order management

What is Order Management Process - The Ultimate Guide

Learn about how the order management process works, different types of order management system, and how an order management cycle can help your business.

Organizing, managing and fulfilling customer orders is a critical process for any business. Without an efficient order management process in place, businesses can quickly find themselves overwhelmed and struggling to keep up with customer demand. In this blog, we will discuss what is order management process, the benefits of implementing an effective process and explore some best practices for streamlining the process. So, if you are looking to improve your order management system, keep reading!


What Is Order Management?

Order management deals with the creation and fulfillment of customer orders. The order management process typically begins when a customer submits an order and ends when the order is either fulfilled or canceled.


What Is the Order Management Process?

What Is the Order Management Process?

The entire process, from receiving the customer’s order to the fulfillment of it, is called the order management process. Creating and updating orders is the first task in customer order management. This involves creating a new order in the system and then updating the order as needed.


Updating an order may involve adding or removing items, changing the shipping address, or changing the payment method. Order management systems typically include tools to help with this task, such as order entry software, for shipping labels and tracking numbers.


Shipping orders is the next task in the order management solution. This involves ensuring that the order is properly packaged and sent to the correct address.


Finally, customer inquiries must be handled in a timely and efficient manner.


Some of the key steps in a purchase order management cycle include:


Receiving the customer’s order


When a customer places an order with a business, the order is typically received by someone in the customer service or sales department.


The customer service or sales department then forwards the details of the order to the warehouse staff, who gets them ready for shipment.


Meanwhile, the order is entered into the company’s Order Management System (OMS), which is used to keep track and manage the orders from start to finish.


The OMS will assign an Order Number to the order and will keep track of the order’s status, shipping information, and other pertinent information.


Fulfilling the customer’s order


There are three broad steps involved in fulfilling a customer’s order:




The first among many steps in the order fulfillment process is retrieving the ordered items from the company’s warehouse. The warehouse workers tally and pick the right items from the warehouse shelves and send them to the appropriate packaging station for the items to be packed.




Once the items are sent to the package department, they have the task of choosing the right materials to pack the ordered items with. This is vital as the right packaging materials will ensure that the ordered items are delivered to the customer safely. For example, TVs are packed in polystyrene or thermocol sheets, while glass items are packed in bubble wraps.




After the packaging is done, the ordered items are sent to the shipping department, which attaches the invoice of the items and appropriate shipping labels to the items. Then, the sales department is informed about the shipment of the ordered items, and the customer gets confirmation of the shipment and the tracking link.


Handling the post-sales processes


This is the final stage order fulfillment process. Businesses contact customers to know if they are satisfied with their order purchase. If the customer is dissatisfied or if there is any problem with the order, a return or refund process is initiated to make things right with the customer.


What is Order Fulfillment?

What is order fulfillment?

Order fulfillment is the essential process of completing an order by sourcing and shipping the correct product to the customer. This process can involve many different steps, such as choosing a supplier, calculating shipping costs, and preparing the order for shipment.


It involves overseeing and coordinating all these steps to ensure that orders are fulfilled efficiently and accurately.


A successful order management system will streamline the fulfillment process, making it easier to track orders and make sure that their customers receive the ordered items on time.


Order management software can also automate many of the tasks involved in fulfilling an order, such as generating shipping labels and sending out confirmation emails.


By streamlining the fulfillment process, businesses can reduce their operating costs and improve customer satisfaction.


Order management software can also provide valuable insights into the performance of the business, such as which products of theirs are selling well in the market and which areas of the fulfillment process need improvement.


Key Features of Effective Order Management

Key Features of Effective Order Management

For an order management process to be effective, it should have the following features:




One of the most important features of an effective order management process is visibility.


To ensure that every priority order is being processed correctly and promptly, everyone who is a part of the process must have access to the most up-to-date information.


This includes not only the people who are responsible for fulfilling orders but also managers and executives who need to be able to track progress and make decisions based on Order Management data.


A good Order Management system will provide tools for tracking order status and history, as well as real-time updates on inventory levels and other relevant data.


This allows everyone involved to stay informed and make quick decisions when necessary. Visibility is key to ensuring that orders are processed efficiently and without any mistakes.




Intelligence is another key feature of effective order management. By understanding the customer’s needs and preferences, as well as the market conditions, the organization can make better decisions about what orders to place and how to fill them.


This can result in faster response times, improved customer service, and increased profits. In addition, a well-run order management system can help prevent stockouts and overages, both of which can damage the bottom line.




As a business grows, the purchase order management process must be able to scale with the company. That’s where flexibility comes in. By possessing the ability to adapt to any situation, your business can handle anything.


