Order management is the process of receiving, tracking, and fulfilling customer orders. It is a crucial step for many e-commerce businesses that mostly begins when a customer places an order via the e-commerce site and ends when they receive the package. As important as it is, it might not necessarily be in the books for many new online stores with manageable orders per day.
However, as the business expands and the orders increase by the day, it becomes very tedious, time-consuming, and unproductive to create spreadsheets, review inventory and manually create shipping labels. This explains why many e-commerce businesses leverage software solutions to optimize their order management process, minimize human errors, and improve overall business efficiency.
Beyond definition, what is order management? Why should you care about it? And How can you optimize your order management system? This article will take you through the overview of order management, some of its best practices, and how to use software to maximize your efforts and improve your revenue streams. Let’s get right into it.
Order management refers to the process and activities involved in receiving, processing, fulfilling, and tracking customer orders from initiation to delivery. It encompasses the end-to-end management of customer orders efficiently and effectively, including order capture, processing, fulfillment, tracking, and customer communication.
Order management systems and processes are essential for businesses that sell products or services, enabling them to manage and track orders systematically and organizationally. It aims to ensure the seamless and accurate execution of customer orders, optimize inventory management, reduce errors, and deliver a positive customer experience.
An order management system (OMS) is a software application or platform designed to facilitate and streamline the end-to-end management of customer orders. It provides businesses with the tools and capabilities to handle and process orders from initiation to fulfillment effectively. An OMS serves as a central hub that integrates various order-related processes, data, and systems, enabling businesses to optimize their order management operations.
Although these two concepts are slightly similar, their operations and processes differ. Order management refers to the comprehensive set of processes and activities involved in managing customer orders from initiation to delivery. It encompasses all aspects of handling orders, including order capture, processing, fulfillment, tracking, and customer communication.
It is a broader term that covers the entire lifecycle of an order – the order management process begins from the moment it is received to when it is delivered to the customer and beyond. Key components of order management include order capture, order processing, inventory management, order fulfillment, order tracking, customer communication, and returns processing. An order management system (OMS) is a software platform that facilitates these activities and provides a centralized hub for managing and optimizing the order management process.
On the other hand, order processing is a specific part of the order management process. It refers to the tasks and activities involved in validating and processing customer orders after they have been captured. Order processing typically includes order verification, checking product availability, calculating pricing and discounts, applying taxes, managing payment transactions, and preparing the order for fulfillment.
Order processing is focused on the internal handling of orders, ensuring that all necessary information is accurate and complete before the order moves to the fulfillment stage. It is an essential step in the overall order management process, as accurate order processing directly impacts order accuracy, inventory management, and customer satisfaction.
In summary, order management encompasses the entire process of managing customer orders from start to finish, including order processing as one of its critical components. On the other hand, order processing is a specific step within order management that deals with validating, verifying, and preparing customer orders for fulfillment. Both are crucial in ensuring efficient and accurate handling of customer orders without manual processes, ultimately leading to improved customer experiences and streamlined business operations.
Order management is crucial for e-commerce business success due to several key reasons:
Effective order management processes enable businesses to streamline their operations and optimize the handling of customer orders. Businesses can reduce manual errors, minimize order processing time, and improve overall operational efficiency by automating and standardizing order-related tasks.
Smooth order management processes directly contribute to enhanced customer satisfaction. Customers expect timely order fulfillment, accurate order processing, and transparent communication throughout the order lifecycle. An efficient order management system ensures that orders are processed accurately, products are delivered on time, and customers are kept informed about their order status. Satisfied customers are more likely to become repeat customers and recommend the business to others.
Effective order management allows businesses to have better control and visibility over their inventory. By accurately tracking inventory levels, businesses can avoid stockouts or overstock, reduce carrying costs, and improve inventory turnover. A successful order fulfillment process ensures that products are available when customers place orders, leading to improved order fulfillment rates and customer satisfaction.
As businesses grow, managing orders manually becomes increasingly challenging and time-consuming. Order management systems provide scalability, allowing businesses to handle higher order volumes without sacrificing accuracy or efficiency. With automated workflows and streamlined processes, businesses can easily scale their operations to meet growing demand.
Order management systems provide valuable insights and data on order patterns, customer behavior, and operational performance. These insights enable businesses to make data-driven decisions, identify trends, optimize processes, and adapt their strategies to meet customer demands effectively. Access to real-time data and analytics empowers businesses to improve their order management processes and continuously drive business growth.
