In business, it doesn’t matter if you are making pasta, filling prescriptions, or executing a stock trade - an organized, well-defined process is a key element of any successful order management system.
Order processing is the established workflow that takes place between the receipt of an order and its delivery. In the context of eCommerce, it certifies that customer orders are both accurately prepared and shipped to the correct address.
Optimizing that workflow is a crucial, continual goal for any online merchant. Decreasing errors, saving time, and improving productivity will lower business costs, boost employee morale, and increase customer satisfaction.
At SkuNexus, we design management software systems to help brands address critical issues, and order processing is often a challenge standing front and center. Here, we would like to give an overview of order processing and discuss some methods merchants can employ to achieve the best possible results.
The Order Processing Workflow
Order processing comprises just a handful of steps, however multiple decisions and actions take place within each one. Because of this, a seemingly simple chain of events can become extremely complicated, and eliminating manual processes as much as possible is vital to maintaining control.
Step One: Order Receipt & Routing
Order processing software as part of a broader OMS (Order Management System) is an essential tool for automating the workflow and that begins when an order is received.
Well-designed software will communicate with an IMS (Inventory Management System) and integrate with all sales channels. This free data flow sends real-time inventory information out so sales channels reflect actual inventory levels (eliminating stock-outs/backorders), and pulls sales orders in. As orders come in, the system will allocate available inventory and automatically determine where they should be routed for fulfillment.
For larger businesses with multiple fulfillment channels (warehouses, 3PLs, dropshipping, in-store), distributed order management (DOM) uses a rule-based system to enable advanced order routing for more complex fulfillment scenarios.
Any information may be used in order routing: proximity to customer, VIP customer, type of product, shipping method, et al. These can all be factored into rules to provide extreme control while maintaining near-total automation.
Step Two: PickingRegardless of where an order is routed, the fundamental order fulfillment processes are the same, and picking comes first. Accuracy and efficiency are critical during this step, and a warehouse management system (WMS) generally directs the activity.
The WMS provides floor employees with highly specific information for individual piece picking (item description, location, optimal route), and may also organize various picking strategies (batch picking, zone picking, wave picking). Regardless of the method, barcode scanning is the standard used to ensure accurate picks and help track inventory as it moves through the warehouse.
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The entire fulfillment process involves multiple checks and balances to guarantee customers receive the correct items, and the sorting of picked products is a part of this. It is especially necessary for items picked in zone/batch strategies as they need to be organized into their individual orders before they are packed and shipped.
The use of carts and totes (all with unique ID’s) during this stage is especially helpful in maintaining organization and control. Under this method, no matter where an item is placed for movement through the fulfillment process, its location is scanned and entered into the order management system. This powerful tool gives merchants the ability to track the status of any given order, at any time.
Step Four: PackingThe easiest component of order processing to understand is also one which can be rife with costly errors. Manual decision-making during packing can lead to using the wrong-sized parcels, overuse of insulating materials, or underuse of shipping packaging resulting in damaged items.
The WMS can alleviate these issues by automating the process. It will provide packers with appropriate parcels and insulation amounts, special instructions if needed, and issue shipping labels. All a packer need do is follow the WMS-generated pack list, affix the shipping label, and forward the order to shipping.
Step Five: Shipping
A picked, packed order is ready to be shipped and delivered to the customer. The delivery method (1-day, 2-day, ground, etc.) is usually selected by the customer during checkout and is a crucial part of the order itself. Going further, if a flat-rate shipping option is chosen, it allows room for a WMS to cost-optimize the carrier/service and still get the parcel there on time.
Once picked up by a carrier, the critical need is for clear, updated tracking information as customers will often check the status multiple times prior to actual delivery.
Additional Tips for Optimizing Order Processing
We touched on some of the most important elements of order processing (automated routing, barcode scanning, directed picking and packing), however merchants have other weapons in their arsenals when it comes to optimizing operations and reducing the time it takes to fulfill an order.
Prioritize Inventory Control
A disorganized, scattershot inventory is a recipe for disaster in any business, and the amplification of sales and fulfillment channels within eCommerce makes inventory control that much more important. Sales channels depend on accurate inventory numbers and correct order routing breaks down if items are not where your system shows them to be.
A well-considered warehouse layout, organized warehouse operations before orders come in (receiving and putaway of goods), and regular cycle counts all contribute to better control over inventory which can only benefit your entire enterprise.
Validate Order Processing Metrics
Metrics provide valuable information, however they do not show how and why the numbers came to be. Issues in your order processing must be identified before they can be fixed, and determining where the blind spots are can yield insights re: potential future problems before they occur.
Maintain a Safety Network of Dropshipping Partners
Few things disappoint a customer more than being informed an item is out-of-stock. Keeping a dropshipping network helps eliminate this contingency and can also give you the option to offer certain items your customers occasionally want but which don’t make financial sense to hold in inventory.
Mastering order processing for eCommerce requires technological know-how, logistical savvy, and serious data analysis. It is complex stuff, absolutely. At SkuNexus, however, simplifying the complex for clients is our raison d'être.
To get a closer look at how SkuNexus can help your eCommerce business achieve its goals, please schedule a demo today.
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