What is Order Processing?

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Accurate and pain-free order processing can make all the difference between a loyal customer and one who never returns. It is a make-or-break process that can greatly impact a company's reputation and bottom line. When a customer places an order, what do they normally expect? A smooth and hassle-free experience, timely delivery, and receiving exactly what they ordered. If a business falters at any point in this chain, it can result in a lost sale, a negative review, or, even worse, a lost customer.

This is why efficient order processing is crucial for businesses to succeed in today's competitive market, build a loyal customer base, and ultimately drive growth. In this post, we'll explore every aspect of order processing, from what it is and how it works to the different types of systems. We'll also discuss the benefits and drawbacks of using an order processing system, as well as share some valuable tips that can help streamline the process and improve overall efficiency.

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What Is Order Processing?

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Image credit: katemangostar

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Order processing, in simple terms, is the order management workflow that a business follows to accept, manage, and fulfill customer orders. It can be described as a series of steps that start from the moment a customer places an order and end when the order is successfully delivered to the customer. Order processing can vary depending on the scale of a business's operations. It can take place in a warehouse or distribution center where pickers, sorters, and packers work in coordination to fulfill orders, or it can be managed by a single person or small team. So, why is efficient order processing so important? Well, there are a lot of reasons, some of which include:

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• It helps businesses keep track of inventory levels and avoid stock shortages.
• It ensures timely and accurate delivery of orders, which leads to satisfied customers.
• It allows businesses to monitor and analyze order data to make informed decisions.
• It helps companies maintain a good reputation and build customer loyalty.

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What Is Order Processing Software?

Order processing can be done manually with pen and paper or through spreadsheets, but as a business grows, so does its operational scope, and these manual methods no longer suffice. This is where order processing software (OPS) comes into play— OPS speeds up the order processing process, reduces the potential for human error, and ensures customer satisfaction, no matter how big or small a business operation is. Order processing software is a digital tool designed to manage and streamline the order processing workflow from start to finish with little to no manual intervention.

Order processing software automates the multiple stages of an order lifecycle: it can capture orders from various sources (e.g., emails or online portals), track order/delivery statuses, and generate invoices, all of which help businesses efficiently manage and fulfill customer orders. This is critical as accuracy and timeliness are key factors in maintaining customer satisfaction, and a satisfied customer means more sales, positive reviews, and a better brand reputation. Order processing systems can also integrate with other business systems, like ERP or CRM, to merge all order processing operations (e.g., data entry, order confirmation, etc.) into one unified platform.

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Steps Involved in Order Processing Workflows

A critical component of order fulfillment, order processing involves a whole lot of moving parts. It's a complex process that requires careful management and coordination to ensure that customers' orders are fulfilled correctly and on time every time.

Depending on the scale of a business and its operational model, order processing workflows may vary. However, there are five general steps that are typically followed by most businesses to process orders. These include:

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1. Receiving Orders

The very first step in the order processing workflow is receiving an order from a customer. This can be done through various channels, including emails or online via an e-commerce website. The order details, like product name(s), quantity, and delivery address, are then recorded and entered into the ERP or order management system. This step is crucial as it sets the foundation for the rest of the order-processing workflow.

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2. Verifying/ Validating Orders

Once the order is received, the next step is to verify and validate it for accuracy. This step involves checking the order information (e.g., product name, quantity, and price) against what has been entered into the system. Verifying and validating order details is essential as it ensures that the customer's order is accurate and that there are no discrepancies or errors that may cause delays or issues in the fulfillment process.

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3. Providing Quotations

In cases where the order requires special pricing or customization, a quotation is generated and sent to the customer for approval. The quotation includes all the necessary information, such as item details, prices, terms/conditions, delivery dates, etc. If the customer agrees to the quotation, the order can move forward to the next step. If not, the process may need to be repeated until both the customer and the business reach an agreement.

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4. Creating Invoices

Once the order is confirmed and approved by the customer, the business then creates an invoice to request payment for the order. This document usually outlines details like company and customer information (e.g., name or address), product/service description, delivery date, payment terms, and total cost. The invoice is then sent to the customer for payment processing.

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5. Shipping Orders

After the customer's payment is processed and the order is ready to be fulfilled, it moves on to the final step in the order processing workflow: shipping. This involves picking, packing, and shipping the product/service to the customer's designated delivery address. Once the order is shipped, a tracking number is provided to the customer, which allows them to track their order's delivery status.

