Order management process
06 Minute Read
Efficient order management is the backbone of a successful business. The order management process involves a series of interconnected steps that ensure every order moves seamlessly from placement to fulfillment.
From capturing accurate details to handling returns with care, each stage plays a role in delivering exceptional customer experiences and maintaining operational efficiency. Order management requires overseeing seven crucial steps in the customer’s journey from ordering to receiving.
At the start of any order management process, you have order capture, in which you acknowledge a customer’s order. You may receive the order via mobile app, website, chat, or any other omnichannel medium. During order capture, the system collects data such as:
The order capture process starts when a customer creates an order and terminates once you ship the order to the customer.
Think of it this way: an order can’t get captured if the product isn’t ready to ship. Order capturing is more like the “initialization” component of order management that prompts a business to check and activate the other components.
Usage-based business models can be a powerful lever for growth, but some companies hesitate to implement them because of the perceived risks and investments involved. Building the capabilities and deploying in the appropriate situation is critical. Consider the following variables:
Some organizations skip this step, but order validation is essential to the order management process. During validation, the system checks the order for errors related to:
Taking a moment to validate the order prevents mistakes and improves customer satisfaction. Best of all, most order management systems can do this automatically, improving your chances of catching critical errors early in the ordering process.
Companies generally consider inventory management a component of their end-to-end order management processes. It involves checking and monitoring stock levels against the ability to fulfill customer orders.
Beyond that, inventory management lets you streamline the level of raw materials and finished products to avoid surpluses and shortages in your order management pipeline.
Inventory management can also apply to SaaS or subscription-based digital models. For example, suppose you can only support a certain number of users on a particular subscription tier. In that case, your order management system will check to ensure you can fulfill the customer’s order.
When the product is ready to leave the company’s warehouse and head to the customer, fulfillment is the next step in the order management process.
Generally, fulfillment happens in the back office, distribution center, or warehouse, with people sorting, packing, and labeling each order to proceed to fulfillment. Next, the company ships out the product and sends the customer an automated message to inform them it’s in transit.
During this step, the company coordinates transporting goods to the customer. Shipping logistics is no small feat, so many companies outsource to a third-party logistics provider (3PL) to fill in the gaps.
This step also requires selecting the best shipping options and generating a tracking number for the customer.
Without an OMS, these processes have to happen manually. Fortunately, an automated order management system can pass goods to shippers automatically. They also send order tracking information to the customer so they can monitor the package in transit.
Delivery isn’t the end of the order management process. Customers expect constant updates throughout the process, so they know when to expect their product.
In many cases, how you handle communication during the post-order period can influence long-term customer retention, so prioritizing communication at every stage of the order management process is crucial.
Regular communication builds trust. Keep customers apprised of their order and boost trust by:
These automated reminders are a good start, but some customers may need additional help. A trained customer service team is always valuable to respond to customer needs. Fast, high-quality responses are key to improving retention.
Successfully delivering a product to the customer may feel like the finish line, but it isn’t. At least 16% of all e-commerce orders are returned, costing the retail industry $817 billion. An order management system streamlines the return and exchange process, reducing costs and inefficiencies at scale.
During this process, the OMS will validate shoppers’ return requests, process refunds, or initiate replacements. The OMS can often do these tasks independently, freeing team members to focus on more high-level responsibilities. Not only does a smooth returns process encourage customer loyalty, but it also reduces time-consuming manual work.
The order management process tracks goods and services from the moment a customer places an order. The right order management system makes a difference during this process but still requires proper oversight to generate tangible results for your business. That’s where order management best practices come in.
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