order processing system

What Is Order Processing? – Definition, Tips, and Features

Order processing consists of a sequence of tasks and actions involved in managing and fulfilling orders once they are placed.

The pressure to fulfill orders quickly and smoothly has reached unmatched levels, with the popularity of online shopping soaring.

Efficient order management in an e-commerce business is necessary because it is crucial for building customer loyalty and satisfaction in today’s digital marketplace. Your order process can make or break the customer experience and determine if they become repeat buyers or not.

But what is order processing exactly?

We will take a deep dive into defining what order processing involves, key features to look for in an order processing system, and best practices to streamline the process.

What Is Order Processing?

Order Processing Explained

The process entails the necessary steps and tasks to receive, fulfill, and finalize orders. There are multiple steps involved, involving various departments and systems. It involves multiple steps, departments, and systems, all to provide customers with a seamless and gratifying experience.

Steps in Order Processing Workflow

Order processing workflows can differ from business to business, but here is a general outline of the key steps involved:

Placing an Order

Ordering is a smooth and easy process.

Here is the breakdown:

  1. Customers can place their orders online, over the phone, or in person.
  2. An advanced order management system captures all the necessary details, including the chosen items, quantity, shipping destination, and payment method.
  3. To ensure accuracy and efficiency, the system carefully verifies the order by checking for any data errors, ensuring product availability, and verifying customer information.

Selecting Inventory

The system continuously tracks inventory levels in real time to guarantee that the products that are ordered are currently in stock. Inventory is distributed from specific warehouses or stores based on availability and shipping efficiency. If any of the items you select are out of stock, the system may provide the option to backorder or suggest possible alternative products.


Implementing automated checks is crucial for identifying missing information and detecting potential fraud. To enhance the efficiency of sorting and filtering, it is essential to standardize and categorize order details.

Additionally, prioritizing orders based on factors such as urgency (e.g., overnight shipping), order value, and customer type is important.


It is important to ensure that all items being shipped out are in good condition. Inspect for any damage and ensure they are by the order specifications.

To achieve this, one must carefully select suitable packing materials, considering the item’s size, weight, and fragility.

Be sure to insert packing slips containing a list of items, quantities, and any additional details, such as refund or exchange instructions.


During this step, orders are assigned to specific carriers for transportation. Factors such as shipping method, costs, and delivery timeframes are considered.

Shipping manifests are then generated, which are important documents for carriers to track shipments and complete billing.

Additionally, customers are provided with tracking numbers and estimated delivery dates to ensure transparency and prompt communication.

Tips to Improve Order Processing

To enhance order processing, it is important to consider these valuable tips:

Work Faster and Smarter

One of the important aspects of order processing is investing in an automated order management system (OMS). With an OMS, you can easily automate inventory checks, order validation, and shipping label creation.

Say goodbye to tedious manual tasks and experience a streamlined, time-saving process.

Use Machines to Help

Investing in a reliable traditional OMS, or wholesale order management system, is essential. However, it is equally important to explore other technological advancements for order processing. One such advancement worth considering is the use of robots capable of efficiently

navigating warehouses, identifying items, and retrieving them accurately and quickly. By implementing this automation, the time and manual effort required for picking are significantly reduced.

Guess What Customers Want

One effective approach is to analyze previous customer orders and identify patterns in their behavior. This will provide valuable insights into various aspects, including the popularity of different products and the frequency of purchases.

Additionally, you can encourage customers to share their feedback and thoughts through reviews. This will help you understand their specific needs and preferences.

Know How Much Stuff You Have

Having a real-time inventory tracking system is crucial to avoid overselling products and disappointing customers due to stockouts. By investing in inventory management software, you can easily track inventory levels, generate reports, and manage purchase orders.

Keep Your Storage in Check

Categorizing items by type, size, popularity, and demand is crucial to maintaining an organized environment. Consider using clear labels and location identifiers for easy identification and retrieval of products, so they are readily available for you should you need them.

Additionally, do some spring cleaning by discarding obsolete and damaged items and rearranging inventory based on current demand and sales trends.

Organize Your Storage Areas Well

Boost your storage capacity using shelves and pallet racks while making the most of your available space.

Examine your picking patterns and strategically organize items to minimize travel time, allowing for increased efficiency in completing more picks within a shorter timeframe.