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Factors Involved in the Order Processing Workflow

There is no universal approach to processing orders. Each business has its own set of priorities and methods for order fulfillment, which can differ depending on several factors, including:

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• Nature of the product: What type of product is being ordered? Is it perishable or fragile? Each product may require a different approach to packaging and handling. For example, perishable items like food may require special temperature-controlled environments, whereas fragile items like glassware may not.
• Order volume: How many items are being ordered? The amount of items can greatly affect how they are handled and shipped. Bulk items may be freight shipped to a distribution center, while smaller orders may be directly shipped to the customer through a courier service.
• Shipping packaging: You can't just toss a product into any random box and expect it to arrive at its destination unscathed. The size and type of packaging can greatly impact the handling of the product. For instance, large items (e.g., heavy machinery) may require specialized packaging and handling compared to smaller items like bolts or smaller precision instruments.
• Productivity of workforce: Can your current workforce efficiently handle the order processing workflow? If not, it may be time to re-evaluate and consider incorporating automation to improve productivity and speed up the order fulfillment process.
• Seasonality: During busy seasons (like holidays), the entire order-processing workflow can be impacted. With a higher volume of orders to pick, pack, and ship, the process may take longer than usual. This can result in a delay in delivery and impact customer satisfaction.

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Types of Order Processing (OP) Systems

Order processing systems are designed to help companies manage and streamline the process of fulfilling customer orders. To do so, these systems collect and store all the data related to customer orders (such as product information, shipping addresses, and payment details) in a centralized database. This way, all relevant departments within a business can access accurate and up-to-date order information at any time. For example, the sales team can use the system to track the status of orders, which can help them provide more accurate delivery estimates to customers.

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There are several types of order processing systems, each with its own way of managing orders, but they can generally be categorized into two main types: manual and automated.

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1. Traditional Order Processing Systems

Traditional (or manual) order processing systems rely on human labor and physical or digitized paperwork to process and fulfill orders. Everything from order entry and verification to order tracking and invoicing is done by hand. While processing one or two orders manually may not be a big deal, as the order volume grows, the manual process can become cumbersome and time-consuming. Moreover, manual order processing increases the chances of human error because every step of the process relies on human input. This can lead to incorrect or delayed orders, which can negatively impact customer satisfaction.

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2. Automated Order Processing Systems

Automated order processing systems rely on technology to manage and streamline the order processing process. These modern order-processing systems use advanced AI technologies like large language models (LLMs) to automate various tasks in the order-processing workflow, such as order entry, data extraction, order tracking, invoice generation, and order confirmation.

For instance, an automated system can extract vital information from customer orders (e.g., product details or delivery addresses), verify it with what is already stored in the database, and then automatically input the data into a company's ERP/CRM system. Since these systems use AI technology, they can process orders at a much faster rate while greatly reducing the chances of human error.

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Advantages of Order Processing System

Order processing systems can optimize business operations and significantly improve the overall customer experience. For example, order processing systems offer a streamlined approach to tracking order progress, from when a customer places an order to when it is delivered. This can help improve accuracy in order fulfillment and provide customers with real-time updates on their orders. Order processing systems can also reduce the risk of lost or misplaced orders. For instance, if a customer accidentally inputs the wrong address, the system can flag the error and send an alert or notification to the customer and/or the business for correction. In turn, this can offer a more reliable experience for customers and build trust and loyalty towards your business.

A well-implemented order processing system not only eliminates manual workload (like data entry or order tracking) but also mitigates the possibility of human errors, which can be costly and time-consuming to rectify. By automating repetitive tasks, businesses can redirect their workforce to focus on more value-added tasks, like customer service or product development, that can help grow the business.

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Disadvantages of Order Processing System

While order processing systems often prove beneficial when implemented well, they do have some drawbacks that businesses should consider before investing in them. Extremely intricate and tailored systems can be costly to implement and maintain. This is because they may require additional specialized personnel or constant updates to ensure proper functionality.

Moreover, on-premise order management software also comes with maintenance costs, including the need for an IT team to manage it. This can be an added burden for small businesses or startups as they may have limited resources or budget constraints to allocate to IT infrastructure and support.

Since all order processing data is automatically captured by the software program, it can also be hard to track down errors compared to a manual order processing system where a human employee can retrace and rectify their steps. This can result in inaccurate orders and customer dissatisfaction if not addressed promptly.

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7 Tips to Improve Your Order Processing

While every company's order processing methods are tailored to its specific business and customer requirements, the end goal is always the same: accurately fulfill customer orders, improve productivity, and keep costs low. Here are some tips to help refine your order processing and reach these objectives.

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1. Focus on Boosting Efficiency

Businesses run more efficiently when all the components work seamlessly in harmony. It's crucial to continuously monitor your order processing workflows to pinpoint areas where improvements can be made. Reducing or eliminating manual, repetitive tasks (e.g., order intake, invoicing, or data entry) with AI or other automation tools can free up time to focus on more strategic tasks that require human decision-making, like order fulfillment issues or complex customer inquiries.This allows your team to work smarter and more efficiently, leading to higher productivity levels.

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2. Keep the Stock Levels Up-to-Date

Maintaining well-organized and accurate inventory records can directly impact order processing efficiency. When a customer places an order, they expect that the item(s) they want are in stock and ready to be delivered. However, if the inventory data is not accurately updated or the item is out of stock, it can lead to delays and customer dissatisfaction. While manual organization systems (e.g., spreadsheets) can work efficiently to a degree, automated inventory tracking systems can reduce the likelihood of human error, speed up the process, and provide real-time data for better decision-making.

