Order Management Guide

Chapter 17. Everything to Know about Order Management

In our penultimate chapter, we list all the most important things we explained about order management in our guide. Think of this chapter as a chance to remember everything you have learned.

Are you a little lost? Head back to the order management guide home page.

Top 20 Things to Know About Order Management

1. What Defines Order Management?

Order management generally refers to the process that follows an incoming customer order. It also includes ordering from suppliers and handling any issues with orders.

It may seem very basic, but it is important to identify what is and isn’t your responsibility. Order management is closely tied to inventory management and other processes crucial for running a successful e-commerce business.

Read more: Chapter 1. What Is Order Management?

2. Why Is Order Management Important?

Order management directly impacts customer satisfaction. You can get orders to customers faster with fewer mistakes when orders are properly managed.

Order management directly impacts inventory management and other processes. Get it right, and everything will work smoothly. Get it wrong, and you’ll have a lot of headaches.

Read more: Chapter 1. What Is Order Management?

3. The Most Common Order Management Terms and Concepts

Understanding the most commonly used order management terms and concepts will make working in order management much easier. You will also be better able to communicate with your team and suppliers.

That said, there are a lot of terms, acronyms, and concepts to remember. Some terms are known by other names, can depend on the business industry you work in, and some are more technical than others.

Read more: Chapter 2. Order Management Terms and Basic Concepts 

4. Important Things to Know about Order Management

Order management is a vast topic, but a handful of things are good to remember from the beginning.

Firstly, never immediately assume that an order is complete because it’s been shipped. You should also use an OMS (that’ll be repeated soon!) to keep track of orders (order management doesn’t work without tracking!).

Some other great advice includes always handling rush orders first, merging orders when shipping to the same customer, and verifying high-value orders.

Read more: Chapter 2. Order Management Terms and Basic Concepts 

5. You Should Be Familiar with POs

PO stands for ‘Purchase Order,’ and they are documents used to order products from suppliers.

Working with them is a major part of order management and a standard way of ordering products from suppliers. You must include all relevant information in the order.

Read more: Chapter 3. What Are Purchase Orders? What You Need to Know

6. The Challenges of POs

Learning to work with POs can be tricky at first, as young businesses might not know what quantities to order and what information suppliers will require.

In addition, if POs are not sent or approved in a timely manner, delays can occur, which can affect current orders and on-hand inventory and lead to overselling.

Read more: Chapter 3. What Are Purchase Orders? What You Need to Know

7. How to Create a PO

Stepping into an order management position, you must be the mastermind of PO creation. It should be second nature to you. From your OMS, you should be able to:

  • Navigate to new purchase orders.
  • Input the relevant information about the order—the who and the where.
  • Select the required products to order.
  • Add the relevant billing information.

The OMS should take the information you have added and create a PO, which can be sent directly to the supplier.

Read more: Chapter 4. Creating Purchase Orders

8. When and How to Use Dropshipping?

Dropshipping is a method of fulfilling orders where the seller doesn’t hold inventory. Instead, orders are shipped from the vendor to the customer. The seller is essentially a middleman in the transaction.

Dropshipping is good to use when you don’t have the inventory at the time an order is made, but do note that profit margins are slimmer for dropshippers.

Some businesses specialize only in dropshipping orders, but even larger companies utilize dropshipping as a method sometimes when it is more convenient to fulfill orders.

Read more: Chapter 5. What Is Dropshipping?

9. When and How to Use Cross-Docking?

Slightly similar to dropshipping, cross-docking is another effective way to get orders to customers where the seller doesn’t hold inventory.

Cross-docking is where a customer orders an item that the seller might not have, so the seller orders it from the vendor to send it to their warehouse and then ship it directly to the customer.

Like dropshipping, cross-docking can be a backup method for fulfilling orders.

Read more: Chapter 6. What Is Cross-docking?

10. You Must Use an OMS (Order Management Software)

If you’re familiar with our other chapters, then you know we love to repeat that you should use an OMS—it’s the industry standard.

In short, an OMS automates many order management tasks, reducing errors, speeding up processes, and making everything easier to track. It improves efficiency and helps make you competitive.

Read more: Chapter 7. Why Should You Use Software for Order Management?

11. The Difference between an OMS, ERP, and Other Solutions

Aside from OMS solutions, you should be familiar with other e-commerce solutions and what they offer.

Many solutions offer a blend of different e-commerce features, and it’s not always easy to define them. They may solve one particular problem or several.

Some solutions you may come across when researching for an OMS include:

  • ERP (Enterprise Resource Planning)—Mostly used by manufacturers, they can include business management features you don’t need and can be very pricey.
  • CRM (Customer Relationship Management)—Used solely to store customer information and will not help you track orders or communicate with customers.
  • PIM (Product Information Management)—Used to manage product information. It can be used to manage your product catalog but not your orders.

Read more: Chapter 7. Why Should You Use Software for Order Management?

12. The Functions an OMS Must Have

An ideal OMS should centralize your order management tasks, prevent human error, enable time-saving automation (so no more pen and paper), provide valuable reports, and avoid overselling.

