What is order management and how does it work in business

To run any successful lifecycles, a well-managed system is always required. Same like that, to manage the end-to-end order process lifecycle, an e-commerce business required a complete system that can take care of daily operations itself. Successful merchants keep their tasks to a minimum and left the routine tasks for these systems to manage.

 

Managing orders are daily operational work that consumes the maximum time of the whole business team. However, a proper order management system can be the only solution to resolve this pain point.

What is Order Management?

It all begins with a tap on the checkout button for further proceedings. One click marks the beginning of the order journey which compels the Order Management System (OMS) to emanate. Order Management is a completely tracked process of order placement, fulfillment, and delivery. It is the system that ensures the flawless movement of orders through this cycle.

With the growth in the e-commerce industry, OMS has become a must-have part for e-commerce and retail businesses. Otherwise choking of bombarding orders within system bottleneck will turn process flow into great disasters.

OMS not only allows flawless order processing operations but also let merchants see the updated statuses to get full control over and understocking.

It helps e-commerce businesses in faster deliveries to end customers as well. Approximately 60% of the customers like to purchase things from brands whose orders never get late. To refrain from all these backflows a merchant must have full knowledge of what Order Management is and what stages it exactly covers.

Merchants who preplan things and automate daily processes earn higher customer satisfaction than those who don’t.

Following are the main stages through which orders went:

  1. Order placement
  2. Verification
  3. Fulfillment
  4. Delivering

Order Placement

Orders can be placed through any channel. This can be through a brand website, a multi-vendor website like daraz.pk, amazon or through brick and mortar store etc. Once the order is placed it further goes for the verification process.

Order Verification

The order that is placed in a brick and mortar store is billed directly by the store account keepers who then update the inventory right away.

 

Those orders that land through online resources like a website or multi-vendor site land into a virtual bucket of that brand. These orders are verified one by one through the following procedures

          Manual verification: The customer gets a call from the support team for order placement. Support then informs admin whether the order should go for fulfillment or not. Admin has full rights to approve or disapprove based on certain conditions. These conditions may be any, like product unavailability or service unavailability, etc.

 

          Automated verification: Automated systems tend to send verification SMS to customers, right after the order is placed. If they do not receive any call from the customer shortly they send the order for fulfillment.

 

          IVR call: Not all e-commerce businesses are using this type of verification method. Bigger e-commerce brands that are taking care of thousands of orders a day are making use of this service to automate verification processes. IVR call is basically a robo-call, which takes confirmation of order from the customers right after they place it.

Order Fulfillment

Once the verification process is done, the order is passed over to the fulfillment team for further processing. Three different fulfillment ways are in operation at the current time. The type of fulfillment depends upon the business type and its size. These business types are mentioned later in this article. For now, let us have a look at three different ways of fulfillment.

  • Warehouse fulfillment: The businesses who prefer to fulfill the orders by themselves refer to the warehouse fulfillment method in which they have their warehouses to manage those.
  • Dropshipping Fulfillment: If you are lacking the facility of your warehouse then drop shipping can be the best option to choose for order fulfillment. A middleware business builds connection in this regard on the business’s behalf and provide an end-to-end order management facility
  • Third-party fulfillment: 3PL is another name for third-party fulfillment services that provides warehousing, fulfillment, and delivery service on your behalf. They handle all fulfillment processes on their own.

For all the above-mentioned fulfillment types, basic processes remain the same. Following are the stages through which order is fulfilled before delivery:

  • Order picking: On receiving order details after the verification process, (single or multiple) items are picked from specific areas of the warehouse. The process is simpler in smaller businesses but is fairly complicated in large warehouses with millions of products.

The exception is for businesses using OMS.

  • Order packing: after picking order item/s went for packing where the team weighs it as well. Labeling and usage of packaging lip also come under this stage.

o   Slip generation: This step is highly essential and holds great importance because complete order details are mentioned here. It may include the following:

  • Weight of the package
  • Dimensions of the package
  • Item details
  • SKU number
  • Quantity etc.

Shipping: Once an order is packed the order went for the next stage of fulfillment. The fulfillment team makes sure a few things before shipping the parcel at this stage.

o   Logistic company: Which logistic company will suit best to deliver the order based on geolocation to cut costs?

 

o   Shipping cost: minimum shipping cost is being ensured while choosing the logistic company. So that customers should not pay high amounts just for shipping. This cost is based mostly on weight and distance.