Whether it’s unexpected surges in demand or changes in product lineups, a flexible order management process can quickly adapt to keep your business running smoothly. This is crucial for ensuring that customers always receive the best possible service.


In addition, a flexible order management system in ecommerce can help you take advantage of new opportunities as they arise. For example, if you notice a competitor struggling, you can quickly adjust your process to start capturing a part of their market share.


Real-time inventory


For businesses to be effective in their store order management, they must have a real-time inventory. This way, they can keep track of what is being sold and what needs to be restocked.


It also allows them to know when they are running low on a particular item and need to reorder. Having a real-time inventory also helps businesses keep track of their stock levels and make sure that supply meets the demand.


Read our blog on inventory management and control to know more!


Delivery and service scheduling


Delivery and service scheduling are the other key features of an effective order management system in ecommerce. Order management software can help businesses keep track of their inventory so that they can ensure that they can deliver the correct product to the customer on time.


Order management systems can also help businesses efficiently schedule their service appointments. This could help drastically reduce the wait times for customers and ensure that businesses can meet their service deadlines.


Customer engagement technologies


Customer engagement technologies are a key feature of effective order management. By tracking customer interactions and preferences, businesses can better anticipate and meet customer needs, improving satisfaction and loyalty.


Additionally, customer engagement technologies can help businesses more efficiently manage orders and track inventory. Store order management systems streamline the process of taking and fulfilling customer orders, while inventory management systems help businesses keep track of stock levels and optimize stock utilization.


Fulfillment optimization


Order fulfillment is a key part of store order management and can be the deciding factor in how successful a business is. Order fulfillment optimization is the process of making sure that orders are filled as quickly and accurately as possible.


This can include making sure that the right products are available, that the right shipping methods are used, and that inventory is properly managed.


Optimizing order fulfillment can be critical to success. In some cases, it can mean the difference between making a profit and losing money on order. Order fulfillment optimization requires careful planning and execution, but it can be well worth the effort.


The Order Management Process Flow and Life Cycle

The Order Management Life Cycle and Process Flow

The process flow and life cycle of order management look like this:


Placement of Order by the customer


The order management cycle typically starts when a customer orders a product or service. The order is received by the company and processed. This may involve checking the inventory to make sure that the product is available and then preparing and shipping the order. The company may also need to contact the customer if there are any problems with the order.


Verifying the order and checking for any possible errors


This includes verifying that the customer information is correct, that the items in the order are actually in stock, and that the total price of the order is correct. If any errors are found, they need to be corrected before the order can be processed.


Processing the order and preparing it for shipping


The ordered items are then processed and prepared for shipping. This may include tasks such as selecting the appropriate shipping method and packing the items. Once everything is ready, the shipping department makes arrangements to send them to the customer promptly.


Delivering the order to the customer


The order management process includes several key steps to ensure that the order is delivered to the customer’s address safely and on time. Throughout the shipping process, communication between departments is essential to ensure that the order is handled efficiently and accurately.


Handling any returns or complaints from customers


Businesses have to be able to handle any returns or complaints from customers. This includes having an effective process in place for dealing with these issues quickly and efficiently. Having a designated person or team who is responsible for handling these situations is ideal. This will ensure that the complaints of the customers are taken care of promptly and that the business’s reputation is protected.


What Makes Order Management Essential for Businesses

What Makes Order Management Essential for Businesses

Here is why order management is essential for all businesses, big or small.


Prevents losses because of overstocking or understocking


An effective customer order management process ensures that your store has the right amount of stock to meet customer demand. It’s important to keep from overstocking and understocking, which can lead to lost sales and dissatisfied customers. Implementing a good order management process can help you stay on top of things.


Update your order management process by reading our blog on supply chain management!


Helps you reduce mistakes while fulfilling orders


An efficient order management process helps you make fewer mistakes while fulfilling orders by ensuring that:


  • You have the correct inventory levels on hand.
  • You order the right quantities of items from your suppliers.
  • Verify that the items you received match the order that was placed.
  • Package and ship the items correctly.


Helps you plan for the future


An efficient order management solution gives you information that helps you make decisions. You can keep a tab on the sales and demand of a particular product; get an idea of how your business can improve. Having an efficient order management process also helps you come to conclusions about cost-cutting measures and strategize how to increase profits.


Help you save time in fulfilling your orders from customers


Using a dedicated order management process flow will automate many of the tasks involved in order processing, such as creating purchase orders, tracking inventory, and creating shipping labels. Having a system like this in place, including an online order management system, will help to ensure that orders are processed quickly and without any errors.


An efficient order management system also helps create standard operating procedures for handling orders. This will help to ensure consistency and avoid any confusion or delays in processing orders.


