Order processing and information system

WHAT IS ORDER PROCESSING?

Order processing is fulfilling a customer’s request for goods or services. In order
processing, suppliers accept the orders, then deliver the products to customers. The
suppliers receive and verify the order, select the products or services, and ensure
that they are delivered to the customer promptly and accurately.

This process can include steps such as verifying the availability of the products,
calculating the cost and taxes, and processing payment. Order processing is a
crucial step in selling goods or services. It ensures that customers receive what they
have ordered and helps to build trust, increase customer satisfaction and foster a
positive user experience.

WHY IS ORDER PROCESSING IMPORTANT?

There are several reasons why businesses should consider adopting and
implementing effective order processing practices. Good order processing practices
help companies avoid overstocking and understocking issues by accurately tracking
and forecasting demand. They also save businesses money by reducing excess
inventory holding costs and lost sales due to stockouts.

Streamlined order processing helps businesses fulfill orders more quickly and
accurately, which reduces mistakes and improves customer satisfaction. The
process frees up time for other tasks and allows firms to handle more orders without
increasing labor costs.

Accurate and timely data on order history and trends can help businesses make
informed decisions about inventory levels, staffing needs, and other operational
matters. Efficient order processing can help enterprises offer faster turnaround times
and better service, giving the business a competitive advantage in the market.

ORDER PROCESSING ADVANTAGES

AND DISADVANTAGES
Order processing can help a business manage inventory, as processing orders can
provide data on what products are selling and which are not. The process can
improve customer satisfaction, as customers are more likely to be happy with their
purchase experience when orders are processed efficiently. Tracking and fulfilling
orders efficiently ensures that customers receive their products or services on time.

However, order processing can be time-consuming, mainly if a business gets many

orders. It can be costly, as a company may need to invest in software or systems to
process orders efficiently. There is also a risk of errors occurring during the order
processing process, leading to delays or issues with fulfilling orders.

THE STEPS OF ORDER PROCESSING

Businesses follow steps to process orders effectively without errors. Here is the
order management process flow.

PLACEMENT
The first step in order processing is placement. It involves receiving and accepting
an order that a customer places. Different businesses have different ways of taking
orders, such as online sales through an e-commerce site or over the phone.

RECEIVE
The next step is receiving the order, which involves checking to ensure that the
customer has sent all the necessary information. The stage includes ensuring the
customer has entered all required information and that everything is correct in the
order details.

PICK
The next step is the picking process, which involves determining which products or
services are necessary to fulfill the order. In this stage, you can check to see if the
ordered products need restocking.

SORTING
In the next step, products are separated into groups before they are packed and
prepared for delivery. This process can eliminate any confusion or delays in the
order processing process.

PACKING
In this step, the products are packaged, labeled, and sealed to prepare them for
transport.
SHIPPING

WHAT IS ORDER PROCESSING?

Order processing is fulfilling a customer’s request for goods or services. In order
processing, suppliers accept the orders, then deliver the products to customers. The
suppliers receive and verify the order, select the products or services, and ensure
that they are delivered to the customer promptly and accurately.

This process can include steps such as verifying the availability of the products,
calculating the cost and taxes, and processing payment. Order processing is a
crucial step in selling goods or services. It ensures that customers receive what they
have ordered and helps to build trust, increase customer satisfaction and foster a
positive user experience.

WHY IS ORDER PROCESSING IMPORTANT?

There are several reasons why businesses should consider adopting and
implementing effective order processing practices. Good order processing practices
help companies avoid overstocking and understocking issues by accurately tracking
and forecasting demand. They also save businesses money by reducing excess
inventory holding costs and lost sales due to stockouts.

Streamlined order processing helps businesses fulfill orders more quickly and
accurately, which reduces mistakes and improves customer satisfaction. The
process frees up time for other tasks and allows firms to handle more orders without
increasing labor costs.

Accurate and timely data on order history and trends can help businesses make
informed decisions about inventory levels, staffing needs, and other operational
matters. Efficient order processing can help enterprises offer faster turnaround times
and better service, giving the business a competitive advantage in the market.

ORDER PROCESSING ADVANTAGES

AND DISADVANTAGES
Order processing can help a business manage inventory, as processing orders can
provide data on what products are selling and which are not. The process can
improve customer satisfaction, as customers are more likely to be happy with their
purchase experience when orders are processed efficiently. Tracking and fulfilling
orders efficiently ensures that customers receive their products or services on time.
However, order processing can be time-consuming, mainly if a business gets many
orders. It can be costly, as a company may need to invest in software or systems to
process orders efficiently. There is also a risk of errors occurring during the order
processing process, leading to delays or issues with fulfilling orders.

THE STEPS OF ORDER PROCESSING

Businesses follow steps to process orders effectively without errors. Here is the
order management process flow.

PLACEMENT
The first step in order processing is placement. It involves receiving and accepting
an order that a customer places. Different businesses have different ways of taking
orders, such as online sales through an e-commerce site or over the phone.

RECEIVE
The next step is receiving the order, which involves checking to ensure that the
customer has sent all the necessary information. The stage includes ensuring the
customer has entered all required information and that everything is correct in the
order details.

PICK
The next step is the picking process, which involves determining which products or
services are necessary to fulfill the order. In this stage, you can check to see if the
ordered products need restocking.

SORTING
In the next step, products are separated into groups before they are packed and
prepared for delivery. This process can eliminate any confusion or delays in the
order processing process.

PACKING
In this step, the products are packaged, labeled, and sealed to prepare them for
transport.

