What is Order Management? Process and Importance

When a customer clicks the "Buy" button, the journey of their order begins. When new orders are placed on your ecommerce platform, whoever is storing your inventory must select, package, and ship the appropriate products to the appropriate location.

 

When you have a brand new business, this may not seem too difficult: Every day, a few orders arrive, which you can quickly (and cheaply) fulfill. No worries. As sales increase, channels multiply, products are added to your inventory, and your customer base grows, potential obstacles may arise.

 

As your ecommerce store expands, an order management system can assist you in removing bottlenecks. Here's how.

 

 

What is Order Management? 

 

The process of capturing, tracking, and fulfilling customer orders is known as order management. The order management process begins with the placement of an order and ends with the customer receiving their package.

 

An order management system (OMS) is a computer software system used for order entry and processing in a variety of industries. A perfect order is one that is fulfilled to the specifications of the customer, delivering goods as promised at the time of sale.

 

The process of receiving, tracking, and fulfilling customer orders is referred to as order management. The order management process begins with the placement of an order and ends with the customer receiving their package. When scaling your business, it's critical to automate and streamline this process; otherwise, the sheer volume of orders will overwhelm you.

 

Order management begins when a customer places an order and ends when the package or service is delivered. It enables a company to manage the entire fulfillment process, from order collection to inventory and delivery visibility, as well as service availability. 

 

The workflow involved can vary depending on the needs of the company, but a typical order management process includes three steps:

 

1. Placement

 

The order is placed by the customer using an automated form. A member of the sales team verifies the information and confirms the order.

 

2. Fulfillment

 

A warehouse employee confirms shipping information, generates an invoice, and completes the order — pick, pack, and ship.

 

3. Inventory Control

 

Inventory levels are monitored as they fluctuate in response to business demands.

 

Also Read | What is Order to Cash Process

 

Order Management Process

 

Order management processes begin the moment a customer places and pays for an order. The order is routed to the store's inventory, where warehouse workers handle the picking, packing, and shipping. 

 

The majority of order management processes can be divided into three stages: receiving a customer's order, fulfilling the order, and handling after-sales processes. The process concludes with the store checking in with the customer to see if they are satisfied with their purchase. The following are the steps of an order management process :

 

Stage 1: Acceptance of the customer's order

 

When a customer places an order with your company, the first stage of the order management process begins. Receiving entails accepting the customer's order and collecting payment for it. Following this, the purchase details are forwarded to your warehouse, where your staff can begin working on getting the products ready for shipment.

 

Stage 2: Completing the customer's order

 

The second stage involves actually fulfilling your customer's order. This stage can be divided into three steps:

 

1. Selecting

 

The picking process, in which items are retrieved from the warehouse, is the first step in fulfilling an order. Warehouses are typically lined with shelves that are each stocked with a different type of product, so warehouse workers must be able to quickly and accurately pick the right items for an order. After the items have been chosen, they are transported to a packing station to be packed.

 

2. Packing 

 

The packing station is responsible for more than just packing items and shipping them. They are also in charge of selecting the appropriate packaging materials for each product to ensure that it arrives to the customer intact and in good condition, while also maximizing resource utilization. 

 

To avoid wasting packing material, extremely fragile items such as glassware should be packed with bubble wrap or air pillows in a properly sized box.

 

3. Shipping

 

The next step is to ship the correct order after you've picked and packed it correctly. Warehouse workers at the shipping station typically handle three tasks:

 

• Including the appropriate shipping label and invoice with the order
• In all of your sales channels, mark the order as shipped.
• Sending the customer shipping confirmation and order tracking emails

 

Picking, packing, and shipping can only take place in that order if your company has the required products on hand. So, what do you do when a customer places an order for a product that you don't have in stock? In such cases, businesses have two options: turn the customer away or postpone the order delivery to a later date via backordering or dropshipping.

 

Stage 3 - Handling post-sales operations

 

Handling after-sales processes is the final stage of order management. This is where businesses contact customers to solicit feedback and ensure that they are satisfied with their purchase, as well as to manage any returns and refunds if they are not.

 

A typical order management process consists of all three stages. Some businesses prefer to tailor their order management strategy to their specific requirements. Order management is also useful for businesses that provide services rather than goods, though the process is slightly different. 

