What is Customer Order Management & How to Improve it?

keyKey Takeaways:
  • Effective customer order management is crucial for building customer loyalty and driving profitable business growth. Timely order fulfillment helps you become the preferred choice of customers who need your products or services again.
  • Challenges in customer order management include incorrect order data, inventory management, operational efficiency, and customer support.
  • Order management systems (OMS) can improve customer order management by automation, integrating route planner, enhancing collaboration, measuring performance, and utilizing the key insights from reports.

In today’s competitive business landscape, timely order fulfillment is a critical factor for establishing customer loyalty and driving profitable growth. Regardless of whether you operate in the B2C, B2B, or D2C space, ensuring efficient delivery processes is vital for managing orders effectively. 

Without a clear system in place, the risk of order delays, customer complaints, and potential loss of business becomes all too real. There’s a growing demand for customer order management software due to increase in online shopping and rapid digitalization of businesses.

In fact, a recent report by Markets and Markets forecasts that the global market share of multi-channel order management will reach a staggering $4.2 billion by 2027, with a compounded annual growth rate (CAGR) of 9%. While customer order management holds significance across industries, certain sectors reap particularly substantial benefits. 

In this article, we delve into the complexities of customer order management, explore its key challenges, and present actionable steps to improve it.

What is Customer Order Management? 

Customer order management (COM) refers to the end-to-end process of handling and fulfilling customer’s orders within a business. It involves various steps, from order placement to delivery and post-sales support. 

The primary objective is to ensure accurate order processing, timely delivery, and seamless customer experiences. Effective COM is the foundation of operational efficiency and customer satisfaction, driving long-term success.

There are a lot of things that could go wrong during the placement of order and final delivery. Hence, it is crucial to understand the complete order management cycle and its steps from the placement of the order to the delivery.

What are the Steps Involved in Customer Order Management Cycle?

Steps Involved in Customer Order Management Cycle

The entire order management process begins with purchase and ends with after-sales support. Let’s explore the steps involved in customer order management cycle:

1. Order placement

This marks the first step of the order management cycle wherein a customer places an order. Customers could place their order from multiple channels like websites, apps, emails, calls or even in-person at a physical store.

During this step, customers provide details like their desired products, their quantity, address, delivery preference and any other specific instructions. This information is then used further for the next steps.

2. Order processing

Once an order is placed, it goes for processing. This step involves verifying information like order details, payment details, product availability, pricing and discount, and other additional details for accuracy.

Additionally, necessary documentation and product preparation is done for any special requirements. Nowadays, order placement and order processing happen almost simultaneously, thanks to automated order management solutions.

3. Order fulfillment

Order fulfillment is an important stage where the physical products are picked, packed, and shipped from the warehouse to the customers. It requires efficient coordination between various teams and efficient processes.

Warehouse staff or fulfillment centers collect the ordered items from the inventory, carefully pack them to ensure safe transit, and generate shipping labels for the designated carrier. 

4. Order tracking

Having real-time tracking of shipments is essential for internal business communication as well as conveying order status to the customers. 

Tracking systems enable businesses to share tracking numbers, shipment updates, delivery status, and estimated delivery dates with customers. In case of order delays or any last-minute changes, notifications will help keep them updated.

5. After sales support 

In an ideal scenario, we expect the order to reach our customers perfectly, but that will not be the case every time. There might occur any mishap in the process, and the order might not get delivered in perfect condition. 

If there’s something wrong with the order, the sales history and feedback from past orders can help sales reps to comprehend and resolve the issue proficiently. Sales reps ought to be outfitted with the essential information data to deal with customer orders effectively and offer ideal assistance.

The customers might reach you to address the issue and ask to process return, exchange, or refund. Customers may request a return or exchange of products due to various reasons, such as receiving damaged or incorrect products or changing their mind about the purchase.

Therefore, it is essential to have a well-defined returns and exchange process in place to ensure a smooth handling of such requests. This includes providing clear instructions to customers, issuing return labels if necessary, product inspection upon return, and processing refunds or exchanges promptly.

What are the Challenges in Customer Order Management?

Fulfilling orders is not as easy as it sounds. There are many challenges that businesses face throughout the order management cycle. The most common challenges of them are: 

    • Incorrect order details

    Ensuring that shipping details are correctly captured and free from errors or omissions is a critical challenge in customer order management.

    Syncing errors between integrated channels may lead to missing or incomplete data. This increases the chances of mistakes in order entry which may lead to incorrect product selection, quantities, pricing, or delivery to the wrong location.

    These errors can result in customer dissatisfaction, delays in order processing, and additional costs for order corrections or returns. 

