management | 3 mins read

Order Management Process - 3 Key Steps to Know

order management process 3 key steps to know
Hanh Truong

By Hanh Truong

As soon as a shopper makes a purchase online, the order management process begins for the company. This system ensures that the right products are selected for the order and that it is properly packaged and promptly shipped to the right destination.

With eCommerce becoming increasingly popular among consumers, businesses are experiencing expanded channels, more sales, and a need to increase inventory. Creating an effective order management process will streamline customer service and eliminate bottlenecks.

What is Order Management?

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The order management process is the system of receiving, monitoring, and fulfilling customer orders. The process generally ends when the orders are shipped and received by shoppers.

Proper order management also encompasses informing customers when there is a delay in order processing, such as when inventory is lost or when there is a stock-out. By being honest and transparent, consumers can make quick decisions about their order and build trust with the brand.

Establishing a well-defined process is important in cultivating effective customer service. With accurate order management, companies can stay on top of every single order they receive, maintain optimal stock levels, and minimize errors in order fulfillment.

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3 Steps in the Order Management Process

There are 3 essential steps in the order management process. By thoroughly understanding each stage, administrators will be able to implement appropriate optimization practices and deliver goods to customers quicker.

1. Order Placement

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The process begins when a consumer places an order on the retailer's store website or on a third-party online marketplace, such as Amazon or eBay.

Typically the customer will pay and have their transactions processed immediately when the order is placed. At this time, customer service will also help shoppers with any questions about their products or ordering process.

2. Inventory Adjustment

After an order is placed, stock levels for the products should be adjusted on the online store and inventory management system. Brands and consumers need to know the latest inventory level of the store's merchandise to prevent instances of selling or buying out-of-stock products.

Companies that proactively monitor their inventory will be able to quickly make these adjustments. To effectively track inventory, managers can utilize different identifiers, such as-

  • Product Name - Brands can create unique names from each of their products.
  • Stock-Keeping Unit Number - A scan-able bar code that can identify and track stock.
  • Description - Details about the product's color, size, or dimensions.

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3. Order Fulfillment

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Fulfilling the customer's order is the last stage of the order management process. Once payments are approved and inventory is adjusted, the order is sent to the retail store's warehouse.

Generally, a warehouse employee will take the order and retrieve the products from the facility. Then, the items are packed into a box or mailer bag, along with other packing materials to ensure that the product will be safe during its transport.

Also known as the picking process, companies can utilize 4 methods to ensure efficiency-

  • Single Order - An employee picks every item on the order form from the warehouse and brings it to the packing station.
  • Batch Picking - Staff picks multiple orders at once and splits the order before packing them.
  • Zone Picking - Each employee has his or her own area in the warehouse and the order is fulfilled as it passes through each area.

A shipping label is then created and adhered to the package before it is sent to shipping carriers. The process ends once the order is delivered to the customer's door.

3 Ways to Optimize the Order Management Process

There are many best practices that companies can integrate into their order management process to maximize efficiency and reduce costs.

Invest in Automation

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Automation will help simplify the order management process and allow managers to allocate their attention to more crucial business functions. For example, companies can simplify their stock replenishment procedures by using inventory-ordering software.

This form of inventory management software tracks inventory levels in real-time and can alert authorized users when products are reaching low levels. This allows brands to maintain optimal stock levels and ensure that consumers will always be able to purchase the goods they need from the company.

Develop a Warehouse Floor Plan

A well-developed warehouse floor plan will allow staff to easily navigate through their workspace and accessibly reach the supplies they need to complete their tasks.

Managers should have a clear storage and labeling system that helps make finding inventory products easier. This can reduce errors in order fulfillment, as well as boost the productivity and efficiency of the warehouse teams.

Have a Communication System

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Once orders are shipped, warehouse staff should update the company about the package's movement so they can confirm that the order was completed.

Customers should also be communicated when their order is on the way so they can expect their package to come.

By understanding the steps in the order management process and implementing tips to optimize the system, brands can enhance their customer experience and ensure that all orders are fulfilled correctly.

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