What is Order Management?

Order management, sometimes referred to as sales order automation or sales order processing, enables today’s companies to meet customer demands for a rapid quote-to-order-to-delivery process while removing mountains of paper from legacy ordering processes, producing significant organizational efficiencies.

A digital order management system helps coordinate the aspects of a firm’s order fulfillment process as well as the administration. It includes order entry, tracking and processing orders, and organizing fulfillment from the initial order entry to shipment of the product. It also manages additional data from customers and sales teams.

A quality order management system enables a company to achieve a single view of demand, inventory and supply, which is essential as customers want quick delivery and companies strive for quick inventory turns so as to minimize the amount of capital tied up in inventory at any time.

In addition to providing this holistic end-to-end view of order process within the organization, an order management system will typically automate much of the workflow to streamline operations. Below is a more granular look at some of the benefits that an order management system can provide to an organization:

Improved Visibility

By integrating order management with a modern enterprise resource (ERP) system, different business departments, accounting and management can all communicate with each other in real time, enabling decision making based on real-time, accurate information, rather than on dated data.

Better Traceability

Unlike legacy, paper-based systems, in which orders can easily be misplaced or lost, today’s order management systems enable the customer or sales representative to submit orders electronically (some may opt for an automated phone process), with the order automatically acknowledged and supporting documentation readily available during the entire procure-to-pay cycle.

Improved Accessibility

All details for an order — from quotes to actual orders to work orders, inspection reports as well as any other documentation — are easily accessible in one repository, without the need to jump from one application to another online or to call a customer service agent or a sales rep.

Easy Integration of Different Formats

Orders can arrive in many different formats and channels, including electronic data interchange portals, eCommerce sites, phone, fax and email. Outside sales reps might enter sales directly into the system using yet another format, so it is essential that the order management system is versatile enough to accommodate many data formats.

More Efficient Quote to Order

A modern order management system enables automated conversion of sales quotes to sales orders with the click of a mouse, simplifying the order entry process.

Minimize Order Entry Time

One of the most time-consuming issues salespeople and customers face is dealing with the vast amount of paperwork necessary to close a sale and ensure optimal customer service. A modern order management system will verify customer order information, such as in the case of automated address verification, and will enter these details directly into an ERP system. This eliminates the need for continual manual rekeying of information, as well as the need for data entry into multiple systems.

Any time data is manually re-entered, there is a chance of human error. A modern order system eases data entry to speed processing and minimize mistakes. Data automatically flows from sales to accounting to warehouse management software, eliminating the onus of data entry.

Happier Staff

Repeated data entry is not only prone to human error and costly in terms of man hours, but it’s a dull, mundane task for employees as well. By using automated order entry, the company frees staff up to devote their time to more interesting, value-added work.

Can Automate Orders on an As-Needed Basis

The emergence of Industry 4.0, with various sensors integrating with order management and other systems to further enhance the sales and ordering process is still in its earliest stages. However it’s anticipated that data available from various Internet of Things (IoT) sensors will further enhance order management by notifying a supplier that a customer needs a product automatically. For example, a sensor could notify the order management system and the supplier that a motor or similar component is nearing failure, or end of expected use based on production, enabling the replacement to be shipped and ready to install before actual failure occurs.

Data Provides Better Insight

If Industry 4.0 is upon us sensors are increasingly being integrated into company techno-ecosystems. This is enabling order management system to incorporate valuable data streams that can provide valuable insights, such as:

  • The ebb and flow of sales can be tracked in real-time to understanding trending of best-selling products, so strategic decisions can be made on which products to retain or cut from the line.
  • Wastage can be easily tracked. If a certain product is showing high percentages of waste, management can step in to take the necessary steps to optimize the process.
  • The life of tools can be monitored so that replacements can be ordered before a failure occurs, to ensure minimal production down time.

Ease Change Management

Order changes aren’t uncommon, as sometimes the customer will realize soon after the initial order that more or less product is needed, or changes in capital availability will mean more or less product can be ordered. A modern order management system enables the customer to easily make changes online.

Improved Sense of Control for Customers

Customers want to have easy access to order information 24/7. A modern order management system enables customers and their authorized representatives to have immediate insight into the order status, shipping and other essential information without the need to call customer service or a sales rep, giving customers greater visibility and control.

Improved Customer Satisfaction Through Quality Control

Order management software has the added advantage of improving customer relations. Nothing can sour a relationship faster than a late delivery. If a salesperson sells a product based on outdated inventory data, this can result in cascading delays. By providing accurate, up-to-the-minute information, order management systems can ensure that what is promised to the customer can be delivered within the time quoted/specified. And if a product does not meet quality standards, it can be flagged on the system and it can be barred from being accidentally shipped out to the customer.

To maximize the benefits that organizations receive from order management, it’s important to make the necessary investment in training. As is a typical change management best practice, organization will need to spend some time evangelizing the benefits of the order management system to users to ensure adoption. Staffers may be hesitant to use the system rather than the legacy way of ordering so the benefits must be demonstrated and explained. The quicker customers and internal users begin to use all of the system’s capabilities, the sooner the organization will realize the benefit of its investment in a modern order management system.