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3. Warehouse Management System

Implementing a warehouse management system (WMS) can significantly enhance productivity and lower costs related to order processing. For example, a WMS can handle all warehouse-centric functions, including order fulfillment, inventory management, and shipping, in one centralized location; it gives you a complete, real-time view of your inventory, allowing you to plan and fulfill orders more efficiently. A WMS can also be integrated with other supply chain software(e.g. SAP or NetSuite) to further streamline the order fulfillment process, resulting in improved service levels and reduced costs.

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4. Demand Forecasting

It's always better to be prepared for a surge in orders than to face backlogs and delays. By analyzing customer insights and historical sales data, it's possible to estimate future demand and plan accordingly. For instance, demand forecasting can help you anticipate peak seasons and increase stock levels or hire extra staff to handle the expected increase in orders. A proactive approach to demand forecasting can also help you avoid overstocking and reduce unnecessary inventory costs.

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5. Enhance Customer Communication

Keeping your customers informed and up-to-date throughout the order-processing lifecycle can help build trust and satisfaction. Be transparent about order status and estimated delivery dates. If there are any delays or issues, communicate promptly and provide alternatives to ensure a smooth customer experience. When customers know what to expect and are kept in the loop, they are more likely to have a positive perception of your brand and become repeat customers.

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6. Utilize Automated Order Processing Software

Automation can significantly improve the speed and accuracy of processing orders. By automating repetitive tasks (like data entry, order verification, tracking, invoice creation, etc.,) businesses can save time and money while minimizing the chances of human error. Automated order processing software also offers real-time visibility into the entire order fulfillment process, allowing businesses to identify and resolve any bottlenecks quickly. For example, if an order has incorrect or missing information, an automated system can flag it and notify the appropriate team member to fix the issue.

Cutting-edge order processing software powered by AI can also come with advanced features like natural language processing, enabling businesses to understand and respond to customer queries more efficiently. For instance, a customer can ask about the status of their order in simple terms like "Where is my order?" and the AI software can interpret the question, check the data, and provide an accurate response in seconds. AI-powered automated order processing can also help businesses handle orders in multiple languages, making it easier to expand globally and cater to a diverse customer base.

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7. Train and Upskill Your Team

It's crucial to invest in training and upskilling your team members to ensure they are well-versed in utilizing new technologies and processes. It doesn't matter how advanced your order processing systems are if your team lacks the skills to operate them efficiently; it's just a waste of resources. By providing regular training and upskilling opportunities, you can equip your team with the necessary skills to use these advanced order processing systems, leading to greater productivity, improved efficiency, and more accurate order processing.

Aside from these tips, other things you can do to improve your order processing workflows include: integrating your ERP/CRM systems with your order processing system, and regularly reviewing and optimizing your processes based on customer feedback and data insights. By continuously striving to improve and streamline your order processing workflows, you can provide a better customer experience, reduce costs, and stay ahead of the competition.

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Streamline Your Order Processing Workflows with turian

If you want to automate and streamline your order processing workflows, from order entry to order confirmation, then turian is a robust AI automation solution that can do just that. Our cutting-edge order-processing software is powered by the most advanced large language models (LLMs) along with layers of proprietary technology that ensure accuracy and speed in every step of the order-processing process. turian can automate a range of manual, repetitive tasks, such as sales order entry, data extraction and validation, invoice creation, order tracking, and more.

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Our AI assistants can capture orders from various sources, including email free-text, PDFs, Word files, and images, pull out the necessary data points (e.g., product name, quantity, price), and automatically enter them into your company's ERP or CRM system. turian doesn't just blindly copy and paste data; it understands the context and meaning behind the information and can make decisions accordingly, just like a human order processor. For example, if a customer sends an email with the subject "Urgent Order", turian will prioritize that order and notify your team for immediate action.

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Our AI assistants can also generate quotes, draft and send order confirmation emails to customers, track and update order status, and even handle customer inquiries regarding their orders in a conversational manner. For instance, if a customer asks about the status of their order, turian can provide real-time updates and estimated delivery times. If there are any delays or issues with the order (e.g., wrong/missing information), turian can flag it and notify your team members for approval/confirmation before proceeding. With turian’s intuitive interface, you can monitor and manage all of your order processing-centric tasks in one place, giving you full control and visibility over your automated workflows.

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One of the greatest things about turian is that it can be seamlessly integrated into your existing systems (e.g., ERP, CRM) and email clients (e.g., Outlook, Gmail) without any disruptions to your usual workflows andr significant IT costs. Moreover, you don't have to train our AI assistants or worry about data quality. Our models are pre-trained and constantly learning from new data, feedback, and your specific business processes. But we don't just rely on pre-training; we work closely with our clients to fine-tune our models and tailor them to their unique business needs and industry requirements. This way, you get a personalized AI assistant that understands your workflows and can adapt to changes in your business. If you want to see for yourself how turian can streamline your order processing workflows, we offer a free Proof of Concept. In the PoC, you can witness our solution in action with real data and decide if it's the right fit for your company.

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