What Is Order Processing? 5 Steps & 10 Tips To Improve

It’s no surprise that ecommerce has become one of the fastest-growing industries in an increasingly digitalized world. In order to meet this demand, businesses need to improve the order processing workflow – from when an item is ordered to when it’s shipped – to ensure customer satisfaction.

What Is Order Processing?

Order processing is a critical part of order fulfillment. It ensures that customer orders are prepared correctly and delivered to the correct place. Order processing may take place in a warehouse or distribution center where pickers, packers, and sorters all work together to fulfill orders or by one person.

What Is Order Processing Software?

Order processing is possible manually using pen and paper. However, the complexity of this method increases as companies grow. Order-processing software is a great tool for minimizing human error and ensuring customer satisfaction.

The software can be used to ensure that orders are delivered accurately and on time. It stores data, shares it, and checks stock availability. Accuracy and reliability lead to increased customer satisfaction and more sales. Order management systems (OMS) are often integrated with other software like accounting and billing to consolidate order processing.

How To Order?

Order processing is a process that occurs after a client places an order. The process begins with checking that the product is in stock. Next, the inventory is sorted, and the items are sent to the sorting area. Each order is then compiled, packed, labeled, and sent to the customer, either directly or via order consolidation, depending on whether there are smaller volumes of shipping.

Five Steps In The Order Processing Workflow

The order processing process includes five steps, from the time of placing an order to when it is delivered. It can also continue if a client initiates a return procedure. What happens when an order is being processed? Here is a typical breakdown of the workflow:

1. Order placement: When a business receives an order from a client, the details of that order (including items, quantities, shipping information, and delivery addresses) are typically sent to a system for order management. The OMS will automatically determine the warehouse to ship from if the company has multiple fulfillment centers or warehouses. It does this based on the delivery address and availability of items. It reduces delivery times and costs. To ensure faster delivery, an order with multiple items can be fulfilled at several warehouses. If, for example, one fulfillment center doesn’t stock an item, or if that item is not in stock, then the customer will receive two shipments, so they don’t have to wait until it gets restocked.

2. Picking inventory is the process of obtaining a certain quantity of inventory items to fulfill customer orders. Order picking is a tightly controlled process that directly impacts the overall productivity of order processing. The sooner orders can be accurately picked and packed, the faster they can be shipped. Organizations use a variety of picking strategies to efficiently pick orders. These include, but are not limited to:

• Picking in pieces, each picker collects the products needed for one order.
• Picking by zone, in which each picker has to select items from a specific area of the warehouse. The final step is to collect all items.
• Order pickers gather products in batches for multiple orders.

Picking can either be done manually using spreadsheets and packing slips, or it can be done automatically by barcodes and scanners.

3. Sorting is the process of separating items according to their final destination. When zone or batch picking is used, for example, each item has to be sorted according to its order before it can be packed and shipped. Sorting is a crucial step to ensure accuracy and customer satisfaction, as it allows workers to check that all items ordered are in good condition and present for shipping.

4. Packing is the process of packing goods into shipping boxes. Packing also involves weighing packages, labeling them, and adding any delivery instructions and recipients’ addresses. It’s important that you prioritize weights and dimensions for easy handling and cost-effectiveness, whether your items are packaged in plain corrugated boxes or custom packaging.

5. Shipping: The transport of orders to their destination. Orders may be sent directly to customers or consolidated with orders that are going to other locations in order to reduce costs and the number of shipments. When orders are consolidated, multiple orders will be shipped by the same carrier and then sent to different locations as needed. It’s crucial to have a tracking system that you can rely on so both you and your clients can keep track of orders.

Order Processing Factors

Processing orders is not a “one size fits all” process. The methods and priorities used by businesses, carriers, and distribution centers vary. They are often influenced by factors like:

• The type of product. For example, perishable products such as flowers or food need to be transported in a temperature- and/or humidity-controlled environment to maintain quality.
• The quantity of the order. Bulk orders are handled and packed differently from small orders. Small orders may be delivered directly to the customer via postal service, whereas bulk products might be shipped by freight to a distribution center.
• Shipping Packaging. Not every item can be packaged in the same way, and the packaging container size can influence how it’s handled. A vinegar producer who carefully packages bottles and gallon containers to be sold in retail stores must use a different approach when packaging commercial 55-gallon barrels and 275-gallon totes.
• Productivity and efficiency of the workforce. The ability to keep up with order processing requirements can be an important factor in deciding if automation is needed.
• Seasonality. Busy seasons for shopping (such as the holidays) can cause stress to the order processing workflow. The workload of workers is increased because there are more orders to sort, pack, and ship. This can cause the order processing workflow to be longer than normal.

Order Processing Systems Are Available In Different Types.