An order management system integrates with various systems and departments within the organization, such as inventory management, sales, customer service, and fulfillment. This integration allows for seamless collaboration, data sharing, and real-time updates across different teams. It helps eliminate silos, improves cross-functional communication, and ensures all stakeholders access accurate and up-to-date order information.
The order management process refers to the series of steps and activities involved in managing customer orders from initiation to fulfillment. While specific processes may vary depending on the business and industry, the general order management process typically includes the following stages:
The process begins when a customer places an order through various channels, such as online platforms, phone calls, emails, or in-person interactions. The order details, including product or service, quantity, and customer information, are captured and recorded.
Once an order is received, it is validated to ensure its accuracy and completeness. This involves verifying the order details, such as product availability, pricing, discounts, and any special requirements. Any discrepancies or missing information may be addressed at this stage.
After validation, the order moves into the processing phase. This involves tasks such as updating inventory records, calculating taxes and shipping costs, generating invoices or receipts, and initiating payment processing. The order is prepared for fulfillment, and the necessary documentation is generated.
In this stage, the order is fulfilled by picking, packing, and shipping the products or delivering the services to the customer. Inventory is allocated, and products are gathered from the warehouse, packaged securely, and labeled for shipment. Alternatively, if the order is for a service, the necessary resources are assigned, and the service is scheduled for delivery.
Once the order is ready for shipment, a tracking number or shipment reference is generated, and the order is handed over to the shipping carrier. The customer is provided with tracking information to monitor the progress of their order. Updates may be sent to the customer regarding the order’s status and estimated delivery time.
Effective communication with the customer is crucial throughout the order management process. This includes order confirmations, updates on order status, notifications of any delays or changes, and promptly responding to customer inquiries or concerns. Clear and timely communication helps manage customer expectations and ensures a positive experience.
In the event of returns, exchanges, or refund requests, the order management process includes handling these situations. The appropriate procedures and protocols are followed to manage the return authorization, track return shipments, process refunds or replacements, and update inventory records accordingly.
It’s important to note that order management processes can be customized based on each business’s specific needs and requirements. Implementing an order management system or software can significantly streamline these processes and provide automation, real-time tracking, and integration with other business systems for improved efficiency and accuracy.
Order management software is a type of software application or platform designed to facilitate and automate the various tasks and processes involved in managing customer orders. It provides businesses with a centralized system to effectively handle and track orders from initiation to fulfillment. Order management software streamlines and optimizes order-related activities, improving efficiency, accuracy, and customer satisfaction.
When evaluating order management software solutions, several key factors must be considered. Here are some important aspects to look for:
Ensure that the software offers robust order processing features, including order validation, inventory management, pricing calculations, discount application, and payment processing. It should support various order types, handle complex order scenarios, and accommodate customization based on your business requirements.
Check if the software can integrate with your existing systems and platforms, such as e-commerce platforms, marketplaces, payment gateways, shipping carriers, and inventory management systems. Seamless integration enables data synchronization, streamlines operations, and prevents manual data entry errors.
The software should provide real-time visibility into inventory levels, allowing you to efficiently manage stock and prevent stockouts or overstocking. Look for features such as automated inventory tracking, replenishment alerts, backorder management, and SKU-level tracking to ensure accurate inventory management.
Look for order management software that automates and optimizes the order fulfillment process. It should enable efficient order picking, packing, and shipping, with features such as automated workflows, generation of packing slips or shipping labels, and integration with shipping carriers for real-time tracking. This helps ensure timely and accurate order delivery.
Consider software that offers built-in customer communication features, such as automated order confirmations, order status updates, and delivery notifications. Clear and timely communication enhances the customer experience and keeps customers informed about their orders.
The software should have capabilities to handle returns, exchanges, and refunds efficiently. Look for features such as return authorization management, automated return workflows, and integration with shipping carriers for return tracking. It should also support refund processing and inventory updates accordingly.
Consider whether the software can scale with your business as it grows. It should be flexible enough to accommodate changing business needs, handle increasing order volumes, and support customization based on your unique requirements.
Look for order management software that provides robust reporting and analytics capabilities. It should offer pre-built reports and customizable dashboards to gain insights into order metrics, sales performance, inventory levels, and customer behavior. These insights enable data-driven decision-making and process optimization.
Ensure that the software has an intuitive and user-friendly interface that is easy to navigate and use. A well-designed interface enhances user adoption and efficiency.
Consider the level of customer support provided by the software vendor. Look for a vendor that offers reliable customer support, training resources, and documentation to assist with the software’s implementation, onboarding, and ongoing usage.
By considering these factors, you can select an order management software solution that aligns with your business needs, streamlines your order management processes, and contributes to overall operational efficiency and customer satisfaction.
