6 Key Stages of Order Processing

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Everyday, everywhere, goods are constantly transported from one place to another. And it takes a well-established process to do this with consistent reliability. Beyond delighting in the actual product, customer satisfaction is hugely affected by the company’s capability in order processing. No amount of customer relation can replace poor order fulfillment and unmet customer expectations.

What is Order Processing?

Order processing refers to the workflow associated with serving a customer’s order, from the receipt of the order, until the goods have been delivered to the customer and properly documented. It consists of complex stages happening in a sequence and supported by other business processes within the company. The end result of the process is the fulfillment of a customer’s order. A consistent order fulfillment process results in customer satisfaction

Stages of Order Processing

Order Preparation

This is the stage where a demand for a product becomes a signal for a buyer to place an order. There are several ways to do this: manually, via access to an online ordering systems, or using electronic data interchange systems connecting a customer’s internal order management system to that of a regular supplier.

The use of standardized order forms is essential when ordering, whether done manually or online.This guides the customers in preparing the orders, facilitates ease in processing and minimizes errors in entry.Some important inputs on the order form are: Ship to Address, Item Number and description, Order Quantity, and delivery date.In most cases, companies maintain a database of its customers and product maintenance, interfacing with its order processing system.

Order Transmittal

Once the order is finalized, the customer transmits the order information to the supplier either manually, sent via email, or clicking a confirmation key when ordering online, or using EDI systems.Once received, the seller triggers the process in serving the order.

Order Entry

This is the part where the seller checks the order for validity before serving the items. Details such as Order Date, Payment Terms, Item, Order Quantity, Unit Price, etc., are checked. Checking also includes stock checking, accuracy checking, credit checking, back ordering, order cancelling, transcription, and billing.

The accounts receivable system is a reference for order entry since customer credit or payment status is required to clear the order to be served.

Customer feedback is also important especially when the order cannot be served as expected by the customer, for whatever reason: product not available, delivery date not feasible, credit or payment impediments, etc.

Order filling

Once the order is cleared, the preparation process begins and may involve product retrieval, production or purchase.For most finished goods, product retrieval from a warehouse is triggered by a pick slip, a report used to gather the items that are on a sales order.

After the items have been prepared, a shipping confirmation is generated to record how many items were actually picked and packed for shipment based on the order. Information confirmed at this stage serves as a basis of the details of the shipping documents (e.g. waybill), and the final invoice for the customer.

Order Delivery

Shipping documentation and the schedule of delivery is arranged at this point. Shipping logistics agreements and insurance against damage or loss during handling are important considerations for order delivery. But the most important goal of this process is to meet the delivery schedule agreed with the customer.

Order Status Reporting

It is vital to provide the customer with a status of the order once this has been shipped out. This starts with the tracing and tracking of the order once released from the warehouse. Order tracing/ tracking technologies like laser-beam bar-coding, and GPS applications are being used by logistics companies like FedEx, UPS.

The Invoice, which contains the order details and the charges, are also released at this stage, and Invoice transmittal may be done manually or electronically via email or any online B2B application.

Optimizing with Order Processing

The elements of Order Processing are complex interdependent steps that need to be performed seamlessly to ensure a smooth delivery of goods to the customer. Each element is supported by separate independent processes happening simultaneously with the order process.

An effective order processing system must have a smooth interface with other existing business processes in order to operate optimally. The goal is to fulfill customer orders with consistent reliability, enhancing the customer experience with the company, and bring about customer satisfaction — to sustain profitability.

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