Order processing systems are available to make order fulfillment faster and more accurate. In order to do this, they collect and store all data related to orders — from inventory availability to tracking shipments — in a centrally located database. It is now possible for all relevant departments to have access to real-time information about orders at any time. The system can be used by the shipping department to determine where and which orders should be shipped.

Two main types of order management systems exist:

• Traditional systems of order processing are based on manual labor and handwritten files. All order processing, whether it’s writing order slips or dropping off hand-packaged orders to the carrier, is done manually, typically by a single person or a small team. The person or small team responsible for order processing is also in charge of tracking inventory and order data. This can be a daunting task.
• Modern systems for order processing are technology centric. All data, including customer profiles, inventory, and order processing tasks, are fed into the software. It reduces the chance of human error while increasing a company’s growth potential and capabilities. 

Order System Benefits

Order processing systems are a boon to businesses and can enhance customer service. Order systems, for example, make it easy to track orders from the time of picking up to the moment they are shipped. It can improve the accuracy of picking, sorting, and packing. Order systems can also help prevent orders from being lost or misplaced. This can lead to a more reliable experience for customers and can also result in recurring sales or positive recommendations, which help attract new clients.

Order System Disadvantages

Order systems can be beneficial when they are implemented correctly, but there are some drawbacks. In order to maintain the functionality of highly complex or technological systems, additional personnel may be required. This can make implementation expensive. The cost of maintaining on-premises order software can be significant and may even include hiring additional IT staff. It can be difficult to trace an error if it occurs, as order processing data is captured automatically by the software and not manually by warehouse workers who could retrace the steps.

Ten Tips For Improved Order Processing

While each company has its own unique order processing procedure, the goal of maximizing accuracy, efficiency, and productivity is the same for all companies. Here are some tips on how to achieve these goals and improve order processing:

1. Workflow efficiency: Businesses function better when they are all in sync. Track workflows continuously to identify where they can improve. Simplify communication whenever possible to accelerate decision-making without compromising accuracy.

2. Automation is a great way to save time and money for businesses, improve the experience of customers and make workers’ lives easier. Automation can, for example, improve the shipping process, as well as other general order fulfillment procedures.

• Shipment: Automation helps to choose the most cost-effective shipping method based on factors such as available inventory, destination, and package size. Automated systems for shipping can send notifications to customers regarding order confirmation and tracking.
• Processes Picking inventory and sorting are made easier with automated systems. Having an automated communication system can also improve the flow of information between all employees involved in order processing. Automation can, for example, help create task lists that are sent to pickers, sorters, and packers. Automated processes can prevent employee burnout and are less likely to cause mishaps.

3. Demand forecasting. By analyzing past purchasing trends and customer profiles, it is possible to better plan, budget, and set goals for order processing. Demand forecasting, for example, can help businesses determine when they need to hire seasonal staff.

4. Accurate stock level: Well-organized, accurate inventory data will improve order processing efficiency and ensure that customers receive their orders promptly and accurately. Manual or outdated processes can slow operations down. Automated tracking systems are faster and virtually error-free than manual organizing methods.

5. Warehouse management systems can be a key tool in increasing productivity while reducing costs. A WMS, for example, can centrally manage all warehouse tasks, including order fulfilment service and shipping. A WMS can be used in conjunction with specific inventory software and other supply-chain software to streamline the order fulfillment process. This increases the quality of service while decreasing costs.

6. Partial order processing – Sometimes, it may not be possible for a customer to receive their entire order in a single shipment. A pencil manufacturer with low stock might only be able to send half of a 1,000-pencil order to an office supplies store. The manufacturer may process a portion of the order so that the office supply store has items to sell. They will then send the remaining half once it is available. Partial order processing is also a way to increase shipping efficiency. It may be quicker to split an order up into multiple shipments if, for example, part of the order comes from your warehouse while the other part is from a fulfillment center nearby. Being able to ship partial orders can increase customer satisfaction.

7. Communication with customers: It is important to communicate and assess customer satisfaction throughout the order processing workflow. Let your customers know that their orders are in progress. This will give them more control and help them feel involved.

8. Inventory control: Inventory control, along with demand forecasting, helps to prevent situations where there is too much or too little stock available. Inventory control is a way to save money. It ensures that the company only purchases the products and quantities it can sell. Inventory control that is efficient incorporates information from recent purchases as well as reorder rates and customer satisfaction.

9. ERP integration: A enterprise resource planning system automates business processes using a central database. This database collects information from departments ranging from accounting to human resources, including warehousing. Order management modules integrated with ‘s broader ERP system will help track and monitor customer orders. This can improve the speed of order processing and improve the customer experience.

10. Mobile barcode scanning and picking: Pickers use mobile devices to scan the barcodes of items when they are picked for an order. These scanners will alert teams if an incorrect barcode is scanned. This can reduce picking errors.