    • Inventory management

    Balancing stock levels to meet customer demands while preventing stockouts or overstocking is another challenge in customer order management. 

    Inventory management

    Inadequate inventory management can lead to stockouts, where customers’ desired products are unavailable, causing frustration and potentially driving them to competitors. 

    On the other hand, overstocking ties up capital, increases holding costs, and products may get outdated. 

    Overall, an effective supply chain management (SCM) is crucial for optimizing stock levels and guaranteeing a consistent flow of products to manage customer orders.

    • Operational efficiency

    Streamlining processes to minimize lead times, delays, and reduce mistakes is a key challenge in the entire supply chain. Inefficient order processing workflows, manual tasks, lack of automation, and disconnected systems can impede operational efficiency.

    Slow order processing, bottlenecks in the supply chain, and delays in shipping can result in customer dissatisfaction and lost business opportunities. 

    • Customer support

    One thing that can make or break everything is customer support. Customers expect prompt responses to inquiries and quick resolution of issues throughout the process. 

    Failing to meet these customer expectations can result in frustration, negative reviews, and damaged brand reputation.

So, having a well-trained customer support team is vital for businesses to address customer inquiries and resolve issues effectively. 

How to Improve Customer Order Management?

The customer order management process can be improved by implementing a robust customer order management system with other integrated solutions like route planning and optimization. An effective order management system can help you in the following ways:

    • Process automation

    Implementing order management technology can significantly streamline business operations through automation. These systems automate manual tasks to reduce human error and improve overall efficiency. 

    Process automation

    They centralize all the scattered information by automating order entry, inventory management, and order tracking. This reduces inefficient manual processes, ensures accurate data, and expedites fulfillment of order.

    Process automation enables businesses to handle a larger volume of orders while maintaining high accuracy and quick turnaround times.

    • Route planning and optimization

    One important aspect of efficient order fulfillment that businesses often struggle with is timely delivery. 

    If you have hundreds of deliveries in a day in different parts of the city, planning delivery routes manually may drive you mad because of its complexity. Plus it can also be time-consuming and may lead to increased delivery costs because of inefficient routes.

    This is where route planning and optimization solutions like Upper help businesses to solve their routing problems and provide efficient routes so that every order gets delivered on time. 

    Upper’s route optimization algorithms ensure that delivery routes are optimized to provide shortest as well as fastest routes to save travel time, cut costs, reduce fuel consumption, and fulfill orders faster. They take into account factors such as traffic conditions, delivery time windows, and priority orders to generate the most efficient routes for delivery personnel. 

    By integrating route optimization systems into the order management software, businesses can improve the overall logistics and delivery process, leading to faster and more cost-effective order fulfillment. This not only saves time but also enhances the customer experience.

    • Integration and collaboration

    Enhancing cross-functional collaboration between departments involved in order management strategy is vital to remove silos and improve communication. 

    Smooth integration between sales, customer service, inventory, and fulfillment systems enables real-time data sharing and faster business decisions.

    By fostering collaboration and information sharing, businesses can minimize errors, resolve issues more efficiently, and provide customers with accurate and up-to-date order information. 

    Integration also gives you real time visibility into inventory availability, order status, and customer interactions, facilitating a seamless end-to-end order management experience. This, in turn, leads to higher customer satisfaction and an expanding customer base.

    • Performance measurement

    Tracking key performance indicators (KPIs) related to order management is crucial for identifying areas of improvement. 

    Monitoring metrics such as order accuracy, on-time delivery, order cycle time, and customer satisfaction provides valuable insights into the effectiveness of existing processes. These metrics offer a complete view of your order management operations.

    By regularly measuring and analyzing these KPIs, businesses can identify bottlenecks, pinpoint areas for improvement, and implement targeted strategies to streamline order management performance.

    Continuous monitoring of performance indicators allows businesses to make data-driven decisions and take proactive measures to improve customer experiences.

    • Insights and Reporting

    To ensure continuous improvement, businesses should regularly analyze their order management system. 

    OMS provides valuable data insights through reporting and analytics. It allows businesses to track key metrics like order volumes, cost per order, shipping cost, order picking accuracy, and customer satisfaction.

    These insights help identify trends, make data-driven decisions, and continuously improve order management processes, ultimately leading to higher customer satisfaction.

    By conducting periodic reviews, identifying bottlenecks, and implementing process enhancements, businesses can streamline workflows, reduce mistakes, and increase customer satisfaction.

    This involves continuously evaluating and reporting the effectiveness of technology solutions, identifying areas of optimization, and implementing process changes based on customer feedback and emerging industry trends. 

