In this bonus chapter of our order management guide, we set out to answer as many frequently asked questions as possible that we couldn’t fit in the rest of the guide.
Are you feeling lost? Then head back to our order management guide home page.
Most Common Order Management FAQs
Without further ado, here are the most common questions about order management!
What Is the Difference between Order Management and Order Processing?
Order management and order fulfillment are closely related terms, though there is a slight difference between them.
- Order management—Covers all tasks related to managing orders, from ordering from vendors to sending orders to customers and any tasks in between.
- Order fulfillment—Specifically refers to packing and shipping orders to customers. Order fulfillment is a part of order management.
What Are the Three Steps of Order Processing?
Order processing is not entirely related to order management, though parts overlap. Depending on who you ask, there are more than three steps to order processing; arguably, there are five steps.
- A customer places an order.
- Inventory is picked in the warehouse.
- Picked inventory is sorted according to orders.
- Orders are packed and prepared for shipping.
- Orders are shipped out to customers.
Sorting, packing, and shipping are order processing steps that overlap with order management and fulfillment.
How Do You Measure Order Fulfillment?
Order fulfillment is tricky to measure because it involves a multitude of processes. You will be much better off measuring specific processes in order management, and to do this, you need to use KPIs and metrics.
To measure order fulfillment effectively, you must regularly check the performance of your KPIs and metrics in your OMS (Order Management System) and set realistic expectations and goals.
How Many Order Types Are There?
There are seven main order types that you’ll deal with daily. Here they are:
- (Standard) sales order—When a customer purchases from your website. This is the most common type of order.
- RMA order—Stands for ‘Return Merchandise Authorization,’ this order is created when a customer wants to return a product to exchange, replace, or refund it. It can be called a ‘return order.’
- Exchange order—Created when a customer wants to exchange a product they have purchased for another.
- Backorder—Orders created when a product is out of stock. They are shipped as soon as the product becomes available.
- Rush order—An urgent order that needs to be ‘rushed’ to the customer. They must be prioritized before other orders.
- Dropship order—An order that needs to be dropshipped to a customer.
- Credit memo—Issued to customers when a business owes them a refund, they have overpaid, or they are owed credit for returned items.
What Are the Two Types of Order Management?
Quite simply, the two types of order management are manual and automated.
Manual involves doing everything by hand, including pen-and-paper processes, but also anything where you need to manually update something, like a spreadsheet, or where you need to update information, like a marketplace listing or inventory.
In automated order management, details update automatically. Using an OMS or an ERP is considered automated.
Automated order management is preferred because it reduces errors and saves time.
What Is the End-to-End Order Management Process?
‘End-to-end order management’ is a term used to describe monitoring the entire order management process from when an order is placed to when it is fulfilled.
An end-to-end order management process is highly beneficial as it covers every step along the way.
What Are the Core Requirements for Order Management in E-commerce?
Many are required for order management to function properly. However, arguably, the core requirements for order management include the following:
- Ability to capture orders—You must have somewhere to collect orders, including their details, such as product and customer information.
- To verify and process orders—You must be able to confirm the order receipt with the customer, ensure there are no errors, and start preparing the order.
- Inventory management—Your OMS should be connected to your inventory management system so ordered items can be reserved and overselling prevented.
- Order fulfillment—You must have a system for preparing and shipping customer orders.
- Order tracking—You must be able to track orders from their conception all the way through to when they reach customers.
What Are the Four Rules for Efficient Order Management?
To maximize the efficiency of your order management operations, focus on these four areas.
- Automation—Automate as many areas of order management as possible to speed processes and remove human error (it really is one of the best things you can do).
- Validation—Utilize measures to ensure that information is validated. For example, order, shipping, and product information should always be double-checked before sending an order.
- Shipping rates—Always strive to choose the best shipping options based on fulfillment time and price.
- Package types—Always use the right package size and materials. Packaging waste can accumulate and become a significant expense.
What Does an Order Management Analyst Do?
An order management analyst ensures that orders are being processed efficiently. They analyze processes in order processing, inventory management, customer service, and more.
Having an order management analyst on your team can be highly beneficial, as they can help you identify areas for improvement.
What Is the Primary Responsibility of an Order Management Team?
An order management team has a lot of responsibilities. You could say they have more responsibilities than any other team working in an e-commerce company.
Their biggest responsibility is to get orders shipped out to customers as efficiently as possible. However, their many other responsibilities include:
- Tracking inventory.
- Tracking returns.
- Packing orders.
- Choosing the best shipping rate.
- Validating addresses.
- Managing the costs of packaging materials.
What Is Distributed Order Management?
Distributed order management (DOM) is a method of order management that uses automation rules to determine how customer orders should be fulfilled.
The goal of DOM is to ensure that orders are fulfilled efficiently while simultaneously balancing business costs. For example, choosing the best shipping rates or location to ship orders from.
A DOM solution is, in a sense, the evolution of OMS. However, many OMS solutions work like a DOM and have DOM features.
Which Is the Best Order Management Software for Business?
The best order management software for your business should:
- It should support an omnichannel business and consolidate all your business’s orders into one interface.
- Enable you to build rules for certain actions. For example, put high-value orders on hold to be confirmed before fulfillment.
- Offer ‘DOM’ features to balance customer expectations, business goals, and profitability.
- It should also provide a WMS (Warehouse Management System) and free shipping software.
- Include multi-company options so you can manage orders across multiple companies and brands.
You can find all that and more with Sellercloud.
You’ve now officially finished our order management guide! If you’d like to keep learning, check out our inventory management and moving warehouses guides.