What Does Order Management Software Do?
All distributors need order management software. To succeed, distributors have to manage high order volumes with orders coming in from several channels – keeping track of these is very challenging without good order management software. Orders can come in from eCommerce online stores, placed by your customers through a self-service portal, placed over the phone with your sales reps or placed by your trading partners through EDI (Electronic Data Integration). Order management software displays all the orders received from all the different channels in one place and ensures that orders are not overlooked. As part of order management, order processing allows orders to be managed through the various stages from receiving orders, then released to fulfillment through picking, packing and shipping then delivery to the customer and finally invoicing the customer. Good order management software keeps track of all this for you so you can see all orders and see in what stage they are.
Order Processing Stages
Order processing works in conjunction with or as part of order management. Order processing refers to the system that allows orders to be quickly and efficiently processed through the various stages of order entry, fulfillment, and delivery.
Order processing starts with receiving orders. If orders are entered on eCommerce platforms, either online stores or a self-service portal, an API linkage will create these orders in your order management system. Similarly, orders submitted by trading partners through EDI will be delivered by the EDI VAN and automatically created as orders in the system. Orders that are called in by customers to your sales reps, will need to be manually created in the system. To optimize this process the order processing should allow order lines to be specified directly or imported from the customer’s recent purchases or prior transactions. It should also allow order lines to be imported from a CSV spreadsheet if needed. Similarly, the order processing should offer complex pricing by customer using contracts, promotional pricing, matrix pricing, quantity breaks and special pricing that is applied automatically.
Once orders are received, order processing releases the orders to fulfillment. Fulfilling orders consists of 3 processes: picking, packing and shipping, that all happen within the warehouse and are sometimes referred to as warehouse management software (WMS) rather than order processing. Strictly speaking, WMS is focused on optimizing warehouse layout, locations, picking logistics and put-away operations, while order processing moves the order through the different stages. Whatever the terminology used, order management tracks what orders are in what stage throughout.
Fulfilling Orders – Picking
The first order processing stage in fulfillment is picking. Picking refers to physically taking the goods specified on an order from the warehouse shelves or bins and moving them to a staging location. Orders may be picked individually or more typically in batches to cut down on trips across the warehouse. Order management software allows you to see which orders are ready to pick, which are being picked and which are already picked.
Fulfilling Orders – Packing
Once the goods on an order are picked and moved to a staging location in the warehouse, they move to the next order process stage: packing. Depending on how the order is to be shipped, the goods will be packed and packing lists created to identify which items are in which box. A single order may be packed in multiple boxes and this will be tracked by the packing lists. Order management allows you to see which orders are ready to pack, which are being packed and which are already packed.
Fulfilling Orders – Shipping
After the goods are packed, the next order processing stage is referred to as shipping. In this stage, the packed orders are assigned to a shipping carrier (e.g., UPS, FedEx, USPS) or LTL carrier, freight costs obtained, and tracking numbers issued. Once this information is obtained, this is communicated to the customers so they can track progress of their orders. In this order processing stage, all the necessary shipment documentation is created. The shipments are then released from the warehouse and either dropped off with the carriers or more commonly are picked up. Order management software tracks which orders are awaiting pick up, and which are already shipped.
Often, distributors will have their own fleets of trucks that deliver to customers. In this case after the orders are released from the warehouse, they are loaded onto delivery trucks and drivers are dispatched usually along prescribed delivery routes to get these orders to customers. This delivery process typically involves sending orders to be delivered, to the drivers’ mobile devices on which they record proof-of-delivery information. Order management software tracks which orders are being delivered by which driver and which are already delivered, together with recording all the delivery information on the order.
Sometimes during the fulfillment process, the warehouse personnel will find they do not have the goods physically available to fill the order. In this case the order management software will create a back order for the goods that cannot be shipped. Order management software tracks all back orders so that unfilled orders are not lost or forgotten. In addition, order management software allows back orders to be actively evaluated at any time to assess whether the back orders can be filled from newly received Purchase Orders, or from returns.
The last order processing stage is to invoice the customer for orders that have been shipped. This essentially just bills the customer for the orders that have been shipped or delivered and specifies the terms the customer has for payment. For eCommerce orders placed on online stores, payment is usually collected in advance when the order is placed. The order management software tracks which invoices are awaiting payment and which have been paid.
The Role of Order Management Software
Managing all of the orders and tracking them through each order processing stage is mission-critical for distributors. Without order management software, orders will get lost, will get filled incorrectly or delivered incorrectly or delivered but not invoiced. The result of any of these types of failures will likely lead to loss of customers and ultimately to the distributor going out of business. Arguably, getting the right order management software is one of the most important decision a distributor can make.
Getting the Right Order Management Software?
You need to ensure that your order management software can successfully manage and process orders through your complete flow. It should be able to accommodate all your business process workflows. The order management software must be able to link to and integrate with all the channels you sell on, so that all orders can be pulled into one system. For orders that are entered manually, the order management software must have all the tools and shortcuts to minimize the amount of work needed to enter orders, many of which might be repeat orders. It must allow orders to be tracked and processed quickly and efficiently. Orders should be able to be processed individually or in batches. It should allow multiple warehouses and managing the same goods stored at multiple locations within a warehouse. It should allow multi-carrier shipping to optimize freight costs. It should have a full back order processing capability. It must work in tandem with a powerful inventory management and purchasing management system to ensure that you have the goods on hand to fill your orders. Managing a few hundred orders is easy, but your order management software must be able work even at a much larger scale. It needs to offer comprehensive reporting, dashboards, and business intelligence (BI) tools to optimize your order processing.
If your order management software is not doing what you need it to, contact us. We would like to show you what Accolent ERP Cloud-based software for distributors can do for you. Accolent ERP fully integrates order management software with order processing, WMS, multi-carrier shipping, inventory tracking and management, purchasing management, reporting and BI, and accounting, accounts receivable and accounts payable.