Order processing is a fundamental aspect of supply chain management, ensuring that customer orders are fulfilled accurately and timely. Order processing management refers to the set of activities and processes involved in managing customer orders from the initial placement to the final fulfillment and delivery. It encompasses all the steps required to ensure that customer orders are accurately received, processed, tracked, and fulfilled on time.
In this blog post, we’ll explore the role of order processing in the supply chain, discuss different types of order processing, and highlight real-world examples of how companies are leveraging advanced technologies to streamline their operations.
Index
Types of Order Processing
There are several forms of order processing, each with its own distinct qualities and requirements. Some typical categories are:
Manual Order Processing
This refers to manually inputting client orders into a system and processing them through several phases, including selecting, packaging, and shipping. While easy, it may be time-consuming and error-prone.
Automated Order Processing
This method uses technology to expedite the order processing workflow, eliminating manual involvement and increasing accuracy. Examples are barcode scanning, RFID tracking, and warehouse management systems (WMS).
Batch Order Processing
This approach involves processing orders in groups or batches rather than individually. This can be more efficient for high-volume companies, but it may mean longer lead times for individual consumers.
Real-Time Order Processing
This method processes orders as they are received, resulting in immediate fulfillment and shorter order cycle times. It needs modern systems and infrastructure to manage the rising complexity.
Steps in Order Processing
Here are the key steps in the order processing workflow, along with real-world examples:
Order Placement
Customers place orders through various channels such as online, by phone, or in person. For example, Motocard, a leading European retailer of motorcycle gear and accessories, receives orders through its online store and brick-and-mortar locations.
Order Entry
Customer orders are entered into the company’s order management system. This step ensures that all order details are accurately captured and stored for further processing. Shopify Flow, a workflow automation tool, can help businesses tag orders based on various criteria, such as payment method or shipping method.
Order Validation
The order is checked for accuracy, availability of funds, and credit approval. For instance, Shopify Flow can be used to validate orders paid with gift cards or identify orders with irregularly large discounts.
Inventory Allocation
Available inventory is allocated to the order to ensure timely fulfillment. Companies like SAM Outillage, a French tool manufacturer, use automated storage and retrieval systems (AS/RS) and warehouse management software to streamline inventory management and order fulfillment.
Pick, Pack, and Ship
The ordered items are picked from the warehouse, packed, and prepared for shipment. Motocard uses picking shelves with walkways to store and fulfill orders efficiently. Decathlon, a multinational retailer of sporting goods, also equipped its warehouses in Italy with a warehouse management system to optimize order processing.
Shipping and Tracking
The order is shipped to the customer, and tracking information is provided. Motocard was able to dispatch 90% of orders placed before noon on the same day after implementing a warehouse management system and shipping software.
Invoice and Billing
An invoice is generated, and the customer is billed for the order. Shopify Flow can be used to tag orders based on payment method or send handwritten notes to customers after they place their second order.
Customer Notification
The customer is notified about the order status, delivery, and any other relevant information. Shopify Flow can be used to email customers when a wishlist item is on sale or send a loyalty reward for ordering a specific product.
Conclusion
Order processing is a critical component of the supply chain, influencing customer happiness, operational efficiency, and overall business performance. Companies may increase customer happiness, cut costs, and optimize operations by knowing various order processing forms and employing sophisticated technology. As the need for faster and more accurate order fulfillment rises, businesses must remain ahead of the competition by investing in new order processing systems.
Also read: Order Processing 2.0: How Artificial Intelligence is Fuelling a New Era of Efficiency
