1. What is order management?
Order management is the process of receiving, tracking and fulfilling customer orders. The order management process begins when the order is placed and ends when the customer gets his or her package.
In addition to tracking order status from processing to shipping, order management also manages the customer data, processes, and partnerships needed to fulfill those orders. For example, businesses will have to notify customers when products are out of stock or not available or respond to inquiries when there is an interruption in transportation.
Here is a typical order management process:
When a customer places an order online, the business must confirm the order and process their payment.
Orders will be placed from different places, at different times, and across every existing business channel. All relevant information, such as order details, shipping address, payment method, etc., will be sent to the management system for processing.
If a product is out of stock, the company must cancel the order or save it as a preorder. The business owner should then promptly purchase new inventory from the supplier and notify the customer right away.
Pick up items
At this stage, the warehouse has received the order and is ready for fulfillment.
Based on the information of the orders, the warehouse staff will be responsible for selecting the products correctly and quickly. The inventory arrangement significantly affects the lead time of each order.
After sufficiently and accurately selected, products will be delivered to the packing station.
All items in an order will be packed into boxes, crates, or pallets, depending on product size and quantity. Employees need to use suitable and safe packaging materials, ensuring that the goods are intact when reaching the consumer.
For example, fragile goods, such as glass, should be packed with bubble wrap to prevent damage during transportation.
Packing helps protect the condition of goods from accidents during order fulfillment and helps optimize the loading of goods according to the vehicle’s length, width, and height.
Once packing the order correctly, the staff will deliver the item to the delivery point. They will print a shipping label with the customer's address and attach a bill of sale to the package. Customers can choose a carrier that suits their needs and priorities (delivery time, shipping costs, etc.).
In addition, information about order status will also be updated on the management system and shared with customers via the app, email, or phone message.
Speed and accuracy are two critical factors in order fulfillment. Therefore, businesses always need to improve their delivery speed while ensuring the integrity and quality of the goods.
After successfully delivering the order, businesses need to follow up and nurture the customer experience.
Businesses should contact shoppers and ask them for feedback on the experience: Were they satisfied with the service? What do they not feel happy with, and what can the business do to improve it?
In some cases, the company may have to process a return or refund. To improve the customer experience, businesses should build a post-purchase customer service process, helping employees quickly overcome and promptly handle possible problems.
Moreover, regular contact with customers by providing lots of helpful information, discount codes, etc., can build loyalty and keep them coming back to your business.
2. Challenges in order management
Overstocking or understocking
One challenge facing businesses when managing orders is excess inventory or shortages.
When goods are stored in excess in the warehouse, they become obsolete and difficult to sell. Besides, the excess products also take up a lot of warehouse space, causing a significant increase in storage costs while not creating much value.
On the other hand, a lack of stock will lead to decreased sales or an increase in the backlog of orders. Customers will have to wait to order an item from a business and are more likely to switch to a competitor if they are served more quickly.
Errors in order fulfillment
Order management is often measured against on-time delivery rates and customer satisfaction, so order fulfillment errors become significant business challenges.
Today, customers are increasingly demanding businesses deliver goods quickly in just a few hours or a day. Therefore, delays when shipping goods will adversely affect the customer experience.
However, working faster doesn't always yield better results. In addition to speed, accuracy also plays an essential role in order fulfillment. If an employee chooses the wrong product or writes the incorrect address, it will take a lot of time and money to correct the mistake and make adjustments.
The lack of information also causes many errors in the management process. When the number of orders increases (e.g., up to thousands of orders per month), businesses will have difficulty updating information, processing orders, coordinating, shipping, checking on-time delivery rates, etc., without a unified and transparent management system.
Manual and cumbersome workflow
Order tracking and management are still done manually. The manager has to call the driver every hour or wait until the end of the day to check the order status. Given the above difficulties, managers do not have comprehensive visibility over the pickup and delivery process in real-time, making management ineffective and not transparent.
Besides, order management needs to combine many departments such as finance, supply chain, sales, customer service, etc. Each department will have different working processes and storage and evaluation systems. Therefore, the cooperation process between the parties takes a long time and remains cumbersome procedures. Obstacles such as long production lead times, shipping delays, customer complaints take businesses a lot of time to resolve due to the involvement of many departments.
Discrete and inaccurate data
Most data currently in businesses are managed by people and stored in multiple sources. Every month, enterprises spend hours aggregating performance results and making reports. The data is not aggregated in charts and tables, making it difficult for managers to analyze operational efficiency from the beginning to the end and offer improved solutions for the next time.
