surprise on the due date is what damages the relationship.
• Cost: Re-entering orders, chasing missing information, fixing invoices, and expediting freight are all hidden labor and COPQ.
• Cash: Invoice errors and disputes delay payment. Clean order data flows straight into accurate invoices and shorter days sales outstanding.
• Capacity: Planners working from one clean order book can schedule. Planners working from several partial lists spend their day reconciling.

Key terms

Term	Meaning
Order-to-cash	The end-to-end process from receiving a customer order through fulfillment, invoicing, and collecting payment.
Single point of entry	Every customer order enters the business system once, in one place, and flows from there without being re-keyed or re-sent by email.
Order execution system	The standard process and system (usually ERP order management) used to receive, promise, schedule, ship, and invoice orders.
Order acknowledgment	Confirmation sent to the customer showing what was ordered, price, and the promised delivery date.
Available to promise (ATP)	Inventory and planned supply not yet committed to other orders, used to promise dates.
Capable to promise (CTP)	Promising based on available capacity and materials when ATP stock is not enough.
EDI	Electronic data interchange. Orders sent system to system in a standard format, with no manual keying.
TMS	Transportation management system. Plans loads, selects carriers, books and tracks shipments.
Order entry accuracy	Orders entered with no error in item, quantity, price, date, or address, as a percent of all orders entered.
Perfect order	An order delivered on time, complete, undamaged, and with correct documentation, including the invoice. APQC calculates a perfect order index as the product of those four percentages.
Early warning	Notifying the customer of a delay or change as soon as it is known, with a new date, rather than on the due date.
Days sales outstanding (DSO)	Average days to collect payment: accounts receivable divided by credit sales for the period, multiplied by the days in the period.

How to do it

1. Staple yourself to an order. Pick five recent orders, including one that went wrong. Walk each one through every step and handoff, from receipt to cash. Note every re-key, wait, email, and question.
2. Map the standard process. Draw one process from receipt to invoice, with owners and time targets for each step. Include how changes and cancellations are handled. Changes to orders already inside the frozen plan follow the planning fence rules in G27.
3. Standardize on one system. All orders are managed in one order execution system (usually the ERP). Retire side spreadsheets and personal order lists.
4. Create a single point of entry. Decide the one place orders enter: EDI, a customer portal, or a central order desk. Orders from email or phone are keyed once, by one team, and never again. Sales does not keep a parallel list.
5. Check orders at entry. Validate item, price, quantity, ship-to, and requested date against master data before acceptance. Hold incomplete orders in a visible queue, not an inbox.
6. Promise from real data. Acknowledge every order with a date based on ATP or CTP, not a standard lead time guess. Target acknowledgment within one business day.
7. Extend to logistics and transport. Shipping, carrier booking, export documents, and tracking run from the same order record. The customer’s delivery date, not the ship date, is the target.
8. Build the early warning rule. When a promised date is at risk, the customer is told within a set time (for example, 24 hours after the risk is known) with a new date and the reason. Log each warning.
9. Measure the process. Order entry accuracy, acknowledgment time, on-time delivery to promise, perfect order index, invoice accuracy, and DSO.
10. Review and fix. Review order errors weekly. Use structured problem solving on the top causes, usually master data, pricing, and changes after entry.

What each maturity level looks like

SO-2 Order Execution

Level	Assessment wording	What it looks like on the floor	How to move up
1	Order execution is ad hoc.	Each salesperson or customer service rep handles orders their own way. Orders live in inboxes and spreadsheets. Status requires a phone call.	Map the current order path and agree on one standard process.
2	A standardized order execution system is used.	All orders are managed in one system using one process. But orders still arrive by email, phone, and portal and are keyed by different people, sometimes twice.	Define one point of entry and stop re-keying.
3	As Level 2, plus orders enter the system through a single point of entry.	Every order is entered once, validated, and acknowledged from the same record. No parallel order lists.	Bring shipping, carrier booking, and tracking into the same system.
4	As Level 3, plus the order execution system covers logistics and transport.	Shipments are planned and tracked from the order record. Delivery status is visible to customer service without calling the warehouse.	Write and measure an early warning rule for date changes.
5	As Level 4, plus customers are warned early of any delays or other changes to what was agreed.	Customers learn of a delay days before the due date, with a new date. Warnings are logged and reviewed. Few customers call to chase.	Track warning lead time and reduce the delays that trigger warnings.

