In Chapter 13 of our order management guide, we’ll go over the top order management challenges you will likely encounter and how to resolve them.
Confused? Maybe this is too advanced or too basic for you? Head back to the order management homepage.
Top 10 Challenges of Order Management
As you’d expect based on our previous chapters, an adequate OMS (Order Management System) will handle, if not reduce, the difficulty of almost all these challenges (it’s what it is designed to do, after all!).
If anything, this chapter serves as an important reminder to properly demo an OMS before settling to ensure it can handle all the most common challenges you will encounter.
If you can defeat these order management challenges, there’s little you can’t accomplish in e-commerce!
1. Keeping Track of Orders Coming from Multiple Channels
The problem: Keeping track of orders from multiple sources is the most common problem businesses face when expanding onto multiple sales channels.
Your orders are coming from several different channels, and you can’t see them all simultaneously in one place (you’ve definitely heard that before!).
You can get absorbed in one channel and miss orders from other channels. Furthermore, different channels have different workflows, and orders can be sent late.
Tracking orders across channels is often the primary reason companies seek out an OMS in the first place. You were likely familiar with this challenge well before taking up order management.
The solution: The solution should be no surprise to you by now—OMS! Using an OMS is the only way to make this easier, and it should be the first thing you think of when selling on multiple channels.
This challenge is dramatically reduced if you have an adequate OMS to centralize all your orders across marketplaces so that each order, regardless of the marketplace, is treated equally and dealt with promptly.
2. Choosing the Best Shipping Rates Based on Price, Delivery Times, Insurance, Etc.
The problem: There are many shipping options from different shipping providers, and pricing varies widely depending on the delivery speed and time, distance, and package weight and size.
You must ensure you are getting the best deal for your shipping—not just shipping rates, but the right timing and method to keep customers happy.
Confronted by a barrage of different options, knowing which is the best can be hard. It is also time-consuming to select the best shipping option every time for every order.
The solution: An OMS should help you simplify the shipping selection process so that you can quickly select the most appropriate shipping option that is both cost-effective and convenient for the customer.
More advanced OMS solutions can allow you to implement rules to automate shipping selection.
You can also negotiate rates with shipping companies (depending on the size of your business), and it is always wise to have multiple shipping methods available to you
3. On-Time Fulfillment Based on Expected Delivery
The problem: Orders don’t always arrive on time, though they should ideally. A big part of this problem is that orders are not always properly categorized by urgency.
You have most likely not categorized orders by rush orders and regular orders. Treating all orders the same way can mean rush orders become late when they need to be prioritized.
The problem could also be that you are working on the wrong tasks and failing to deal with rush orders or working on rush orders for eBay only and neglecting orders for Walmart, for example.
Other times, orders can end up late because a slower delivery service was selected instead of a faster one.
The solution: Find an OMS that centralizes orders and categorizes them the way you need to ensure orders are dealt with appropriately, regardless of the marketplace they arrived from.
4. Tracking Updates
The problem: Where are your orders? Not just customer orders but the purchase orders coming to you from vendors? The information must be accurate when you need to know where your orders are.
Must be able to answer customer questions about delivery to ensure there are no problems. If a delivery is late, you should know about it in advance. Additionally, you should know when your orders from vendors will arrive to be prepared.
Some businesses operate without any way of tracking orders, and others may use a solution that doesn’t provide accurate information—neither is ideal.
The solution: You need a single place to view all your orders across marketplaces—your OMS! Ideally, it should offer real-time updates.
5. Inventory Updates
The problem: Selling across multiple channels can cause your inventory to fall out of synchronization. This can get very complicated, especially when you sell many products, so you need to always be on top of your inventory.
Without consistent and reliable inventory updates, you can sell something you don’t have, which is called ‘overselling.’
You might sell the last item on Amazon, but someone just paid for it on Walmart. Your Walmart inventory wasn’t updated to show the product sold out.
You then either need to rush to get the order to the customer or refund them and apologize and that can even result in an order cancellation which can hurt your seller rating. This can be critical to the success of your business.
Either way, it is a lot of work, and the scenario shouldn’t have happened in the first place.
The solution: Your OMS solution must synchronize your inventory across all your channels without delay.