Ted Baker’s Use Case for Implementing OMS

Ted Baker, a British high-street clothing retail company, wanted to improve their customers’ shopping experience by creating a seamless omnichannel solution that aligned with customer expectations.

But, they faced challenges related to visibility of available inventory, order fulfillment, stockouts, logistical costs, and end-of-season markdowns, which frequently caused them potential loss of business.

To overcome these challenges, they implemented an Order Management System, OneStock OMS. The OMS provided real-time inventory visibility and optimized fulfillment of orders.

The OMS provided real-time inventory visibility and optimized order fulfillment. 

In its first year of implementing OneStock, Ted Baker fulfilled over 100k additional orders, resulting in an 8% increase in UK eCommerce turnover. Ship from Store capability allowed orders to be fulfilled from store stock, preventing revenue loss. 

During the Black Friday sale, more than 6k additional orders were fulfilled from store stock. Click and Collect orders multiplied six-fold within five months. The OMS improved sales, staff motivation, and customer satisfaction, paving the way for international expansion.

How to Choose the Best OMS for Your Business?

    • Identify your specific business needs: It is not necessary that the popular solution in the market will work for you as well. Consider your business’s nitty-gritty and functions and how it gels with other factors like order volume, product types, order channels, and integration needs. Identify the essential features and functionalities your business needs from an OMS.
    • Research OMS providers: Look for reputable OMS providers that cater to your industry niche and business size. Read reviews and shortlist the solutions that align with your requirements. Contact them and ask for their customer references or case studies. Reach out to their existing customers and gather feedback about their experiences. This will give you a real picture about its reliability, performance, and customer support.
    • Evaluate features and ease of use: What’s the use of a fancy system if you can’t operate it? Review the features and capabilities of each shortlisted OMS. Look for core functionalities like order processing, inventory management, order tracking, and reporting. Consider the system’s user-friendliness and whether it offers an intuitive interface that your team can easily navigate.
    • Integration and scalability: Make sure if the OMS integrates smoothly with your existing systems, such as e-commerce platforms or CRMs. Compatibility with your technology stack is crucial for continuous data flow. Additionally, your OMS should also have the capabilities to scale as your growing ecommerce business expands.
    • Consider pricing and budget: Compare the pricing models of the OMS providers. Also, compare costs, including upfront fees, licensing fees, ongoing subscription costs, and any additional costs for integrations or customization. Choose the option that best fits your budget while ensuring it fulfills orders efficiently and keeps customers happy.
    • Take demos or trials: Request demos or trials from the shortlisted OMS providers. Take trials of all the plans and how it performs for your specific business functions. Pay attention to how well it suits your requirements and whether it makes your job easy or more complicated.
    • Make an informed decision: Consider all the factors mentioned above to make a well-informed decision. Choose the OMS that aligns with your business needs, offers the necessary features, fits your budget, and has a positive market reputation.

FAQs

A customer order management system is software that helps businesses efficiently handle and fulfill customer orders. It helps in automating business processes such as order placement, inventory management, order processing, and order tracking, ensuring accurate and timely order fulfillment.

The standard customer order management process includes order placement, processing, fulfillment, tracking, and after-sales support.

The role of order management is to manage and streamline the order fulfillment process within a business. It involves coordinating processes such as order processing, tracking inventory levels, order tracking, and customer support to ensure efficient and accurate order fulfillment.

While both CRM (Customer Relationship Management) and order management are related to customer interactions, they serve different purposes. CRM focuses on managing and nurturing customer relationships, while order management specifically deals with processing and fulfilling customer orders.

Conclusion

Customer order management plays a vital role in streamlining the entire process from placement of order to delivery and post-sales support.

However, while creating an efficient fulfillment system they face challenges in maintaining order accuracy, managing inventory, improving operational efficiency, and providing excellent customer support. 

To overcome these issues, a strong order management system can really benefit businesses by providing enhanced visibility into each function of their order fulfillment process.

When selecting an OMS provider, consider conducting a thorough research into its key features, ease of use, integration and scalability, and pricing.

By adopting effective order management strategies and OMS solutions, businesses can optimize their operations and deliver seamless experiences to their customers.

Author Bio
Rakesh Patel
Rakesh Patel

Rakesh Patel, author of two defining books on reverse geotagging, is a trusted authority in routing and logistics. His innovative solutions at Upper Route Planner have simplified logistics for businesses across the board. A thought leader in the field, Rakesh's insights are shaping the future of modern-day logistics, making him your go-to expert for all things route optimization. Read more.