Talk to Customers Clearly

Always be transparent with your customers.

Ask yourself the following questions:

  • Is the language clear and to the point?
  • Are all costs associated with the order, including product price, taxes, and shipping fees, clearly displayed for the customer to see?

After receiving an order, promptly send the customer order confirmations containing essential information, including product names, quantities, shipping addresses, and estimated delivery dates. Additionally, ensure that real-time tracking is available, providing updates on the order status and expected delivery dates.

To leave a positive impression, express gratitude by sending a thank-you email to acknowledge the customer’s appreciation for the order’s successful delivery.

Inventory Control

Perform regular inventory audits to maintain accuracy and detect any inconsistencies in records.

Physically count inventory on a specified schedule, whether it be annually, quarterly, or monthly.

Establish minimum stock levels for each item to automatically initiate reordering when stock levels drop below a specified threshold.

Barcode Scanning

Say goodbye to the tedious task of manually entering data and embrace the efficiency of barcode scanning. With this technology, you can instantly capture production information, saving you time and removing the risk of errors caused by manual input.

By scanning barcodes during the receiving, picking, and shipping processes, you can automatically update your inventory levels. This guarantees accurate visibility of your stock and prevents issues like stockouts or overselling.

Additionally, you can utilize barcode data to analyze sales trends, identify slow-moving products, and optimize your stock levels. Ultimately, this will improve your business’s profitability.

Key Features to Consider in an Order Management System

When it comes to streamlining your order fulfillment process, choosing the right order management system is crucial.

Here are some key features to consider when investing in one:

Enable Easy Purchase Orders

Streamline your purchasing process with an intuitive interface that makes creating purchase orders a breeze. Easily input supplier information, item details, quantities, and pricing with minimal effort.

Save time with pre-defined templates for commonly ordered items or recurring suppliers, ensuring consistency and eliminating the need for repetitive data entry.

Never worry about errors again. You can automatically generate purchase orders from approved requests, eliminating the need for manual tasks and improving accuracy.

Efficient Inventory Management

To effectively manage inventory, real-time visibility is crucial for tracking stock levels across different locations and sales channels. This ensures that stockouts and overstocking are avoided.

Also, receiving real-time updates allows for the timely monitoring of stock levels, whether it be for orders or returns. In the event of low stock, automated notifications can be sent to keep you informed.

Ensure Order Accuracy

Catch errors before they happen by implementing rules to validate order data, such as product availability, customer information, and shipping addresses. This ensures that only accurate and complete orders are processed, leading to satisfied customers.

Prevent overselling and backorders by instantly updating inventory levels after each order is placed or picked. With real-time inventory management, you can confidently fulfill customer orders and eliminate any inventory discrepancies.

Streamline Returns Management

You can have complete control and stronger visibility of overall returns with a centralized dashboard. With real-time updates, you’ll easily stay informed about return volumes, reasons for returning, and return status.

Additionally, you can streamline your inventory management by automatically updating levels upon receiving and inspecting returned items.

Integrate with Marketing and CRM

You can experience seamless synchronization of customer details, such as name, contact information, purchase history, and preferences, across OMS, CRM, and marketing platforms. Additionally, order information, including order status and delivery updates can be synced across all platforms.

You can automate targeted marketing campaigns by leveraging purchase history and abandoned carts, among other factors. Furthermore, generates personalized product recommendations based on past purchases and what customers are browsing.

Reporting and Financial Data

Take advantage of reporting capabilities to easily generate predefined reports covering a wide range of data, such as order volume, inventory levels, customer behavior, and financial performance.

Additionally, you can create customizable dashboards that focus on key metrics tailored to your specific needs and decision-making processes.

Implement Automations

Many order management systems provide automation features that eliminate the need for manual tasks, resulting in time and resource savings. With the elimination of manual tasks, the likelihood of mistakes is significantly reduced.

Wrapping Up

Order processing is a major part of any business. With the rise of e-commerce and online shopping, order processing has become even more crucial in today’s fast-paced consumer market. From ensuring accurate orders to providing timely delivery, order processing involves multiple steps and requires careful management. By understanding its definition, the following

helpful tips, and using key features, businesses can improve their order processing and ultimately enhance their overall efficiency and customer satisfaction.

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