SHIPPING
In this step, the products get shipped to the customer. Depending on the business’s
order distribution methods, this process can use either online or offline delivery
channels.

DELIVERY
In the last step, the products get delivered to the customer. A third-party provider
handles this step unless a business chooses to own and operate its fleet of delivery
channels.

FACTORS INVOLVED IN ORDER

PROCESSING
Businesses must ensure they have the necessary systems to manage the order-
processing process. It involves investing in technology, establishing business
processes and procedures, and training employees to process orders effectively.

To effectively maintain an optimal order processing workflow throughout the ordering

cycle, your business must consider several factors when selecting a new system.
Here are the factors involved in order processing.

NATURE OF THE PRODUCT

Businesses have multiple types of products and services that they offer to
customers. Each product or service requires a distinct order processing workflow. As
such, you must select the appropriate software system to fulfill the needs of each
type of product and service. Different types of products include fresh produce,
automobiles, and consumer electronics.

SHIPPING PACKAGING
Your business needs to have an effective shipping packaging system in place.
Suppose a product is shipped as raw materials or as an assembly kit. The company
may choose a shipping design to handle shipments and associated order
processing.

If you plan on selling products and services shipped in bulk boxes or pallets, you
must invest in a packaging and order processing system that can efficiently handle
per-unit orders.

The right software solution should be able to manage all the shipping details
involved with packing and labeling individual items when they leave the packaging
area, tracking them throughout the entire process, and loading them into boxes
before sending them out for delivery.

COSTS
Many costs can be associated with order processing. Labor costs are the costs
related to the staff time required to process orders. This includes the time it takes to
pick and pack orders, process payments, and handle customer inquiries.

Shipping and handling costs are associated with getting the order to the customer,
including the cost of packaging materials, postage or courier fees, and any
additional handling fees. If you are carrying inventory to fulfill orders, you will need to
factor in the cost of storing and managing that inventory. Inventory costs include
warehouse rent and insurance.

If you are using any kind of software or hardware to help manage orders, you will
need to factor in the cost of those tools. Technology costs include payment
processing fees, CRM software subscriptions, and e-commerce platform fees.

It is essential to consider the cost of handling returns and exchanges, as these can
be a significant part of the order processing process. Returns and exchanges
include the cost of processing the return.

AVAILABLE WORKFORCE
Your business must have an adequate workforce available to handle order
processing. It includes having enough employees to hand pick and pack
merchandise and staff who can oversee the order fulfillment process.

SEASONALITY
Seasonality refers to certain events or activities, which can affect everything from
consumer demand to the availability of labor, that tend to occur at certain times of
the year. For example, there may be a decrease in the number of orders processed
during the summer when many people are on vacation.

If you are in a business that experiences seasonality, it is crucial to consider this

when planning your order-processing activities. This may involve hiring additional
staff, adjusting your production schedule to meet increased demand during peak
seasons, or slowing down production during slower periods.

NUMBER OF ITEMS
The number of items factor in order processing refers to the number of items
included in an order. It can impact the time and resources required to process the
order and the cost of fulfilling it.

For example, an order with many items may take longer to pick, pack, and ship and
may require additional packaging materials and labor. Similarly, the cost of fulfilling
an order with many items may be higher due to the increased time and resources
needed to process the order.

TIPS TO IMPROVE ORDER

PROCESSING
Here are several trends to consider to improve order processing in your business.

AUTOMATION
Automation can simplify the order processing process when you take the time to
define the entire order processing workflow. A sound system can help you
streamline the order-picking process, automate transactions such as payments and
shipping labels, track inventory levels and order status, and send automated
notifications when product shipments are complete.

It will help prevent delays in customer orders and let customers know when they can
expect their orders to be shipped.

DEMAND FORECASTING
An effective demand forecasting system can ensure you are ready for high-volume
periods. By forecasting your future order volume, you can plan for increased staffing
levels during peak times so that your customers’ orders will be processed quickly.

A solid demand forecasting system will also enable you to adjust your production
schedule when needed and make any necessary adjustments to avoid excess
inventory storage costs.

CHOOSE THE RIGHT SHIPPING COMPANY

A good shipping company will offer competitive rates, reliable delivery services, and
efficient order processing. It should be able to handle deliveries to all your locations,
handle customer inquiries and cancellations easily, and provide you with a complete
record of orders they have processed so far.
CUSTOMER COMMUNICATION
Good customer communication is key to the success of your order processing. Be
clear about any additional charges associated with shipping, respond quickly to
inquiries, and provide customers with a tracking number when their order ships.
These actions will help build customer trust and see them return for future
purchases.

INVENTORY CONTROL
Having enough inventory will benefit your customers. If you run out of certain
products, it can delay customer orders. To avoid this, ensure your warehouse
management system provides the insights you need to stock enough products to
process your customers’ orders at any time.

ERP INTEGRATION
ERP systems that integrate with your other business software can provide a
seamless experience between your order processing systems and other back-end
business processes. The integration eliminates the need for third-party software
and decreases the number of manual steps involved in processing orders.

ORDER PROCESSING SOFTWARE

An order processing (OP) system can help automate the order processing process,
streamline your order fulfillment process, and provide you with a solid platform to
manage customer relationships and track customer orders. Consider a warehouse
management system to help you with all tasks.

UPDATE CONTINUOUSLY
Make sure to update your traditional OP systems regularly. Updating your order
management software allows you to collect up-to-date information and respond
when fulfilling customer orders.