The number of online consumers ordering products or services has been increasing in recent years. But have you ever thought about what happens once you place an order on an ecommerce site?
The order processing steps begin when a customer places an order. The order details are first sent to the nearest warehouse, and the warehouse system verifies the product availability. It is picked, packaged, and then handed to the shipper.
What Is Order Processing?
Order processing involves a series of steps or processes that fulfill customer orders. It starts when the customer places an order and ends when the product is delivered to the customer. Order processing involves various steps like receipt, validation, picking, packaging, and shipping.
An efficient order management process involves collaborating with various stakeholders in a business, like the sales team, transportation company, warehouse partner, and many more.
Types Of Order Processing Systems
Order processing systems are tools that help to deliver products faster to the customer. There are two main types of order processing systems: manual and automated. A business adopts any of the systems based on its scale.
Let’s discuss them below.
1. Manual Order processing
Manual order processing systems depend on paperwork or desktop software. The warehouse staff updates orders by hand. All the inventories are managed manually on Excel sheets. Businesses do not have to invest much money in manual order processing systems.
It consumes a lot of time and is not very efficient. There is a high chance of mistakes in picking and packaging and wrong deliveries to the customer.
2. Automated Order Processing System
Automated order processing uses advanced systems like warehouse management, inventory management and robotics. These technologies manage inventories in real time and update stocks automatically. It reduces human errors and makes order processing steps faster. An automatic order processing system fulfills orders faster and enhances customer satisfaction.
Why is an Effective Order Processing System the Key to a Successful Business?
1. Customer Satisfaction
Delays in order delivery or wrong product deliveries can decrease brand reputation in the market. Customers can get dissatisfied with it and stop buying products from the brand.
Efficient order processing makes picking, packaging, and shipping faster, fulfills order fulfillment faster, and enhances customer satisfaction.
2. Operational Efficiency
Streamlining order processing can enhance the operational efficiency of the business. For example, if the business integrates various warehouse automation tools like enterprise resource planning and warehouse management systems, it automates picking, packaging, and updating inventories, saving the warehouse logistics staff time. They can focus on core aspects of the business, such as product development.
3. Inventory Accuracy
Overstocking ties up capital and increases the warehouse storage costs of the business. It even raises the risk of obsolete or damaged products in the warehouse. Understocking can adversely affect the brand in the market and even decrease customer satisfaction.
Businesses can use automatic reordering systems, RFID tags, and IoT sensors to manage inventories in real-time. It avoids problems like overstocking and understocking issues.
4. Scalability For Business Growth
An efficient order process allows businesses to scale effortlessly without increasing labour costs. For example, cloud-based warehouse management systems allocate resources or handle order surges in peak seasons without changing the infrastructure.
5. Reduction In Errors And Returns
Businesses can use various automatic tools like barcode scanners and RFID systems. These tools pick up the ordered product from the warehouse shelf and deliver it to the customer. It even lowers the return rates and increases customer satisfaction.
6. Competitive Advantage
Today, more than 85 percent of customers expect their ordered product to be delivered within one or two days. An efficient order processing delivers ordered products faster and meets customer expectations. This helps a business to stand out in this competitive world.
Steps Involved in Order Processing
Here are the list of steps that involve in order processing.
1. Order Placement
Order placement is the first step of the order process. The customer orders through the website, email, or phone call. Whenever a business receives an order, it sends all the essential details like the item, quantities, and delivery address to the order management system.
A business can have several warehouses in many locations in India. The OMS will select the warehouse based on the product availability and the delivery address. This enables the delivery of products faster to the customer.
2. Picking
It is a process of picking the ordered product from the warehouse storage. Order picking is essential in order processing because the sooner the items are picked, the sooner they will be packaged and delivered to the customer’s doorstep.
The business can arrange picking manually or automatically by using scanners or robots.
3. Sorting And Packaging
The warehouse staff separates the picked items based on their destination. The staff then packages the product adequately to ensure it will not get damaged during transportation. The packaged product is then weighed and labelled with the customer’s address. This step ensures that the product is ready for dispatch.
4. Shipping
It is transporting the packaged product to the final destination, i.e., to the customer’s doorstep. Sometimes, the orders directly to the customer. The ordered product is sometimes consolidated with other orders to minimize fuel and logistics costs. A tracking system during product shipping helps the enterprise and the customer know the product’s real-time location.
Businesses follow up with the customer to get feedback once the product is delivered.
Factors Affecting Order Processing
1. Number Of Items
Bulk and heavy items are handled differently by businesses than small orders. The small orders are sent directly to the customer’s address by postal service.
2. Seasonality
The order processing can take a long time during the festive season and holidays. The warehouse staff takes a longer time to pick and package the products. Customers will receive the products they ordered late compared to other days.
3. Technology Integration
An enterprise adopting warehouse management systems and automation tools like robots can handle orders faster and more accurately.
4. Warehouse Layout And Organisation
A well design warehouse can reduces the picker’s travel time. It thus speeds up the order fulfillment process and enhances customer satisfaction.
5. Workforce Efficiency
If an enterprise has skilled and well-trained staff, then the efficiency of the order fulfillment process will be enhanced.
6. Communication And Coordination
There should be seamless communication and coordination between the sales team, 3PL company, transportation team, and other stakeholders to prevent miscommunication and reduce errors.
Tips to Improve Order Processing
There are various ways to enhance order processing. They are as follows.
1. Automation
Automation can help in enhancing the order fulfillment process of a business. For example, automation can help select the cheapest shipping option by considering various factors like packaged product weight, destination, etc.
Again, automation can reduce the workload of warehouse employees. Automated processes reduce accidents in the workplace and prevent employee burnout.
Automated communication channels improve communication between all the business stakeholders.
2. Demand Forecasting
Businesses should utilize AI and machine learning to analyse customer profiles, past buying trends, seasonality, and historical sales data. It can forecast product demand in the future.
Final Words
You cannot earn loyal customers just by having an excellent product. Efficient order processing is essential for smooth business operations and customer satisfaction. Businesses can utilize barcode scanners and mobile devices to speed up the order fulfillment process and reduce errors.
AAJ Supply Chain Management
