What Is Order Management at Its Core? 

Business leaders are always looking for ways to enhance their order fulfillment efforts. And that’s where proper, modern order management steps in. What started as a collection of manual processes for tracking sales and deliveries has evolved into a highly sophisticated, technology-driven ecosystem. 

Today, order management is foundational to the success of all product-centric brands. Order management systems (OMSs) provide these businesses with automation capabilities and advanced reporting tools designed to optimize the entire order lifecycle. 

Using these platforms to their greatest advantage means understanding order management, from its origins to its current form and future trajectory. To that end, the following guide will provide you with actionable insights you can apply to maximize your organization’s order fulfillment and management strategies.

What Is Order Management? 

Order management is the process of tracking and fulfilling customer orders. It is a holistic process that begins the moment a consumer places an order and ends when they receive their product, and its key steps are as follows:

• Order entry
• Payment processing
• Inventory management
• Picking and packing
• Fulfillment 
• Customer service
• Reverse logistics (when products are returned)

Despite their importance, each of these steps can add friction to the customer experience and cause revenue leakage. Businesses that optimize every phase of order management can combat these hurdles, deliver better customer journeys, and achieve stronger profitability. 

The History of Order Management 

Order management dates back hundreds of years, with its earliest iterations relying on paper-based tracking strategies. Following the invention of the telephone, businesses integrated phone-based communications into their order management processes. Documentation, however, was still paper-based, which increased the risk of errors.

The development of on-premises (on-prem) inventory management solutions equipped businesses to overcome many of the challenges inherent in paper-based documentation. Still, manual data entry remains a significant part of order management, and many companies continue to rely on disjointed applications, which creates data silos.

The development of enterprise resource planning (ERP) has unified order data and helped eliminate silos. Since their introduction, ERP platforms have advanced significantly, alongside industry knowledge regarding order management best practices. 

How Order Management Has Changed Over Time

As is clear, order management has undergone several major evolutions over just the last few decades. In particular, the most notable of these leaps include the following: 

The Development of Integrated Platforms 

ERPs are dynamic solutions that readily integrate with other platforms, including an OMS and warehouse management system (WMS). These resources provide stakeholders with a unified view of a company’s operations, stock levels, and performance. 

Moving From On-Prem to the Cloud

On-prem platforms offer some advantages, which is why many businesses continue to use them. A few of these benefits include:

• Direct control over data and infrastructure
• Reliable security measures
• Virtually limitless customization options

However, cloud-based platforms offer several more advantages, making them an appealing alternative to costly on-prem platforms. Some of the key benefits of moving to the cloud are:

• Reduced upfront costs
• Less IT maintenance 
• Shared responsibilities with the developer
• Scalable resources
• Manageable monthly costs
• The ability to adapt and upgrade

Cloud-based platforms will allow your business to access additional resources and user seats on demand. Your recurring monthly costs will also be far more predictable, which can make cloud technology more accessible. 

How Order Management Systems Support Modern Businesses

Traditionally, businesses have relied on manual order tracking methods that are prone to errors and inefficiencies. Today’s innovations and improvements to the order management “formula” put businesses back in control of the order management journey. 

Oversee Customer Orders

Today’s consumers expect a seamless order processing experience; they want to receive the right product within a few days, and they may not even complete their purchases if they encounter any friction during the ordering process. A reliable OMS will allow you to optimize your workflows to meet these ever-increasing expectations. 

The fundamental goal of an order management system is to allow a business to manage its customer orders more effectively. Modern solutions include customizable workflows and automation capabilities that reduce the need for manual inputs and drastically lower the risk of errors. 

Collaborate With Distributor Partners

Distributors are the lifeline of product-centric brands. Clear communication channels and data-sharing capabilities are essential for collaborating effectively with your distributors. Outdated systems and manual processes are barriers to effective communication. 

Transitioning to a fully integrated platform will give you the visibility necessary to cooperate with your supply network, remove friction from the customer journey, and improve operational efficiency. Together, you can cut costs and get products into the hands of consumers faster. 

Optimize Inventory Levels

Consumer preferences can shift in the blink of an eye. If you overstock products, you’ll incur excessive storage fees and may lack the capacity to order in-demand goods. On the other hand, understocking popular goods can lead to stock-outs and customer frustration. Both outcomes are bad for your bottom line. 

Modern order management solutions will prepare you to adapt to shifting customer demands. They’ll provide real-time visibility into sales trends so you can adjust your stock levels accordingly.

Enhance Visibility Into the Supply Chain to Improve Profits

Lastly, leading order management systems will provide your business with real-time granular and big-picture insights into the state of distribution processes and other key supply chain activities. Use the high-level analytics reports to identify potential pain points and then explore specific processes or workflows to pinpoint underlying causes. 

These reports provide actionable data that you can use to improve profit margins and increase efficiency. The better you understand your supply chain and its potential weaknesses, the greater your odds of adapting to and overcoming disruptions. 

