Order Management: What It is, Process and Importance
The journey begins when a customer clicks on the “Buy” button. Your eCommerce platform will place new orders. The person who stores your inventory must choose, package and ship the correct products to the right location.
This may seem easy if you are just starting a business. Every day you get a few orders that you can fulfill quickly and cheaply. No worries. You don’t have to worry about potential problems. As your sales grow, your channels expand, your product range grows, and your customer base increases, so do your chances of encountering obstacles.
An order management system is a tool that can help you remove bottlenecks as your eCommerce shop expands. Here’s how.
What is Order Management?
Order management is the process of capturing and tracking customer orders. Order management begins with placing an order and ends when the customer receives their package.
Order management software (OMS), is a computer program that allows order entry and processing across a range of industries. A perfect order is one that meets the customer’s specifications and delivers the goods promised at the time of sale.
Order management is the process of receiving, tracking, and fulfilling consumer orders. The order management process starts with placing an order and ends when the customer receives their package. It is crucial to automate and streamline the order management process when scaling up your business. Otherwise, you will be overwhelmed by the sheer volume of orders.
Order management starts when a customer places an online order and ends when the package is delivered. It allows a company manages the fulfillment process from order collection to inventory visibility and delivery visibility as well as service availability.
The process involved may vary depending on the company’s needs, but the typical order management process involves three steps.
- Placement: The customer places the order using an automated form. The customer submits the information to the sales team who confirms it.
- Fulfillment: An employee at the warehouse confirms shipping information and generates an invoice. The order is then completed — pick, pack and ship.
- Inventory Control: As inventory levels fluctuate according to business demand, they are closely monitored.
Order Management Process
The order management process begins when a customer places an order and pays for it. The order is sent to the store’s inventory, where warehouse workers do the packing, shipping, and picking.
Most order management processes can be broken down into three steps: receiving the customer’s order and fulfilling it. The final step is to handle after-sales. The store will check in with the customer to ensure that they are happy with their purchase. These steps are part of an order management process.
Acceptance of the customer’s order
The first step in the order management process starts when a customer places an online order. Receiving entails receiving payment and accepting the customer’s order. The purchase details are then forwarded to your warehouse so that your staff can start preparing the products for shipment.
Completing the customer’s order
The second stage is actually fulfilling the customer’s order. This stage can be broken down into three steps.
Picking, which involves removing items from the warehouse, will be the first step to fulfilling an order. The shelves in warehouses are often lined with different types of products, so workers need to be able quickly and accurately select the correct items for each order. Once the items are selected, they are taken to a packing station where they will be packed.
The responsibility of the packing station goes beyond packing and shipping items. They also determine the best packaging materials to use for each product so that the product arrives in good condition. This allows them to maximize resource usage.
Avoid wasting packing material by wrapping fragile items like glassware in bubble wrap or air pillows and placing them in a suitable-sized box.
After you have packed and picked up the order, it is time to ship it. The following tasks are typically performed by warehouse workers at the shipping station:
- Include the correct shipping label and invoice along with your order
- Mark the order shipped in all your sales channels
- Tracking emails and shipping confirmations to the customer
If your company does not have the products required, picking, packing, or shipping can’t take place within that order. What do you do if a customer orders a product you don’t stock? Businesses have two options in such situations: either turn the customer down or delay delivery to a later date via back-ordering or dropshipping.
Handling post-sales operations
The final stage in order management is after-sales. Businesses contact customers to get feedback and make sure they are satisfied. They are happy with the purchase and will take care of any returns or refunds.
Each stage of a typical order management process includes all three. Many businesses prefer to customize their order management strategies to meet their needs. Businesses that offer services or goods may also benefit from order management, but the process is slightly different.
Let’s take, for instance, a mobile network provider. To activate a mobile network, a mobile network company must be able to receive every customer’s request. The customer can then set it up using their mobile phone rather than picking, packing, and shipping products.
Why Order Management is Important
An order management system that is well-planned and organized can make a huge difference in a company’s cash flow. It can help you save time and money, show you if your company’s parts are well-connected, and forecast the demand for your business. Let’s take a look at each one.
Each order management process is composed of many individual processes that must work together from start to finish. This can help you assess whether your business’ various components are working together. This is crucial to ensure that your business runs smoothly, and orders are delivered promptly, accurately, and efficiently, with few errors.
There is always room for error, as you can see by the long list of departments involved with order management. It could spell doom for customer satisfaction and order fulfillment rates if something is missed or not documented properly.
Poor order management systems could lead to the inability to fulfill orders, late shipping or delivery, and payment not being received correctly. A majority of customers will never use the same company again after one bad experience.
An order management system can also help you predict how much demand you’ll receive. Forecasting demand will allow you to avoid overstocking or understocking by knowing exactly how many of each product you need to provide to your customers.
This will ensure that you are ready to sell the products customers want when they need them. Forecasting demand gives you a clear picture of your business’s needs and expenses. This information can be used to make a budget. This budget will ensure your cash flow is steady over time. Forecasting the demand is important for inventory, customer retention, and profitability.
Order management includes everything, from receiving and tracking orders to fulfilling them, and even after-sales activities. An order management system that organizes inventory and helps to save time and money is a must-have for every warehouse.
Good order management practices are essential for retaining your customers, who are the lifeblood of your company. Your customers, finances, and overall business model will run smoothly if you have a successful order management strategy.
How to Transform the Order Management Process
Order fulfillment is the key to a great shopping experience. The future order management systems will be customer-centric and integral to the front office.
Why? These points can be either irritating or delightful for customers. These points can have an impact on whether customers complete a transaction and become loyal customers or if they click over to the competitor.
Provide a variety of shipping/delivery options
Customers expect delivery and shipping options that are available within one hour in metropolitan areas, weekend delivery, in-store pickup, and next-day delivery. These options should be clearly displayed on product pages.
Provide precise product availability information
Your customers shouldn’t be let down by not informing them when an item is out-of-stock after they have added it to their shopping basket. Every minute spent searching for out-of-stock merchandise is time lost for business buyers. To give customers the most current inventory, let them know if a product is out-of-stock or in short supply.
Self-service order status and returns
Customers should be able to check the status of orders and receive updates via email and text on terms. Customers should be able to modify their shipping information. Self-service should be available for returns, such as the ability to print return labels and decide how and where to send an item back.
Empower service representatives, and sales representatives
Sales representatives and service representatives are at the forefront of customer service. They are required to assist customers in every way possible with their orders. They must have full visibility of customer orders and activity. They must be able to use technology to place orders for customers and to make shipping/delivery adjustments to existing orders.
Integrated order management systems enable operational excellence by orchestrating the entire supply chain. This value exchange moment is the result of everything a brand does throughout the customer lifecycle.
Because it affects the way your customers get their orders, order management is an essential component of your warehouse operations. As your company grows, however, Manually managing all these processes can be overwhelming.
Most companies use an order management system. The order management process has been evolving and changing for a long time. Because it allows them to reduce costs and improve quality, change is happening. This order management process will show you how to manage the entire activity.