Ideally, your OMS solution should have inventory management built in to serve as a central point and automatically update other channels when inventory decreases or increases.
When a sale happens on one marketplace, it should impact the available inventory on all channels, as should incoming inventory arriving from vendors.
6. Not Using Sufficient Automation
The problem: In the previous chapter, we explained why automation is crucial to order management. Without automation, you’re open to mistakes caused by manual data entry.
There are many benefits associated with automation, and you might not realize how big a challenge insufficient automation is until you start automating tasks.
The solution: Adopt an OMS with sufficient automation features. Look specifically at the areas you need to automate most desperately.
It’s also a good idea to explore customization options and keep up with updates and new features that can help you automate more order management processes.
7. Accounting and Accurate P&L Reporting Is Borderline Impossible
The problem: getting a complete picture of your business’s profitability is hard (or near impossible) because data comes in from different channels, measured and collected differently.
Advertising fees and different product prices on different marketplaces further complicate your calculations.
However, measuring profitability is an absolute must for any business. Without this information, you could be operating at a loss and have no idea.
The solution: You need to use an OMS to pull all your P&L reporting and accounting to one centralized place.
Keeping track of the specific costs and prices for different marketplaces in the same place can also help your OMS create far more accurate P&L reports.
Lastly, many OMS solutions integrate with accounting software, such as QuickBooks. Find an OMS with such integrations.
8. RMA, Refund, and Cancellation Handing Can Be a Nightmare
The problem: RMAs, refunds, and cancellations have their own processes, and each can go in multiple directions depending on the scenario.
Handling them across multiple channels can be mind-bendingly tricky, especially when dealing with everyday orders.
If they are not dealt with in a timely manner, you will anger customers, generate negative reviews, and harm your business.
The solution: Again, an OMS solution is an enormous help with this challenge because it centralizes these tasks and automates a lot of the process.
Seeing them all in one place is also very helpful—just like incoming orders, RMA, refund, and cancellation requests will come from all different directions.
Furthermore, on a more practical level, you must map out the process for each scenario.
9. Order Fulfillment
The problem: Order fulfillment is stuffed full with multiple challenges. Some of these include:
- Packing and sorting.
- Correctly identifying items on a picklist.
- Unoptimized picking processes—e.g., picking an item and then returning to pick the same item for another order instead of just picking both simultaneously.
- Rush orders.
- And more.
Both complicated and simple orders can be simplified to reduce the time your company spends dealing with them.
The solution: The best way to overcome order fulfillment challenges is to use a workflow to organize your orders according to different criteria.
For example, you could start with simple rush orders and work on complicated rush orders later, or vice versa. You can also split orders into single- and multi-item orders to make them easier to handle.
Unsurprisingly, adopting an OMS with automation can reduce many order fulfillment errors. Furthermore, you can use scanners to reduce incorrect picking.
You can also explore 3PL (Third Party Logistics) options to outsource order fulfillment.
10. Scalability Issues
The problem: Your business is having trouble growing. This is often because order volume and complexity have exceeded your capabilities.
You may feel overwhelmed daily, and you could even get more complaints and returns as more mistakes are made.
The solution: Sufficiently invest in the tools your business needs to handle growing orders. Not just an OMS solution but tools that help you manage your warehouse (such as a WMS) and inventory, for example.
Bonus: 11. Overselling and Missing Sales Because of the Reasons Above
The problem: If your business struggles with the ten challenges explained above, your business is probably overselling and missing out on sales.
This lack of efficiency can have a terrible impact on your business. It can be life or death as it affects profitability. You might not realize how much your company is making or losing, which affects its survival.
The solution: Act on the above solutions with an all-around solid OMS built to cover these challenges and prevent overselling and missing sales.
Key Points From Chapter 13
You are now well aware of the most common order management challenges. Remember these key points.
- There are many order management challenges, some more common than others. Thankfully, you will not be the first person to deal with them, and solutions are available.
- An adequate OMS simplifies many order management challenges. However, you’ll want to ensure it includes the features needed to cover as many challenges as possible.
- Some of the most well-known order management challenges include but are not limited to tracking orders and inventory, returns, order fulfillment, poor automation, and scalability.
- These challenges can result in overselling and missing sales, directly impacting your business’s ability to survive.
The next chapter will examine the costs associated with order management.