The Benefits of a Distributed Order Management System

The Benefits of a Distributed Order Management System

There are many useful benefits of order management systems in eCommerce and elsewhere. It can help you:


Manage order exceptions effectively


One of the biggest benefits of an eCommerce order management system is that it can help businesses effectively manage order exceptions. Order exceptions can include things like incorrect shipping addresses, orders that are canceled or returned, and orders that are placed with incorrect quantities.


Online order management systems can help businesses to track these exceptions and to ensure that they are dealt with quickly and efficiently. This practice ensures the satisfaction of the customers and reduces mishandling or other errors related to priority orders.


Execute against predictable order orchestration policies


Another benefit of using an online order management system is that it can help ensure that orders are processed and shipped as efficiently and promptly as possible. This can be especially helpful when multiple orders need to be processed simultaneously.


An order management system can help orchestrate these orders so that they are executed in the most efficient way possible. This can help save time and reduce the chance of errors.


Channel revenue management


One of the other benefits of order management system is that it allows a company to streamline its revenue management process. The order management system can interface with the company’s accounting system to ensure that all invoices and revenue recognition criteria are met. This can help drastically reduce the time needed to close the books each month and ensure that all sales are properly accounted for.


Find out how you can increase your profits by strategic upselling and cross-selling!


How to Choose the Right Order Process Management System


Before going ahead with a particular order process management system, make sure that it has the following features:


Integration with other systems or departments in your organization


To ensure that orders are processed efficiently and accurately, it is important to have a well-integrated ecommerce order management system that can communicate with other systems in the company.


Order management software should be able to integrate with accounting software, ERP systems, and shipping systems, among others, so that orders are processed quickly and without errors. A good order management system will make the entire process more efficient and help to keep track of all the moving parts.


Inventory and order tracking


A key component of a work order management process is ensuring that inventory levels are accurate to avoid overselling products. Real-time inventory tracking allows businesses to make quick decisions about whether or not to fulfill an order and helps to prevent stockouts.


In addition, order tracking allows businesses to see the progress of individual orders and identify any potential delays.


Room for growth


One of the biggest challenges of order management is scaling your business. As your company grows, your order volume will increase, and you’ll need to make sure your system can handle the new workload.


You will also probably need to make sure that your staff can keep up with the increased demand and that your processes can handle the added complexity.


Multiple warehouses


It can be helpful to have multiple warehouses in strategic locations so that you can keep track of your products and ship them quickly to customers. This way, you won’t run out of products, and you’ll be able to keep up with customer demand.


Having multiple warehouses can also reduce logistics costs as the distance between shipping points and customer destinations would naturally reduce, thus helping increase profits for your company.


Define Project Scope


The project scope in an order management process includes identifying vendors, RFPs (Request for Proposal), vendor negotiation and contracts. To better understand order management process steps, we have to dive a little deeper into this:


Identify Vendors


The first step in the order management process is to identify potential vendors. This can be done through a variety of methods, such as online research, referrals from other businesses, or trade shows. Once potential vendors have been identified, it’s important to perform due diligence to ensure that it is a reputable company and can provide the products or services needed.




A Request for Proposal (RFP) is a professional document that requests suppliers or vendors to submit a proposal outlining their ability to provide a specific product or service. RFPs are commonly used in the business world when selecting a supplier and can be used for procuring new technology or services or for seeking quotes for a product.


While drafting an RFP, it is important to understand what you are looking for and be clear about the requirements in the document. The RFP should also be tailored to the specific needs of the organization issuing it. Also, ensure that the proposal deadline is realistic and that all interested vendors are given enough time to submit a proposal.


After the official RFP has been drafted, it is sent out to potential vendors, who can then submit a proposal outlining how they meet the requirements specified in the document. Once all proposals have been received, they are then assessed by the organization issuing the RFP to choose the best vendor.


Vendor Negotiation


The negotiation process for orders is one of the most critical order management process steps in ensuring that both the customer and the vendor are satisfied with the final result. It’s important to have a clear understanding of the customer’s needs and wants, as well as the vendor’s capabilities and limitations. Only then can a fair and reasonable negotiation take place.


To negotiate effectively, it’s important to have a good understanding of the following factors:


  1. The customer’s needs and wants.
  2. The vendor’s capabilities and limitations.
  3. The market conditions for the product or service being negotiated.
  4. The terms and conditions of the offer from the vendor.
  5. The bargaining power of both parties.




The work order management process also includes contract management, which is the process of creating, modifying, and enforcing contracts between customers and suppliers. Contract management includes negotiating terms, tracking performance, and resolving disputes.