Here are 5 best order management software to help e-commerce and supply chain businesses build the right order management system:
TradeGecko is a comprehensive order management software offering features like order processing, inventory management, and order fulfillment. It integrates with various e-commerce platforms, accounting systems, and shipping carriers, providing seamless order management across multiple channels.
ShipStation is a popular order management solution designed specifically for e-commerce businesses. It streamlines order processing, shipping, and fulfillment with integrations to major marketplaces, shopping carts, and shipping carriers. It offers automation features, batch printing of shipping labels, and real-time order tracking.
Zoho Inventory is one of the best cloud-based order and inventory management tools, providing end-to-end order tracking, customer relationship management (CRM), inventory management, and shipping integration. It offers features such as sales order management, purchase order management, and customizable workflows to suit different business needs.
Orderhive is a multichannel order management software that helps businesses consolidate and manage orders from various sales channels. It offers features such as inventory management, order processing, order tracking, and returns management. It integrates with popular e-commerce platforms, marketplaces, and shipping carriers.
Skubana is a robust order management software designed for high-volume e-commerce businesses. It combines order management, inventory management, and analytics into a unified platform to effectively manage the business process. It offers automation features, intelligent order routing, and integrations with multiple sales channels and fulfillment centers.
It’s important to note that the “best” order management software may vary depending on your specific business requirements and industry. It is recommended to thoroughly evaluate each software solution, considering factors such as pricing, features, scalability, integration capabilities, and customer reviews before making a decision.
To ensure successful order management and optimize your business operations, here are some best practices to consider:
1. Streamline Order Processes
Simplify and standardize your order management processes to minimize errors and delays. Clearly define each step, from order capture to fulfillment, and ensure that all team members are trained on the process. Automation and workflow automation software can help streamline and expedite order processing.
2. Centralize Order Information
Maintain a centralized system or order management software to store and access all order-related information. This allows easy tracking, order history retrieval, and efficient customer communication. Centralization helps eliminate data silos and improves order accuracy.
3. Ensure Accurate Inventory Management
Implement robust inventory management practices to maintain accurate stock levels. Regularly update inventory records, conduct frequent stock audits, and establish reorder points to avoid stockouts or overstocking. This helps fulfill orders promptly and reduces the risk of disappointing customers.
4. Optimize Order Fulfillment
Streamline and optimize your order fulfillment process to ensure timely and accurate delivery. Implement efficient picking, packing, and shipping practices. Utilize barcode scanning or RFID technology to minimize errors and improve efficiency in fulfillment operations.
5. Invest in Integration
Integrate your order management system with other critical business systems like e-commerce platforms, inventory management, and shipping carriers. The integration enables seamless data flow, eliminates manual data entry, and enhances operational efficiency.
6. Implement Real-Time Order Tracking
Provide customers with real-time order tracking information. Enable them to track their orders online, receive shipping notifications, and access estimated delivery dates. This transparency improves customer satisfaction and reduces customer inquiries about the order status.
7. Communicate Effectively
Establish clear communication channels with customers throughout the order lifecycle. Send order confirmations, updates on order status, and delivery notifications via email or SMS. Promptly respond to customer inquiries and provide excellent customer service to build trust and loyalty.
8. Monitor Key Performance Indicators (KPIs)
Define and track relevant KPIs to measure the performance of your order management processes. Metrics such as order fulfillment rate, order cycle time, order accuracy, and customer satisfaction can provide insights into areas for improvement and help you identify bottlenecks.
9. Continuously Improve Processes
Regularly review and analyze your order management processes to identify areas for improvement. Gather feedback from customers, measure performance metrics, and seek input from your team. Implement process enhancements and leverage technology to optimize efficiency and customer satisfaction.
10. Provide Training and Support
Ensure that your team receives proper training on order management processes, software usage, and customer service skills. Provide ongoing support and resources to address any questions or challenges that may arise.
By implementing these best practices, you can enhance your order management processes, improve operational efficiency, deliver exceptional customer experiences, and drive business growth.
In conclusion, implementing a robust order management system is crucial for businesses looking to manage their orders effectively and efficiently. With the right order management system in place, businesses can streamline their order processes, enhance inventory management, optimize order fulfillment, and improve overall customer satisfaction.
A good order management system centralizes order information, integrates with other key systems, provides real-time order tracking, and enables seamless communication with customers. By investing in a reliable order management system and following best practices, businesses can gain better control over their orders, reduce errors, increase operational efficiency, and ultimately drive success in today’s competitive marketplace. So, manage your orders better with a good order management system and unlock the full potential of your business.
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