Best Practices for Product-Centric Businesses

If you are running a product-centric brand, these order management best practices can help you improve margins and streamline operations:  

Leverage Cloud-Based Solutions

Transitioning to the cloud can provide your business with the following:

• Predictable technology costs
• Access to the latest tools and applications
• Unlimited scalability
• Integration opportunities

Cloud-based OMSs and ERP platforms are nimble and versatile. While you will incur upfront implementation costs, they’ll be significantly less than the implementation costs associated with on-prem platforms.

There are options if your existing on-prem systems haven’t reached the end of their useful life, but you need to integrate new tools to improve your order management capabilities. For example, Cavallo’s Order Intelligence solutions integrate with several popular on-prem and cloud-based ERPs, including Microsoft Dynamics GP, F&O, Business Central, and Acumatica.

Cavallo’s Order Intelligence platform elevates the capabilities of your existing OMS and ERP technology’s capabilities while unleashing your business’s full potential. It provides insights powered by artificial intelligence (AI) to inform your decision-making efforts and optimize your profits. You can find and fix revenue leakage while growing your business. 

Integrate With ERP Systems

Choosing an OMS that integrates with your ERP platform will provide a full-fledged, holistic view of your order management processes. You can eliminate data silos and identify pain points that may be hurting your profitability. 

Optimize Order Fulfillment

Modern order management tools can automate every possible workflow, reducing processing times and improving accuracy. You can eliminate friction from the customer journey while reducing inefficiencies that drive up fulfillment costs.

Automation technologies will also help you overcome scalability challenges and grow your business. When you rely on manual processes, you must expand your team to accommodate more orders or additional products. While increasing your workforce will still be necessary in certain instances, your workforce demands will be reduced through automation. In simpler terms, you’ll be able to achieve more with fewer employees. 

Monitor Key Performance Indicators 

Key performance indicators (KPIs) provide insights into your order accuracy, fulfillment speed, return rates, and other data points. 

Of course, you’ll first need to identify the right KPIs to sift through mountains of data and unlock useful insights. Remember, each metric provides a piece of the puzzle; you’ll need to examine several metrics in the context of one another to identify and fix underlying order management challenges. 

Solving Common Challenges in Order Management 

Implementing modern order management and ERP technologies is not a quick fix. You must use these solutions to pinpoint and address common challenges associated with order management.

Inventory Mismatches

You will encounter several different types of inventory mismatches in due time. Discrepancies between inventory records and actual stock are the most concerning, as these errors can cause fulfillment delays. 

Inventory mismatches can also appear as overstocking or understocking. As such, you must tailor your stock levels based on customer preferences and market demand. Integrated order management technologies provide real-time insights into market trends so that you can maintain accurate inventory records. 

Order Processing Delays

Manual intervention or a lack of communication between applications in your workflow can cause delays in your order processes. In either case, the customer experience will suffer. 

Drastically reduce the need for manual inputs by adding automation to your workflows and creating custom rules and actions to ensure its automation processes align with the unique needs of your business. 

Supply Chain Disruptions

Unforeseen issues like supplier delays and transportation bottlenecks can impact your delivery timelines. You need to address these issues in the following ways:

• Promote transparency by promptly notifying customers of any delays
• Communicate with distributors to resolve bottlenecks quickly
• Analyze supply chain performance to identify underperforming links

Modern order management tools assist with these processes by integrating your supply chain and fulfillment data. You will have an interconnected view of the entire order lifecycle and can more effectively respond to disruptions. Use these insights to diversify your supply networks and renegotiate with or transition away from underperforming distributors. 

High Operational Costs

Inefficient supply chain management leads to direct and indirect (yet avoidable) expenses, which can include the following:

• Frequent returns and increased reverse logistics costs
• Unhappy customers, which lead to churn 
• Shipping delays
• Excessive delivery costs
• Missed opportunities due to stockouts
• Excessive storage costs

Leverage automation and AI-powered insights to identify sources of waste or margin leakage to recapture lost revenue and make your business more profitable. 

Protect Your Margins With Order Intelligence

Cavallo’s Order Intelligence includes a suite of tools designed to increase the ROI of your ERP system and modernize your order management processes. The motivation behind the platform is simple: businesses with clear, accurate orders optimize profits, whereas organizations with poor visibility into the order lifecycle experience unrealized revenue and missed opportunities. 

Accelerate your order-to-cash processes and make your business more profitable with automation capabilities, customizable workflows, and everything you need to fix inefficiencies. 

Dive deep into consumer behavior and provide actionable insights to perfect your pricing strategy. Prioritize products that customers want as you address gross margin variances and optimize the cost of goods sold. 

An effective order management strategy is crucial for any product-centric brand. OMS technology and a modern ERP solution are what will lay the foundation for efficient order management, and Order Intelligence takes your capabilities to the next level. 

Cavallo’s cutting-edge technology provides the ultimate solution for optimizing how you process and fulfill product orders. Schedule a demo today!