 

Take, for example, a mobile network provider. A mobile network company must receive each customer's request to activate a network and then set it up on the customer's mobile phone, rather than picking, packing, and shipping products.

 

Also Read | Guide to Inventory Management

 

Why is Order Management Important?

 

A well-organized and well-planned order management process can do wonders for a company's cash flow and inventory. It can save you time and money, tell you whether your company's various parts are working well together, and help you forecast how much demand your business will receive. Let's look at each of these reasons in turn.

 

Because each order management process is made up of several individual processes that must coordinate with each other from start to finish, it can help you determine whether or not the various parts of your business are working together. This is important so that your business runs smoothly and orders are delivered quickly, accurately, and efficiently with minimal errors. 

 

As you can see from the lengthy list of departments involved in proper order management, there is plenty of room for error. If something falls through the cracks or is not properly documented, it could be disastrous for your order fulfillment rates and customer satisfaction. 

 

Poor order management systems can lead to the inability to fulfill orders, orders being shipped or delivered later than expected, and payments not being received properly. After just one negative experience, an estimated 65 percent of customers will not use a company again.

 

Another advantage of utilizing an order management process is that it can assist you in learning to predict the level of demand you will receive. Because you'll know exactly how much of each product you'll need to supply to your customers, forecasting demand will help you avoid overstocking and understocking. 

 

This keeps you ready to sell the products your customers want, when they want them. Because forecasting demand provides an outline of your business's requirements and expenses, you can use this information to create a budget to follow. Sticking to this budget will help your business' cash flow over time, so forecasting demand is good for inventory, customer retention, and profitability.

 

An order management process includes everything from accepting and tracking orders to fulfilling them and taking care of after-sales activity. A proper order management technique that helps each process adhere to a set budget, organizes inventory, and saves time and money should be at the top of every warehouse's priority list. 

 

Finally, maintaining good order management practices means retaining your customer base, which is the lifeblood of your business. Order management success ensures that your customers, finances, and overall business model run as smoothly as possible.

 

Also Read | Supplier Relationship Management: Approaches and Strategies

 

Ways to Transform Order Management Process

 

An exceptional shopping experience begins with order and fulfillment. Order management systems of the future are customer-centric and essential to the front office. 

 

Why? Because these points in the shopping process can either irritate or delight customers. They influence whether a customer completes a transaction and becomes a loyal customer, or whether he or she clicks over to the competition. Let's take a look at ways to transform order management process :- 

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Ways to Transform Order Management Process

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1. Provide a variety of shipping/delivery options

 

Customers want shipping and delivery options that range from one-hour in metro areas and weekend delivery to in-store pickup and next-day delivery. They anticipate that these options will be prominently displayed on the product page.

 

2. Give precise product availability information

 

Don't let your customers down by informing them that an item is out of stock after they've added it to their shopping cart. Time is money for business buyers, and every minute spent looking for out-of-stock merchandise is a waste of time. If a product is out of stock or running low, indicate this on the product page to provide customers with the most up-to-date picture of available inventory.

 

3. Offer self-service Order Status and Returns

 

Customers should be able to check the status of their orders and receive updates on their terms via text and email. They should also be able to modify shipping information. Returns should also be self-service, including the ability to print out return labels and choose how and where to return an item.

 

4. Empower service representatives and Sales Representatives

 

Service representatives and sales representatives are on the front lines of the customer experience. They must assist customers with their orders in any way they can. This necessitates total visibility into orders and customer activity. They should be able to use technology to place orders on behalf of customers and make shipping/delivery changes to existing orders.

 

Also Read | Overview of Supply Chain Management

 

By orchestrating the entire supply chain, integrated order management systems drive operational excellence. Everything a brand does during the customer lifecycle leads to this value exchange moment.

 

Order management is a critical component of your warehouse processes because it determines how your customers receive their orders. However, as your company grows in size, manually managing all of these processes can become overwhelming. 

 

Most businesses use an order management system at this point. For a long time, the order management process has been improving or changing. Change is occurring because it allows them to effectively reduce costs while improving quality. The preceding order management process shows you how to handle the entire activity flawlessly.