What Is Sales Order Management?


A sales order is an official and binding agreement between a client and a company for purchasing/selling a product, as well as a record that captures the specifics and sale data of a transaction.


Sales order management refers to all the processes and documents that are involved in generating that sales order. These processes include:


  • Generating a sales quote
  • Templates of order entries
  • Notification of shipment status
  • Information on the ordered product
  • Discount information
  • Terms and conditions of the sale
  • Customer support team
  • Monitoring of credit
  • Logistics
  • Payments
  • Invoices


The Order to Cash Process


The Order-to-Cash (OTC) process is the series of steps that a company takes to receive an order from a customer, receive and process the payment for the order, and deliver the product or service to the customer. This process could either be manual or automated, depending on the company’s needs.


This process includes:


Creating a document mentioning the details of the sale


The pricing, dimensions, size, weight and freight of the ordered product must be included.


Creating the Terms and Conditions of the sale


The standard terms and conditions should have discounts and interesting offers that help build relationships. It should also allow you to review account performance with your customers regularly and contact them as soon as an invoice is overdue.


Using efficient billing methods


Always draft an agreement on how to manage price promotions, reductions, and refund methods before any work is done. And regularly and accurately record credit notes to fix invoicing and delivery mistakes as they happen.


Understanding customer behavior


To keep O2C processing running smoothly, be proactive and familiarize yourself with your customer’s habits, such as how often they order, what days they typically order on, the average size of their orders, any regular promotions they participate in, and how new product introductions are handled.


Buy-Side and Sell-Side Order Management Systems


Order management systems can be classified into two types: buy-side and sell-side.


Buy-side order management systems are used by investment managers, such as asset managers, hedge funds, and mutual funds, to place orders for the securities they manage. The buy-side order management system interfaces with the broker’s order management system to receive quotes and place orders.


Sell-side order management systems are used by market makers and dealers to manage their customer orders. The sell-side order management system interfaces with the exchange’s order management system to receive quotes and place orders.



The order management process is vital for all businesses. It is the backbone of your company and can make or break your success. As mentioned in this blog, there are many different aspects to consider when managing orders, from processing them to shipping them out.


Be certain that you have a system in place that will help you stay organized and efficient. A good order management process will take into account customer satisfaction as well as your bottom line. By streamlining your process and making it more efficient, you can improve both outcomes. You can read our blogs on strategic procurement and strategic sourcing to help you develop an even better order management strategy.


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  • ERP order management is a system that enables businesses to manage their orders and track the progress of each order. It can help businesses to improve customer service, increase efficiency, and reduce costs. Order management systems typically include features such as order tracking, order history, order creation and entry, and shipping information.

  • ERP and OMS are two different types of ordering systems. ERP is an order management system that integrates all aspects of a company into one software system, while OMS is a system used specifically for orders. OMS is often used in conjunction with ERP but can also be used separately.



  • The order management system is mainly used by the sales department to keep track of the orders that have been placed by the customers. The system helps to keep track of the progress of each order, and it also allows the sales department to keep a record of the customers that have placed orders with the company.

  • There are a few different approaches to work order management: the manual approach, the automated approach, and the hybrid approach.

    The manual approach is where orders are managed and tracked manually, usually using paper or excel sheets. This can be time-consuming and error-prone, and it can be difficult to get a global view of all orders.

    The automated approach uses software to manage orders automatically. This can speed up the process and reduce errors, but it can be expensive to implement and are not suitable for all businesses.

    The hybrid approach combines the manual and automated approaches, using software to manage orders automatically but also allowing for manual intervention if needed. This is often seen as the best of both worlds, providing the speed and accuracy of automation with the flexibility of manual management.

  • Order Entry Management is the process of managing customer orders from start to finish. This includes taking customer orders, creating and issuing purchase orders to suppliers, shipping products to customers, and handling any returns or complaints.

  • The role of CRM in order management is to track and manage customer orders. CRM can help businesses keep track of customer orders, track order status, deal with customer complaints and send notifications when an order is placed, shipped, or refunded. CRM can also help businesses manage their product inventory and track stock levels.


    Distributed Order Management (DOM) is a collaborative order management system that allows authorized users to share information and manage orders centrally while maintaining the autonomy of individual business partners. DOM helps companies improve their order fulfillment process by allowing them to manage customer interactions better and optimize inventory management.



  • OMS or Order Management System and CRM or Customer Relationship Management (CRM) are two different systems that are often used together in a business. OMS is used to track orders and manage the process of fulfilling them, while CRM is used to track customer interactions and manage customer data. Many businesses use OMS and CRM together to manage their sales and customer relationships.

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