Supply Chain Order Management: An Overview

Customers expect speed from every order they place. Can your existing supply chain order management system deliver quickly enough to satisfy customer expectations? The more your business grows, the more you’ll rely on an efficient system to manage customer orders, inventory levels, and every step of the distribution process. 

What Is Supply Chain Order Management?

Think of your supply chain order management system as the machinery that operates your sales channels. The very minute that a customer places an order through your eCommerce platform, the machine roars to life. Supply chain order management involves a series of software systems, warehouses, and third-party logistics partners to create a fast, efficient delivery system.

As your business grows, so do your logistics needs. Traditional spreadsheets can’t always handle the complexity of inventory management, route planning, and other phases of the logistics process. That’s why you need an order management platform that helps you manage, monitor, and optimize every part of the fulfillment process. 

Key Steps in the Supply Chain Order Management Process

Your supply chain is only as strong as its weakest link. That’s why it’s important to understand how each of your order management processes work together, as well as the potential challenges they bring to you and your customers. Here’s what happens during the ordering process.

1. Customer Places an Order

First, the customer places the order. You can receive this order directly from the customer, though it’s more likely that the order will come through your eCommerce platform. Your order management system (OMS) can check inventory levels, and—as long as the item is in stock—the order moves on to the next step.

2. Order Fulfillment

Next, the customer’s order is picked, packed, and shipped from the company warehouse or distribution center. Most businesses guide the process using a combination of manual processes, which involve pickers and packers, and automated tools. Once the order is packed, it is moved to the designated shipping facility, where it is sent to the customer.

3. Inventory Management

One of the crucial steps in the order management cycle is managing inventory. Not only can inventory management software keep track of the items in your warehouse, but it can also identify cyclical trends and maintain your inventory at optimal levels.

4. Post-Sales

Finally, you’ll need an OMS that allows you to manage the post-sales process. For instance, eCommerce retailers need a reverse logistics process to handle exchanges and returns. 

The Greatest Challenges in the Supply Chain Order Management Process

On paper, the order management process sounds straightforward. However, most supply chains are anything but. Many businesses face one or more of the following challenges, each of which can be mitigated with order management technology.

Maintaining an Accurate Inventory

Few developments are as jarring to the customer journey as when someone orders an item that turns out to be on backorder or out of stock entirely. This happens when merchants lack an accurate way of managing inventory, which can lead to errors in the quantity of items displayed through their sales channels. 

An order management system can ensure up-to-date information about product quantities so customers know exactly what’s available and what’s not. The same system can also alert you to low inventory levels or trigger your replenishment processes.

Ordering Too Much Inventory

For many small businesses, warehouse space is at a premium. That makes it challenging to maintain inventory levels. If you order too much, the products occupy valuable space. In contrast, ordering too little means depleting your supplies and risking customer dissatisfaction.

An order management system will allow you to optimize your inventory levels based on sales history and seasonal/cyclical demand. Optimizing your warehouse space also creates room for new products.

Errors in the Order Picking Process

Manual picking processes can introduce errors. For example, data entry errors can send pickers and packers to the wrong item entirely, or the picker may accidentally send the wrong quantity.

While manual processes are likely to remain part of the fulfillment process, technology can reduce the need for manual data entry. As a result, fulfillment teams have the ability to focus on providing accurate shipments. 

Excess Costs from Supply Chain Inefficiencies

Supply chains suffer from many sources of inefficiency, such as:

• Poor communication
• Inefficient route planning
• Network disruption
• Lack of coordination between sales/fulfillment channels

An order management system can streamline your business processes and give you access to an integrated whole. As a result, the order management system pays for itself by reducing the excess costs that come from these inefficiencies.

Unpaid Invoices

Some businesses rely on an invoicing system, where goods are delivered before money is received. B2B companies, for example, deliver shipments of supplies and inventory and send an invoice afterward to request payment. But when these invoices go unpaid, it can create cash flow problems for the sending business.

B2B clients may tap into an order management system that alerts users to outstanding or unpaid invoices. Some systems also send reminders to customers to encourage prompt payment.

No Clear Path for Returns or Exchanges

Customers don’t just want speed. They also desire the security that comes from a clear return policy. If an eCommerce merchant doesn’t communicate its return policy on its online platform, customers might abandon their carts and exit the window entirely.

An order management system can therefore improve sales by assuring buyers of a hassle-free return experience. This may be the safety net that you need to rise above your online competitors.

How Businesses Benefit from Supply Chain Order Management Services

The right software platform can transform your supply chain. Here are just some of the benefits of implementing technology to manage your supply chain and ordering process.

Fulfill Orders Accurately

Delaying a shipment, packing the wrong items, printing inaccurate shipping labels, or duplicating products are all good ways to lose money—not to mention your customers’ trust. However, an effective supply chain management system can avoid these sorts of errors. For instance, your software platform will eliminate the need to manually type out order information such as SKU numbers, quantities, or customer delivery data.

Ensure Faster Shipping

The sooner you can pick, pack, and ship an order, the sooner the items will reach your customers. After all, in today’s competitive market, shipping speed can be your company’s greatest asset. Today’s order management tools will also give you access to order tracking numbers, providing you and your customers with real-time visibility of the order’s status.

Return Products Easily

Many online retailers don’t consider the need for customers to send products back. But reverse logistics is essential for creating a hassle-free return experience. 

Some customers may be more willing to complete their orders knowing they have a convenient option for refunds or exchanges. An order management system will allow customers to return items easily and enable you to choose whether to dispose of the item or return it to your inventory.

Maximize Inventory Visibility

Depending on the nature of your business, you could have upwards of thousands of different SKU numbers sitting in your warehouse at any given moment. Order management software will typically include inventory management tools to help you keep it all straight. 

The best systems can maximize inventory visibility by offering predictive analysis based on historic trends. This also serves to optimize your inventory replenishment cycle according to your needs.

Achieve Greater Customer Satisfaction

The sum total of these business processes translates into greater customer satisfaction. An efficient supply chain will ensure that customers receive their orders quickly and accurately and that online retailers provide an easy return process. This can lead to greater customer loyalty, allowing you to grow your customer base over time.

Reduce Costs

The more your business can tap into technology, the more you can reduce shipping and labor costs, as well as other sources of financial inefficiency. Your platform can further optimize your supply chain through route planning for fast, fuel-efficient deliveries. Many online retailers discover that technology allows them to quickly scale their businesses without increasing the company headcount.

Simplify

Many business owners face supply chains that are too complex to even understand, let alone manage. This is where technology can make a major difference, helping you to overcome challenges and experience greater results from your ordering and fulfillment processes. For example, if your business leverages omnichannel fulfillment, you can create custom automations in your OMS for each phase of the supply chain process and in each channel, simplifying your overall workflow.

Place Your Customers First — Cavallo Can Help

Your supply chain order management solution matters because your customers matter. Deliver greater satisfaction to these customers by implementing Cavallo’s innovative solutions designed to accelerate every stage of order fulfillment for Microsoft Dynamics GP and Dynamics 365 Business Central. 

With these tools in hand, you’ll be able to create tailored workflows, gain 100% visibility of your orders, and optimize every aspect of the supply chain and fulfillment processes. To learn more, request a demo today.