Many small and medium-sized enterprises (SMEs) struggle with outdated or inadequate order processing systems. This can lead to a lot of problems, including delayed shipments, inventory discrepancies, miscommunication between departments, and dissatisfied customers. Without a proper order processing system, manufacturers have to struggle with increased operational costs, reduced productivity, and the inability to meet market demands effectively.
Addressing these challenges is important for SMEs to remain competitive in the manufacturing industry. An effectively managed order processing management system improves customer satisfaction and boosts operational efficiency.
In this blog post, we will learn all about the order processing system, along with key steps that a manufacturer must follow. Also, we will understand types of order processing systems, actionable tips, and best practices.
What Is Order Processing Management?
A systematic approach to receiving and fulfilling an order is known as order processing management. It consists of a series of steps starting from the moment an order arrives till it’s successfully delivered to the buyer's end. The tool allows you to manage receiving, tracking, and fulfilling your customers’ orders.
The order management process starts when your customer places an order for products or services and ends when they receive it. If you get more than a couple of orders in a day, handling them manually can cause errors and become difficult. To manage your staff, streamline operations, minimize human errors, and boost your deliveries, you need smart software solutions. The best purchase order software is capable of improving your business’s fulfillment rates and enhancing your customer satisfaction.
Steps In Order Processing Management Workflow
The order processing management workflow includes a series of well-defined steps. It helps you make sure that your orders are processed effectively from the time they are received until they are delivered to your customers. Here are the steps that you can follow for effective order processing management:
1. Order Placement: The process begins with a customer placing an order for a part or product either from your app, website, or a phone call. This order usually details the products or parts required, quantity, and delivery expectations.
2. Order Reviewing: After you’ve received an order, you must review it for accuracy, completeness, and compliance with pricing and terms and conditions. This step allows you to check if the order aligns with your inventory levels and capabilities before proceeding with the order.
3. Order Approval And Entry: Once you have reviewed the particular order, you have to check your customer’s credibility to fulfil the payments. Once you have reviewed and approved a particular order, you have to enter the order details into your company’s order management system.
4. Order Fulfillment: Whether you manufacture, assemble, or retrieve the product from inventory, you must consider production schedules. You should also check your inventory levels and availability of resources to make sure your customers get timely delivery.
5. Shipping: After manufacturing or retrieving the order, you have to package them, label them, and prepare them for shipping to the customer’s location. Shipping methods, carriers, and delivery timelines mostly depend on your customer preferences, sipping considerations, and costs.
6. Invoicing And Payments: In the invoice, you need to mention the product cost, payment terms, and applicable taxes. After that, you have to make sure the payments received from your customers are processed. You also have to record those payments to make sure your financial transactions stay accurate.
7. Status Updates And Order Tracking: Throughout the order processing lifecycle, you must update your customer with order tracking information. This will allow them to monitor the progress of their orders and gain insight into any delays or changes regarding those orders.
8. Customer Services And Support: Once your order is delivered and the sale is complete, your customer service team needs to handle inquiries. Afterwards, they have to provide support to your customers if they raise any concerns related to orders. This improves your customer loyalty and satisfaction by answering their queries.
What Is The Order Management Process?
The order management process is a team effort in which everyone involved in the supply chain has information about what’s going on with the orders. With the order management process, the whole supply chain network, including retailers, distributors, service providers, and producers, gets information about the order initiation. You can also share information about delivery dates, product availability, and general order status.
An efficient order management process helps you boost order execution, timely deliveries, accurate billing, and customer relationships in the long run.
Types Of Order Processing Systems
There are two different types of order processing systems that depend on how an order is documented and how different tasks are managed in an order cycle. Have a look at these two order processing systems:
1. Traditional Order Processing Systems
If there is a single person or a team who manually carries out all the processes involved in order processing. It includes writing order slips, packaging, and dropping off the orders to a courier company. This is called a traditional order processing system, where everything in the order process is done manually.
2. Modern Order Processing Systems
In a modern order processing system, the usage of technology is primary in all processes. A modern system includes the use of automated, cloud-based, ERP, or specialized systems to maintain data related to orders, inventory, tasks, and customers. When you use these modern purchase order systems, it helps you reduce the risk of human errors and improves your business operations.
Tips For Enhancing Your Order Processing Management
Improving your order processing management system has many benefits. Here are some tips you can follow for doing this:
- Use an automation system that allows automated entry of orders from multiple sources (e.g., website or app) into your order processing systems.