 

o   Shipping label: A shipping label is a special slip that contains basic information including:

  • Country name
  • Region
  • Courier Tracking Number
  • Quantity
  • Date
  • Weight
  • Address etc.

Logistic companies make use of this slip to deliver the order to its destination. Information may differ when it comes to international shipping. Commercial invoices and miscellaneous documents are required to avoid any inconvenience. The commercial invoice is composed of three different aspects along with basic shipping details. These may include:

  • Transactional information
  • Import-Export Information
  • Shipping information

To return or replace the order the companies keep a door for customers so that they feel free to purchase without being worried about returns. In the case of international shipping, RMA is a Return Merchandise Authorization that helps the seller to refund, replace or repair the order in case of return. Return labels are used to fulfill such purposes.

Order Delivery

After going through all the aforementioned processes the order is delivered to its destination via courier service. On delivering the order to the destination, the courier boy notifies the courier service which then updates all statuses and triggers an SMS to hit the customer’s mobile phone.

 

The aforementioned processes are for e-commerce businesses that are using manual or semi-automatic methods and a huge workforce for their orders management. However, a single OMS can handle these tasks in a much simpler and faster way.

Order Management System

B2B and B2C companies operating at a higher scale prefer Order Management System for some obvious reasons. Easy integration of OMS with ERP not only brings profitable results but reduces the workforce as well making the overall solution fairly cost-effective for a merchant.

  • Automation of processes
  • Cost-effectiveness
  • Order Accuracy
  • Flawless order processing flow
  • All-time access and Real-time information update
  • Growth focused
  • Inventory Management
  • Centralized view of all updates.

Types of Businesses with specific Order Management Processes

Small Business Order Management

Order processing in small businesses traditionally takes place as most businesses do from placement till delivery. However, if they get streamlined with Order Management System, they can bring better results with faster and smoother processes.

Supplier Order Management

Maximum control of order Management is in hands of suppliers in Supplier Order Management. If you are going on with this model then for sure you’ll be facing a bit of difficulty in handling order processes as order management processes are handled by the suppliers themselves.

Distributed Order Management

In this type of business orders land from multi-sales channels like brand websites, marketplaces and retail stores. All are needed to be catered with a smooth flow. An omnichannel can be the best solution to cater to such order management.

eCommerce Order Management

As clear from its name, e-commerce order management takes place through a website and integrated software. The system automates the processes and keeps on syncing inventory timely for a better user experience. This type of order management is less complicated than catering distributed order management.

Measuring Order Management Performance

Order Management performance can be measured through the following key metrics:

  1. Order lead time: Measuring time of order journey from placement till delivery
  2. Order accuracy: Checking whether the same product has been delivered as ordered by the customer or not.
  3. Rate of returns: Checking the return rate of the delivered orders. Lower is better

 

Optimizing the performance of all three can bring the best results for the business encouraging a sales boost.

Streamlining order management processes with Ginkgo Retail

Ginkgo is a fully customizable e-commerce business solution that can be molded according to the business need. Whether it is a multi-sales channel, single e-commerce website or any retail store.

Ginkgo becomes a central hub and connects the resources to let them communicate automatically and timely. Ginkgo sync all processes making it fairly friendly for a merchant to focus more on business strategies rather than being busy with routine operational tasks.

Merchants mostly face major challenges when it comes to order management, inventory management or multi-sales channels management. Ginkgo provides a solution to manage all at a time through a single user-friendly dashboard.

How Ginkgo’s OMS works

Step 1: Connecting Ginkgo with POS to fetch inventory. In case of unavailability of the POS, inventory can be uploaded directly to Ginkgo through CSV. 

 

Step 2: Clubbing inventory fetched from multiple stores

 

Step 3: Inventory is pushed in e-commerce stores

 

Step 4: When an order is placed it went in the relevant bucket based on local or international, paid or COD

 

Step 5: Order verification (via Traditional calling, SMS Notification, or IVR Calling)

 

Step 6: Order assigned to relevant stores based on pre/auto-defined locations.

 

Step 7: Order is fulfilled based on pre/auto-defined settings. At this stage, the order will be assigned to a pre/auto-specified logistic company. Consignment Number (CN) is generated and assigned to orders.

 

Step 8: Scan & ship features allow to scan Order Number, barcodes, and CN of the order to maintain order accuracy avoiding human error.

 

Step 9: Logistic Company automatically gets informed and picks the parcels on time to deliver them to the relevant location.

With pre-define or manual settings of OMS provided by Ginkgo, merchants can manage as many orders as they can.