Evidence to look for

Document

• Order-to-cash process map with owners and time targets.
• Order entry procedure and validation checklist.
• System records showing one entry per order (look for duplicate or manually re-entered orders).
• Early warning procedure and log of customer notifications.
• Shipping and transport records linked to order numbers.

Observation

• Watch order entry for an hour. Count manual re-keys, email lookups, and questions sent back to sales.
• Look for side spreadsheets, whiteboards, or printed order lists outside the system.
• Ask customer service to find the status and tracking of a random order. Time how long it takes.

Statement

(questions to ask, and who to ask)

• Customer service: “How many ways do orders reach us? Who keys them?”
• Sales: “Do you keep your own list of customer orders? Why?”
• Planner or scheduler: “Is the order book in the system complete and correct today?”
• Logistics: “How do you know which carrier and date apply to an order?”
• Account manager: “When a delivery will be late, when and how does the customer find out?”

Management report

• Order entry accuracy and acknowledgment time.
• On-time delivery to the promised date (see G22).
• Perfect order index.
• Number of early warnings sent and average days of notice before the due date.
• Invoice accuracy (disputes or credit notes as a percent of invoices) and DSO.

Common pitfalls

• One system, many doors. Buying an ERP does not create a single point of entry. If orders still come by email to five people, you have five doors.
• Shadow order books. Sales or planners keep their own lists because they do not trust the system. Fix the data, then retire the lists.
• Promising from standard lead time. A date based on the catalog lead time ignores the current load and material. Promise from ATP or CTP.
• Ship date instead of delivery date. The customer cares when it arrives. Transport time and customs are part of the promise.
• Late bad news. Telling the customer on the due date is not early warning. Set a rule and measure notice given.
• Changes outside the system. Changes agreed by phone and never entered cause wrong builds and wrong invoices.

Template

Order walk sheet (use for “staple yourself to an order”)

Step	Who does it	System or tool used	Information needed	Re-keyed? (Y/N)	Wait time	Errors or questions raised
Order received
Order entered and checked
Date promised and acknowledged
Scheduled
Produced or picked
Shipped and transport booked
Delivered and confirmed
Invoiced
Paid

Monthly order execution scorecard

Measure	Formula	This month	Target
Order entry accuracy	Orders with no entry error / orders entered
Acknowledgment within 1 business day	Orders acknowledged in 1 day / orders received
Single-entry rate	Orders entered once with no re-key / orders received
On time to promise	Orders delivered by promised date / orders delivered
Perfect order index	% on time x % complete x % damage free x % correct documents
Early warning notice	Average days between warning and original due date
Invoice accuracy	Invoices with no dispute or credit / invoices issued
DSO	Accounts receivable / credit sales x days in period

First 30 days

• Week 1: Staple yourself to five orders. Record every handoff, re-key, and wait on the order walk sheet.
• Week 2: List every way orders enter the business today. Agree on the target single point of entry and who owns it.
• Week 3: Write the standard order process, entry checks, and the early warning rule. Start logging entry errors and warnings.
• Week 4: Publish the first monthly scorecard. Pick the top cause of order errors and open a structured problem solving project on it.

Further reading

• Benson P. Shapiro, V. Kasturi Rangan, and John J. Sviokla, “Staple Yourself to an Order,” Harvard Business Review (1992, reprinted as an HBR Classic in 2004): https://hbr.org/2004/07/staple-yourself-to-an-order
• ASCM, SCOR Digital Standard (the Order and Fulfill processes describe order capture through delivery): https://www.ascm.org/corporate-solutions/standards-tools/scor-ds/
• APQC, “Metric of the Month: Perfect Order Performance,” via Supply & Demand Chain Executive: https://www.sdcexec.com/warehousing/article/12193325/apqc-metric-of-the-month-perfect-order-performance
• ASCM Supply Chain Dictionary, for standard definitions of ATP, CTP, and order management terms: https://www.ascm.org/learning-development/certifications-credentials/dictionary/