The Importance of Order Management & Order Processing 

Once you entice a customer to purchase something from your e-commerce site, the process and life cycle of order fulfillment begins. 

When your business is small, you are likely able to manage this process yourself with only a few orders to attend to daily. As your business expands, however, it becomes more and more important to have an order management system and an automated and streamlined method for order processing to ensure that orders are fulfilled to customers’ expectations and satisfaction. 

Order management systems can decrease potential obstacles in the order management lifecycle and aid in the reliability of order processing.

Order Management Explained

E-commerce sales rose in 2021 up to $870 billion — a spike of more than 50% since 2019. The onset of the COVID-19 pandemic and the evolution of technology has driven more and more business online. E-commerce sites are working hard to keep up with order and customer demands and expectations. 

As your business scales up, the need for an automated order management system to streamline order management is essential to help you keep up with sales and order fulfillment.

Order Management Systems

An order management system automates the order management lifecycle from the time the customer clicks “buy” all the way through order fulfillment. It organizes and streamlines this process to keep things moving on the business end and to satisfy customers on the consumer end. Products can be delivered in a timely fashion and in good condition, without anything falling through the cracks, using an order management system.

An order management system can give you the ability to track every step of the order’s journey from purchase to delivery. Many order management systems can sync directly with your e-commerce platform, automating the flow of sales and order information throughout your retail supply chain and offering you visibility into the entire process. 

What Is Order Processing?

A key component of retail order fulfillment, order processing is the workflow from the time a customer’s order is placed until it is fulfilled. Depending on your operation, order processing can be automated and highly technological, using automated order processing software linked up with your online sales platform, or it might involve manual processes, such as writing orders on an order log sheet by hand. 

Order processing includes the following steps:

• Picking: selecting the correct product from where it is stored after an order is received
• Sorting: compiling products with their respective orders
• Tracking: monitoring the movement of the order through its lifecycle from order placement to fulfillment
• Shipping: the actual movement of product from where it is being stored to the customer’s location

Benefits of Order Management

Order management systems and processes can streamline the retail supply chain and ensure that orders are managed as needed and nothing is missed. This can help to build customer trust, as you will be able to consistently fulfill promises made regarding order delivery timelines. 

An automated order management system can enhance the customer experience, and this can help to drive business through repeated sales. Additional benefits include the following:

• Better time management: With an automated order management system in place, you will need to spend less time attempting to be an order fulfillment expert yourself. This will allow you to spend more time on other business priorities that have greater impact.
  
• Fewer order fulfillment mistakes: Using an order management system helps to ensure that nothing gets missed between order placement and fulfillment. The higher the level of volume that your business deals with, the more likely there is to be a mistake with order processing and fulfillment. 

With a dedicated system in place, you can help to lessen the chances of human error. This is particularly important as the retail supply chain increases in complexity.

• Better stock management: It is important to be able to manage your inventory levels to make sure you can keep up with seasonal demands and keep the right amount of stock on hand at the necessary times. Both understocking and overstocking can cost your business money and create customer dissatisfaction.
  
  With an order and inventory management system, you can keep track of your inventory in real time, use data to predict potential times of seasonal growth or waning, and ensure that you are not understocking or overstocking. This saves you money and keeps your customers happy.
  
• Ability to make data-driven decisions: Order management systems centralize order data into one place, making it easy to visualize where potential issues or bottlenecks might be and helping you to better analyze order information.
  
  This enables you to be able to make data-driven decisions, such as redistributing inventory based on customers’ locations and optimizing your supply chain by highlighting inefficiencies. Visibility into order data can directly impact your bottom line, helping you to increase profit margins.

Order Management Lifecycle

The lifecycle of an order starts when the customer initially places the order and follows the order all the way through to order fulfillment. In some cases, it includes order returns as well. This often involves a lot of moving parts and various entities, and it is important that all the pieces work together for a streamlined and efficient process. 

The order management lifecycle follows these general steps:

1. Order is placed. Customers are placing orders at different times, on different platforms, and in different locations. You will need to use an omnichannel fulfillment or multichannel order management tool to streamline this process and automatically push order details from your e-commerce store to your order management system.
   
2. Order information is passed to the fulfillment center. After an order is placed, this information is sent to the order fulfillment center. Once this is received, the order processing starts. Order management software can help determine, based on inventory and delivery address, which order fulfillment center to send the order information to when inventory is split between different locations.
   
3. Order is picked. Order picking involves using a picking list to retrieve products from the available inventory and move it to a packing station. Proper warehouse management ensures that inventory is arranged in such a way that order fulfillment is made more efficient.
   
4. Order is packaged. After picking, the order is taken to a packing station to be packaged, and a shipping label is affixed to the package for shipping.
   
5. Order is shipped. After packaging, the order is shipped through a shipping carrier to the customer’s delivery address. Carriers often pick up directly from the fulfillment or 3PL (third-party logistics) center. A tracking number is assigned and shared with the customer for real-time order status updates.
   
6. Order is delivered. This is generally the last step in order fulfillment. If you are using an order management system, the odds are higher that your order was delivered on time, as promised, and in good condition.
   
7. Order follow-up occurs. Following up after your order has been delivered is an important part of the process. This can show you if there are any issues you can work to improve and help you to build relationships with loyal customers and drive repeat business.
   
8. Measure potential improvements. Order management should provide you with tools to analyze your retail supply chain and e-commerce logistics to streamline and enhance the process. This can include addressing potential customer dissatisfaction and deciding when and how to provide returns. A good order management system can help you to cut costs while increasing customer satisfaction.

Tips for Streamlining Order Management

There are a variety of options available for order management systems, including different types of order management software. The right system for you will depend on your business and business needs. 

A good order management system should help to automate your order information and workflow, from order placement to fulfillment and delivery to the customer. Order management software is designed to integrate into your business systems and save you time and money. If it makes things more complicated for you, it’s not the right system.

It can also be beneficial to use a 3PL to outsource your order fulfillment processes. 3PLs will have their own fulfillment centers to house your inventory, often in various locations to optimize shipping costs and times. They will take care of the entire order process from the time the order is placed all the way through until it is delivered to your customer. 

A 3PL will have the necessary software, an existing order fulfillment infrastructure, and the ability to scale up and down as your business demands it. Using a 3PL can offer a high level of expertise to streamline your order management and processing procedures to ensure that the needs of both your business and your customers are met.

References

E-Commerce Sales Grew 50% to $870 Billion During the Pandemic. (February 2022). Forbes.