- Integrate CRM (Customer Relationship Management) software. It will help you synchronize customer data, order history, and communication logs.
- Integrating ERP into your order processing systems helps you boost operations in multiple departments. For example, finance, inventory management, and production planning.
- Automate invoicing and billing by using a predefined format to save time and manage bulk orders.
- Use RFID techniques or barcode scanners to track inventory in real-time.
- Optimize the shipping process for creating labels and calculating the cost-effective delivery process.
- Work on providing quality service to decrease returns orders and unsatisfied clients.
- Invest in order processing tools that offer effective communication features with your team and customers.
How To Effectively Manage Order Processing?
Using modern technologies, applying better inventory management approaches, and prioritizing customer satisfaction can help you with effective order processing management. Here are a few steps that can help you smoothly manage your order processing at a manufacturing business:
- Map out your order processing workflow to find errors and opportunities for improvements.
- Invest in modern order processing software to automate your order entry, invoicing, inventory management, and other important tasks.
- Maintain accurate inventory records to prevent any stockouts or overstockage situations.
- Implement a Just-In-Time (JIT) inventory management approach to minimize carrying costs and improve your cash flow.
Integration With The Industry’s Best Business Tools
Integrating the industry’s best business tools to manage your order processing can highly improve your performance. Here are some of the best business tools that can help streamline order processing management:
- Oracle Netsuite ERP: NetSuite provides you with features to handle and fulfill orders. It can automate your workflow and order processing tasks and provide real-time insights into your inventory levels.
- TranZact: TranZact is an end-to-end procurement and supply chain management software that allows you to create and manage purchase orders. It also helps your business with features like order tracking, invoice creation, insights into supplier performance, and much more.
- Tally Prime: It allows you to simplify order processing and lets you create, track, and manage orders easily. It comes with a simple interface and customization options like order numbers and details, buyer details, and many more.
- SAP (Systems Applications and Products): It is a ERP software that helps you manage orders across different channels. With SAP, you can manage order entry, tracking, pricing, invoicing, and order fulfillment.
How To Choose The Right Order Process Management System?
Choosing the right order management system is important to smoothly run your business operations and improve customer experience. Here are the factors to look at.
- Analyze the size of your business and the frequency of your daily or monthly orders received.
- Identify the required integrated features such as inventory management, delivery management, invoice creation, and more.
- The order process management system you are investing in must be adaptable to your current systems.
- Minimum or no modification should be involved in integrating it with your backend structures or existing ERP.
- Make sure it smoothly integrates with your order processing system and adapts the features needed for your growing business.
- Consider order processing software that is responsive and can be remotely accessed.
- Consider the minimum implementation time so that your business should run without downtime.
Streamline Your Order Processing Operations With TranZact
With a better understanding of the order processing system and its importance, you can make informed decisions to improve your business operations. TranZact is specially made and user-friendly software specially designed for Indian SMEs.
Loaded with all the required features for manufacturing business, TranZact can help you maintain customer details, all in one place. Choose TranZact now to manage your inventory, sales, and purchases to improve your order processing management.
FAQs
1. What is order process management?
Order process management is a way of keeping track of all your order details. It includes order entry, order picking, packaging, shipment, invoicing, and more.
2. What are the 5 stages of the order process?
The five stages of an order process are;
- Order Placement
- Order Assessment
- Order Fulfillment
- Order Delivery
- Customer Service.
3. What are the steps in order processing?
The steps in order processing include order receipt, order reviewing, order approval, order entry, order processing and fulfillment, shipping, invoicing, and customer service.
4. What is an example of order processing?
Suppose a manufacturing company gets an order for electric motors. Once they receive the order, they check their inventory for availability. If it is in stock, they send it for packaging and delivery to the customer along with an invoice to make the payment. This is a simple example of order processing.
5. What is an example of order fulfillment?
An example of order fulfillment is when an electrical appliance manufacturing company receives an order for 200 custom-designed light switches. Then, the company manufactures those switches with the required features, does quality checks, and ships them to the customer.
6. What is the difference between order and fulfillment?
Order is an initial stage of sales where customer requests to buy a product or service. On the other hand, fulfillment is the end step of the sales cycle, where sellers make the final delivery of the order, accepting the request.
7. Is ERP an order management system?
ERP systems are not exactly an order management system as it is designed to manage a wide range of industries with enough features such as human resource management, supply chain management, inventory management, and much more. However, it offers integrated features for order management.
