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What is order management?

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For customers, a successful transaction occurs when an item they ordered arrives at its intended destination. For businesses, success requires affordability and continuity. Effective order management is what makes successful transactions possible. In simple terms, order management is the process of receiving, fulfilling and tracking customers’ orders. It begins when a consumer buys a product and ends when they receive it.

To explain, let’s take a closer look at order management, how it works and why it matters to brands and consumers.

What is order management, and how does it work?

Order management is the process of receiving, fulfilling and tracking customers’ orders. It begins when a consumer buys a product and ends when they receive it.

The specific steps of the order management process can vary from business to business. But typically, order management involves the following steps:

  • Order placement: The consumer places their order using an automated system or a website on their phone, computer or tablet. Once they click “place order,” a sales team member will receive it and begin processing the information. Typically, this involves reviewing the order details and confirming them.
  • Fulfillment: An employee reviews the order details and creates an invoice. Then, they select the correct product from the inventory, pack it up and ship it to the consumer.
  • Inventory management: Staff members manage their product inventory to ensure they can continue to fulfill orders on time and have enough products to meet the anticipated demand. Good inventory management lets companies know what’s low in stock and when it’s time to reorder. It also helps prevent the common issues of overpromising and underdelivering.
  • Customer service: Throughout the fulfillment process, employees send customers updates (usually via text or email) on the status of their order. Customer-facing employees may also make shipping changes, handle product returns or address any issues a consumer has with a product upon its arrival.

As a business grows, automating this order management process is important. Otherwise, it’s easy to be overwhelmed by the sheer number of orders coming in, and mistakes are more likely to occur.

Although every company is bound to make mistakes, dealing with them quickly and effectively makes all the difference. Repeated errors and fulfillment issues can seriously spoil a brand’s reputation, and ultimately, these issues may damage the customer relationship beyond repair.

What is an order management system?

An order management system (OMS) is a digital platform that allows brands to manage the life cycle of an order. This includes any external partnerships a company uses to fulfill orders.

With a robust OMS, companies can:

  • Manage all of their orders
  • Maintain customer records
  • Fulfill orders
  • Manage and view their inventory
  • Take care of payments and invoicing
  • Provide ongoing customer care

Manually handling all these things is extremely time-consuming and expensive. With an OMS, brands can streamline their order management process and maintain positive relationships with clients and business partners. They’ll also save money with an automated system by optimizing their inventory management and increasing their fulfillment efficiency.

Why is order management important?

Order management is at the heart of everything a business does. It directly impacts the customer’s experience and affects profitability. Here’s how.

Helps prevent inventory issues

Overstocking and under stocking are two of the most common fulfillment issues companies face. Overstocking products is expensive and requires more physical space for storage, while understocking can lead to delays in fulfillment, leaving a bad taste in customers’ mouths.

Order management helps companies identify inventory trends and accurately estimate the quantity a company needs to have on hand to meet consumer demand. In the long run, this saves money and improves customer satisfaction.

Influences the customer experience

Today’s consumers expect a seamless purchasing process, transparency about their order’s status and hassle-free returns. All of these things are important aspects of the order management process. When it’s all said and done, order management can make or break the customer experience and directly influence a brand’s reputation. An automated OMS helps ensure customers receive the correct order, on time, and that the process is effortless.

Improves productivity

With accurate and effective order management, brands can spend less time fixing order issues. Instead, they can focus on meeting the demands of consumers, maintaining continuity and, as a result, making a profit.

Reduces fulfillment mistakes

With more orders come additional opportunities for mistakes. Unfortunately, many companies today don’t handle the entire order management process in-house. Instead, they rely on other partners like suppliers, packaging services or distribution centers to manage their orders.

With more players in the game, keeping track of orders and controlling every aspect of the order management process can be more challenging. As a result, businesses often spend more time and money ensuring that orders are correctly fulfilled and delivered.

With an effective order management system, brands can protect their reputation and guarantee that consumers will receive the goods they ordered on time.

Provides valuable insights

Order management systems collect reliable information and provide real-time data. For example, companies can use their OMS to isolate valuable information about fulfillment timelines, current and historical orders and details on which products are commonly purchased together. Brands can leverage these insights to make wiser decisions that positively impact their bottom line.

5 fundamental factors for successful order management

Order management has a significant impact on a brand’s profitability and reputation. As a result, the key question is this: How can brands establish and maintain a successful order management process? The following five factors can help companies avoid common issues that can derail their order-to-cash operations.

1. Visibility

For best results, brands need a bird’s-eye view of the entire supply chain. With clear visibility, a company can more easily identify and anticipate potential roadblocks and establish efficient processes to bypass them.

This transparency enables them to perform quality checks and easily view order details, like who placed the order, what products they ordered and where they’re going. It’s also easier to access and compare information on storage and other factors that could impact deliverability and the customer experience.

2. Scalable systems

Although it’s tempting to consider only current needs, a company should always consider its future needs too. For example, maybe a young company can handle order fulfillment manually now, but can it keep up once its product gains popularity?

An effective OMS will grow with the business and easily adjust to sales fluctuations. As the business expands and its customers’ expectations change, the OMS should be able to accommodate those needs. With the right OMS, a brand can avoid unnecessary growing pains and streamline its processes from the get-go.

3. Intelligent fulfillment

Today’s consumers expect more, so it’s not enough to just fulfill orders. Fine-tuning the order management process based on a brand’s needs and performance goals will empower the company to deliver a stellar customer experience. And that’s what creates loyal customers instead of sending them to a competitor.

With intelligent order fulfillment and management, companies handle all of their orders with the utmost care and in the most effective way possible. In turn, this also optimizes their inventory management, reduces their overhead costs and increases their order fulfillment efficiency.

4. Reliable inventory

Real-time inventory information makes it easier to see valuable data immediately instead of waiting to review it until it’s published. That way, a company knows right away what’s in stock, running low or out of stock. Brands can also save money because they won’t have to expedite product shipments or constantly overstock just to avoid inventory crises.

As consumer demand increases, accurate information and proactive inventory management become more important. A brand’s order management process has to be quick and precise every time, and a reliable inventory management system makes that possible.

5. Customer engagement

Of course, throughout the order management process, customers should have access to their information and receive regular updates on their order status. Whatever OMS a company uses should give the customer-facing team the ability to view order information and inventory data to assist consumers with any issues.

For example, a team may need to place orders for customers, assist with returns or make changes to existing delivery details. Or customers may need to change their shipping details and complete self-service returns on their own.

An OMS that offers these features will improve a brand’s ability to manage the life cycle of an order and deliver a positive customer experience that leads to repeat business.

Improve your order management process with a proven solution

Effective order management is the foundation for any brand’s success. If you’re looking for ways to improve your process, Cart.com can help. We offer data-driven OMS and inventory management system (IMS) services built for ecommerce, and for your brand.

Our OMS makes it easy to automate your order management so you can focus on doing what you do best: growing your brand. With A-to-Z order tracking, real-time monitoring, returns processing and an intuitive user interface, you can rely on us to streamline your order management process.

Have more questions about our OMS and IMS services? Contact us online to speak with a member of our team today or book a demo.

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