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What is Order Management – A deep dive into the subject

You might have heard about order management system e-commerce. There are many components involved in order management or OM. Information technology, marketing, and logistics are involved in order management and it is all about the proper management of the supply chain. Essentially, order management is a business process that is at the core of a business’s success. It enables old customers to remain satisfied while meeting the demands of new customers. Now more than ever it has become extremely vital to ensure marketing tactics, supply chain, and customer satisfaction is on the same level as digitization is becoming a widespread reality.  

The supply chain process that is involved in order management might sound like a simple process but it is a complicated procedure that not many fully understand. A business must continually meet the expectations of its customers while ensuring the entire process takes place smoothly. The logistics are the one area that can become extremely complex and this is where the order management system comes into play. Constantly understanding the ways to efficiently meet customer demand and give priority to customer satisfaction is key. However, all this requires an in-depth understanding of some key concepts.

This guide will enable you to understand what is order management, its examples, the difference and similarities when compared to inventory management, and an introduction to the order management system.

What is order management?

Order management is a process that involves receiving an order, tracking the order, and fulfilling that order. The next step in the order management process is shipping the order to whoever placed that order; customer or business entity or others. In order for this process to go smoothly, there are many factors involved. Time and resources are involved. Some of the examples of resources are software and systems. It is important to work towards optimal and efficient order management processes to ensure that the customer and business are able to achieve the level of satisfaction they seek.

Order management can be defined as tracking orders and being able to fulfill the order by managing everyone involved in the process. These include partnerships and people. One of the important components of the order management process is managing the customer’s data. This involves information about the customer’s past buying habits, whether they made payments on time, and their other buying habits of value such as whether they buy a few products or in bulk. The order management process involves inventory tracking to ensure you have enough inventory to fulfill orders and you are able to manage vendor data as well.The steps involved in order management might sound like they are not much but the entire process is a complicated process. Let us say that when the order was being processed, something suddenly goes wrong. The customer will need to know about what went wrong during the order processing. Moreover, they expect you to define the problem in detail along with a solution so that the problem can be solved. For example, if during the order processing a product on sale became out of stock because another customer ordered before them, then the customer will require you to provide information about when the product will be back in stock.

Examples of order management

The process of customer order management has a lot of steps involved. Here are the common steps and examples.

Step 1: Entry

The first step of the order management process is order entry which also involves the validation process where what the customer has selected is validated.

Step 2: Processing

This order processing step is about data integration whereby the data is sent to the appropriate platform.

Step 3: Verification

Before the placement of an order, the customer needs to be qualified.

Step 4: Billing and invoicing

This step involves generating an invoice before which the order and customers are set up for billing.

Step 5: Payment

This is when the payment is processed after the customer makes the payment.

Step 6: Inventory

If sufficient stock is available then there is no need to order more but if not then more stock needs to be ordered.

Step 7: Manufacturing

When there is a custom order then it will require this step whereby the custom-order details are shared with the manufacturer.

Step 8: Customer Service

This step is an important one as it involves letting the customer know about what is taking place the whole time.

Step 9: Returns/Refunds

This process can be a part of the previous step whereby information about returns, refunds, and cancellations are provided.

Step 10: Service Provisioning

This step takes place if the order is for a service. It involves setting up the service.

Step 11: Preparation

In this step, the order is prepared as it is picked up from inventory and packed.

Step 12: Shipping

This is when the order is sent to the customer and tracking details are provided to the customer.

Order management vs. inventory management software

Many people often confuse inventory and order management software. Order management software is used for the entire process of managing an order. That is, from the order entry step to tracking delivery, the software helps do it all. Today, order management software tools are able to process multi-channel orders from e-commerce. Inventory management software, on the other hand, is focused on inventory. That is procurement tracking, sales order fulfillment management, and future purchase planning are all parts that are taken care of with the help of the software. Proper inventory management software can help businesses sell more.

Inventory management and order management overlap when it comes to products and here is how. Businesses need to know about their inventory levels and where they have this inventory. This will enable businesses to be able to manage all their orders properly. When businesses have accurate data about sales then they can manage inventory better than if they don’t. This is why these two processes go hand-in-hand. You will notice that solutions for order management will have ways to track inventory and the same applies when it comes to inventory management solutions. That is, these will give you features that enable you to manage orders.

What is an order management system?

Order management system or OMS refers to software applications that work together with bigger systems such as ERP and CRM by being integrated into them. An OMS enables processes such as customer communication and order fulfillment among others. The OMS tools enable processes such as tracking operations related to warehouse, order entry, business intelligence, and accounting to take place smoothly while ensuring correct integration is in place. Oftentimes, people refer to the order management system as order management system software too.Today, the way in which the order management system works has changed due to new dynamics. This is because economies all over the globe are moving towards e-commerce and an increasing number of customers are placing orders with the help of their mobile phones. This has brought a change in the functions of the order management system. Advanced technology is being used as a result of the new demand such as automated order processing in an online order management system. This has made it easier to solve problems faced by customers without complications and it has expedited the problem resolution too compared to before.

Advantages of an order management system

There are numerous advantages of order management systems. Here are some of the top reasons.

  • Order management system helps increase customer satisfaction. For example, when the customer is ordering information, they need to do it once. They see everything happening in front of their eyes and they receive an order confirmation immediately.
  • Customers know what is taking place at all points of order management. This makes it simple for them to know what is happening and if anything needs to be changed then it can be done quickly. This enables customers to feel like they are in charge.
  • Order management software has an automation component that saves time and minimizes errors. This is because the steps required in creating an order until delivery are reduced. Data security is enhanced as a result of this and easy changes can be made when required.
  • The ability to order from anywhere is excellent as it helps increase customer satisfaction levels. An OMS enables customers to order from anywhere they wish and this convenience helps customers buy more. This is beneficial for the business as well.
  • OMS makes it easy to analyze data that is stored. For example, an OMS can help you learn how you can improve and in which areas. An order management system can essentially be used to improve customer loyalty which will benefit your business in many ways.
  • OMS helps anyone to easily get access to the information they need. For example, sales reps can get the information they require without wasting time and energy. Customers can easily find up-to-date and accurate information about a particular product in real-time.
  • Ordering mistakes can prove to be costly for your business. The order management system allows you to avoid mistakes since everything is done in a system and the use of paperwork is not required anymore. Moreover, OMS helps to simplify things and to streamline the entire process.

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