However, it is worth noting that the best OMS for your business should be based on your business’s requirements.

Read more: Chapter 8. How Do You Manage Orders with Order Management Software?

13. How to Ship Orders

Shipping is a crucial part of order management. If you can’t get orders to customers, what you’re doing isn’t really order management at all.

You need to know about the different types of orders, shipping methods, and shipping costs, and they should ideally be automated.

However, orders must be checked for the correct items and documentation, packaged appropriately, and the correct shipping labels applied before shipping.

Read more: Chapter 9. Order Management and Shipping 

14. Managing Orders across Multiple Marketplaces Gets Confusing

Many companies sell in multiple marketplaces to succeed as e-commerce businesses. This means multiple orders come in from different platforms, each with its own way of working.

One of the biggest challenges in order management is keeping on top of everything. The best way to overcome that challenge is to use an OMS that consolidates all orders in one place.

Read more: Chapter 10. Multichannel Order Management

15. Set Goals and Measure Performance with KPIs and Metrics

KPIs (Key Performance Indicators) measure performance based on a specific goal, while metrics are quantitative measurements that track the performance of business processes.

Setting goals and agreeable metrics helps businesses maintain efficiency in order management and identify areas for improvement.

Read more: Chapter 11. Goals, KPIs, and Metrics in Order Management

16. Automation Is Vital in Order Management

Much of an OMS’s work is automating processes, and it is highly recommended that you automate as much work as possible because simplifying processes has a big impact on business efficiency.

Automation frees up time for other tasks, reduces errors, keeps your business competitive, lowers costs, and helps you grow your business.

Read more: Chapter 12. Why Should You Automate Order Management?

17. The Biggest Order Management Challenges (And How to Solve Them)

Some of the biggest order management challenges include:

  • Tracking inventory and orders—especially when selling on multiple sales channels.
  • Handling returns, RMAs, and cancellations.
  • Fulfilling orders accurately.
  • A lack of automation.
  • Order volume and complexity make it difficult to scale.

Read more: Chapter 13. What Are Common Order Management Challenges?

18. Associated Order Management Costs

Some of the most well-known order management costs include labor, packaging and sorting, errors and returns, shipping costs, and payment processing fees.

You will also need to pay for order management software, though costs can vary significantly depending on the features and pricing model.

Using a 3PL or fulfillment service like FBA (Fulfilled By Amazon) is an additional order management cost.

Read more: Chapter 14. What Are the Costs Associated with Order Management?

19. The Most Crucial Order Management Best Practices

There are many best practices that you can follow to improve order management and prevent issues. Some of the most useful include:

  • If a task can be automated, automate it.
  • Inventory and order management impact one another—so improving inventory management processes will also improve order management.
  • Avoid big problems going unnoticed by regularly analyzing your order and inventory data.
  • Never deviate from marketplace rules—it’s not worth getting banned.

Read more: Chapter 15. Order Management Best Practices

20. If You’re Struggling with Order Management, There’s a Lot You Can Try

If your business’s order management processes are not efficient enough, you can consider hiring a consultant to help you find areas to improve.

Businesses struggling with order management can also look into using FBA or 3PL services that can handle much of the order management process.

It may also be that your staff is not skilled enough to handle their current tasks, or you need to hire seasonal workers to handle an increased workload.

OMS and WMS solutions can monitor your business operations and help you find ways to improve.

Read more: Chapter 16. How to Improve the Order Management Process? 

Where to Go from Here?

Now that you’ve mastered order management and (almost) completed this guide, there’s a lot you can do to continue learning and improving.

It’s highly recommended that you learn more about statistics and how to set up KPIs and goals. This will help you work in a more data-oriented way, and you can use these to figure out where to improve.

You can also develop an understanding of technical automation, which will make it easier to automate business processes and improve efficiency.

It is also worth noting that you will learn a lot more about order management while on the job. You won’t retain everything you’ve learned from reading these guides, and it will take practical experience for them to stick.

If you’re looking for more guides to further your knowledge of working in the e-commerce industry, check out our inventory management and moving warehouses guides.

You can also check out Sellercloud’s LMS for courses on how to best use Sellercloud and its features and products.

What Are Order Management Skills? Top 5

There are many beneficial skills to have when working in order management, but these five will make the work significantly easier.

  1. Communication skills. You must communicate effectively with colleagues, suppliers, and customers. Clear communication prevents costly and time-consuming mistakes.
  2. OMS proficiency. You must know your way around an OMS. It may take time to get used to, but the more you learn to do on an OMS, the better.
  3. Great attention to detail. Small details matter in order management, and overlooking them can become a big problem.
  4. Time management. Order management is a highly time-sensitive profession. You must always look for ways to speed things up and know when to prioritize urgent tasks.
  5. Problem-solving skills. Orders can sometimes run into complicated situations. A little bit of creativity can keep customers satisfied and find easy solutions to tough problems.

In our final chapter, we’ll run through the most frequently asked questions about order management to cover anything we have missed.

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Chapter 16. How to Improve the Order Management Process?
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Chapter 18. Order Management Frequently Asked Questions