3. The importance of an order management system
If businesses continue to work with complex, fragmented processes operated by many separate systems, they will face more and more challenges in order management.
An order management system is one of the optimal solutions right now to improve and enhance operational efficiency.
The order management system is software that helps businesses track and manage the entire journey of orders. Through the system, managers can process customer order requests, manage inventory, create goods lists and packing slips, manage shipping status, and make payments.
In short, an order management system streamlines and automates everything needed to fulfill orders on time with the right quality while providing the best customer experience.
Here are four reasons why order management systems are essential to your business:
Manage inventory status
Order management systems allow businesses to access accurate sales figures, thereby helping to identify inventory trends. Based on that, managers can determine the most appropriate amount of stock to meet customer expectations.
On the other hand, the system also helps manage seasonal sales based on customers' purchase history. In this way, businesses will avoid over-stocking or under-stocking.
As the number of orders per month increases, businesses do not always have enough stock to fulfill all requirements. Therefore, these orders will be converted into pre-orders and executed after the restocking of goods. With the order management system, businesses can control the amount of inventory and ensure the fulfillment of customer orders in the most timely manner.
Manage the order processing from start to finish
Businesses can maintain excellent customer service and ensure quick and accurate goods delivery thanks to an efficient order management system that tracks order processing from start to finish.
With this system, businesses can manage many orders with high accuracy, helping to reduce errors while processing. Managers have complete visibility into everything from picking and packing to shipping and delivering to customers. Information about location, shipment, the number of goods, order status, etc., will be updated in real-time, helping businesses track their orders at all times.
Customers can also update their order status anytime to know when it will arrive instead of waiting, which helps businesses improve customer service and enhance their overall experience.
Increase productivity and save time
Because the order management system can automatically update the inventory quantity, order status, customer information, etc., when there is an incoming request, managers will save a lot of time entering data manually while increasing efficiency in fulfilling orders accurately and on time.
Businesses can access order history, delivery history anytime, anywhere, and comprehensively track order fulfillment in real-time. It allows managers to control all processes in the same system to fix problems promptly and quickly.
Ensure complete and reliable data
The order management system will track and automatically update all real-time data related to orders and customers at each stage, thereby helping managers capture and analyze available information and make data-driven decisions.
Businesses can manage their orders more efficiently by knowing which orders are pending, which are on delivery, and which have been successfully delivered. All data on sales, customer demand, order fulfillment results, etc., are aggregated to help managers better understand their business status and make the necessary adjustments timely.
4. How to choose an effective order management system?
The role of the order management system is undeniable. However, to choose an effective one, managers need to set specific criteria according to the business’s goals and operation.
The following are recommendations on four elements of an effective order management system that businesses should consider when choosing.
Integrate with other software and systems
When deploying any new system or software, businesses need to consider their ability to integrate with existing software and systems. The integration allows for quick and easy data input and data retrieval between systems.
With many diverse and constantly updated data from daily activities, it will take businesses a lot of time to convert and store all data into a new system.
Therefore, integration ability plays an essential role in ensuring the link and consistency between data flow, improving efficiency and transparency across business activities.
Track your order processing
One of the essentials of an effective order management system is the ability to track order processing from start to finish.
Since order management involves many different stages and processes, from order receipt, picking, packaging to delivery and after-sales support, it can be difficult for businesses to effectively manage them without clear and comprehensive visibility over their activities.
Therefore, managers should be provided with complete visibility over the entire order processing to track how many goods are in stock, when the order is created, how the order is processed, and how and which products are picked, packed, shipped, and delivered.
Able to scale up
Every business is looking to the future, so the ability to scale the system to manage an increasing number of orders is crucial.
Suppose the enterprise system cannot continue developing, expanding, and satisfying the growing needs of customers. In that case, it will cause damage to the business and affect the current processes, services and experiences.
Although the order management system can be adapted and extended to meet the business requirements, there are still certain limitations. Therefore, managers need to learn about the capabilities and limitations of the system so that they can develop it in line with business goals.
Aggregate data and reports quickly and accurately
When technology is applied in operations, data collection and aggregation play a significant role.
An efficient order management system leverages technology to update and store thousands of data about orders and customers. In addition, the system also needs to be able to aggregate performance results and make various charts and reports. As a result, the system can provide managers with detailed information about order performance and promptly make specific adjustments to each need and goal.
Order management plays an increasingly important role in businesses. However, the current management method is still manual and has many shortcomings. An order management system is a technology solution that helps managers optimize their workflow, control and track all order activities, and improve service and customer experience. Businesses need to set specific goals and requirements to make the best use of the technology's value to be ready for an order management system.