What is Order Management & How Can It Be More Efficient?
What is Order Management?
What is Order Management? In a nutshell, order management is all about keeping track of orders and managing the people, processes and partnerships required to fill them. It involves keeping track of the order itself and managing data around the customer: what’s their past order history? Do they pay on time? Are they a high-volume customer? It also involves tracking whether you have the inventory to fill orders, managing data around the vendors who are going to help you keep the inventory on hand to do that, getting the order to the customer, and so on. The best way to think of order management is as an “ecosystem” that encompasses everything involved with taking and filling orders. The ecosystem includes many related functions that all have to be working together in order for the order management process to go smoothly. In the wholesale business, an important metric used to measure the health of this ecosystem is referred to as “Order to Cash” (O2C). Order management is the first component of O2C, and “Bill to Cash” (B2C) is the second. The process can include:
- The customer who places the order, receives it and pays for it
- The sales and/or customer service reps who discuss the order with the customer and enter the order into the system to be filled
- The warehouse that carries the inventory to fill the order
- Vendors that can deliver parts or stock when inventory runs low
- Shipping vendor that delivers the order to the customer
- Back office functions such as accounts receivable, accounts payable and general ledger that generate invoices and accept payments
Obviously, that is a lot of balls to keep in the air. And not surprisingly, as their businesses expand, many wholesalers find order management to be very cumbersome, with a lot of opportunities for things to go wrong.
History of Order Management
Back in the Stone Age (40 years ago), most companies used paper processes to do this. Even today, many companies are still using these outdated paper processes to take and track their orders, with a lot of risk for lost orders, angry customers and lost revenue because of the ease with which paper can be lost or entered into your accounting and fulfillment systems incorrectly. The difference between 40 years ago and today is that with the advent of e-commerce, most customers are used to being able to place an order online, and have it be fulfilled exactly as ordered. The ability to push a button and get what we want is our expectation now as consumers: one click and done. These expectations carry over to the wholesale B2B space because your customer’s business is run by people, and those people expect this process to be easy, automated, and accurate.
Order Management Systems: There’s an App for That
That’s where an order management system can help. Order management systems can tie all these disparate people, processes and partnerships together, giving wholesale businesses a single source of information to manage and analyze all the data and processes around order management; streamlining the taking, filling and delivering of orders to your customers. This helps maintain happy customer relationships, and by eliminating lost and incorrect orders, helps to drive more revenue and profitability from the ordering process. Companies are increasingly connecting dedicated sales order management applications like Handshake to their back office systems in order to make the order writing and submission process more streamlined. These kinds of applications allow sales reps to write orders on mobile devices in the field, as well as allowing the company to take orders directly from the customer via a B2B eCommerce portal. These sales order management systems can then automatically sync this information with back office systems. This is one way paper processes and redundant work can be eliminated.
Order Management: Bringing it All Together
It can be very difficult to get a handle on all the processes and players involved with order management, which is why it is important to use an integrated approach to process improvements. Integrating your back-end software with your sales order management systems will provide visibility into the entire order lifecycle, from initial customer contact through to final delivery and payment. This data will allow you to identify issues and address them. You will also need to take a close look at how well your company is utilizing industry best practices. Eliminating manual or redundant processes helps eliminate excess costs and increases the accuracy of your order management process. The most important thing to keep in mind, however, is that it's important to look at all the processes that tie into how you take, fill and bill for orders, and determine how they can be improved so that you can identify opportunities to delight your customers and increase your own bottom line. Got a question about how to improve your order management processes? Let us know in the comments. To learn more about order management software, download the free eBook, "Selling More with Order Management Software."