Order management is all about keeping track of orders coming into a retail business and managing the processes required to fulfill them. This covers everything from the point of receiving an order right through to delivery as well as after-sales experience and dealing with any relevant returns.
It also involves keeping a record of the customer – which may include their purchase history, payment method, and volume of order. Sales departments give notification to the warehouse to fulfill the order, and the order is then shipped to the customer.
For proper execution the process involves real-time visibility into the entire order lifecycle starting from the placement of order and ensuring that orders (SKUs) are not lost, delayed, or corrupted during the fulfillment process. The system may also comply with and support parcel carriers and provide sophisticated, centralized freight management and tracking/tracing capabilities. Clients, Customer service representatives account managers and suppliers will thus have the ability to track real-time inventory levels for each SKU and inquire about order and shipment status via the web – anytime, anywhere.
Although this process seems straightforward, it is actually rather complex because it involves different departments and people to get a purchase order moved into sales, then delivered/end of sale.
The start to end process includes:
- Placing of Order – The customer placing, receiving and paying for the order. The customer is assisted by a sales or customer service representative to fill the order form and submit it to be processed by the system. Alternatively, they can either order online or also by phone or in-store.
- Customer experience – Sales or customer service representatives keep a record of each customer – their order history, including volume and payment scheme.
- Order Fulfillment – The filled-out order form is sent to the warehouse responsible for the inventory that will fulfill the purchase. In the warehouse, inventory is monitored and the continuous supply from vendors is recorded. If inventory runs out unexpectedly by a large purchase order, warehouse managers will place an order to the purchasing department to place an order to vendors. If the business manufactures the goods, the warehouse notifies production of low or depleted inventory.
- Order Entry – The Accounting department is also given the entire order slip, including the stamp of fulfillment. The order is then recorded as cash sales or accounts receivable through their accounting software. Goods supplied by vendors and services provided for the delivery of goods are recorded as accounts payable. The sale is logged in the ledger, while the invoice is generated and sent to the client. The payment then is received and recorded.
- Delivering of Order – Shipping service providers or partners then deliver the goods to the customer.
Using Excel
Divide and enter all the standard information related to Products, Orders, and Purchases in their respective Sheets, which are already categorized for you. Information like Product Name, SKU, Stock location, Supplier, Current Stock level, Reorder Point, Sales Channel, Purchase Order, Purchase Quantity, etc.
Using formulas in the inventory management excel template, Excel auto-fills or calculates- Total amount of Order, Purchases quantities to be bought, Stock location, and much more values, if they’re entered prior or once the basic information is entered.
Update your Product sheet daily to record available current Stock level or when there are any changes in standard information like SKUs or suppliers or on the addition of new product(s).
Update your Order sheet when a new order comes in and gets confirmed on any of your sales channels. This could be done on a daily or weekly basis, depending on your business type.
Update your Purchase sheet when a particular product reaches near Reorder point and is needed to be restocked. At his moment, a new purchase order is placed. This could be done biweekly or more, depending on the business.
Certain information is dependent on other parameters which can be interlinked to cancel out manual calculation every single time. For inventory management using Excel, Selling Price is dependent on the Cost price and mark-up price. The mark-up price remains constant but the Cost Price for each product varies due to factors like Vendor, Demand of product, etc. Using the ‘SUM’ or ‘SUMIF’ Formulas in Excel, we have interlinked these 3 parameters to get the calculated Selling Price on its own. For every product: Selling Price = Cost Price + Mark-up Price.
Pictorial Data Representation – Analyzing data using only numbers and codes can make you go crazy! Excel provides various option for the pictorial representation of your data in the form of graphs, charts, diagrams, Smart Art, etc. This makes the analysis of the data much more organized and easy to interpret.
Forecasting – Excel allows trend lines to be extended beyond the graph, to offer predictions of future activity – and such forecasts can help businesses develop their future strategy.
Formula based forecasting can also be done using Excel’s ‘Forecast’ formula.
Forecasting for a y-value dependent on an x-value:
Formula: “=FORECAST(700,J3:J9,I3:I9)”
Syntax:“=FORECAST(x-value, known_y_values, known_x_values)”
You get y-value displayed.
Future Trends
With as much access to the Internet as we have, it has never been easier for customers to leave their loyalty behind and jump ship from one company to another if they experience poor customer service. That being said, there is little to no room for companies unwilling to adapt their order management systems and meet the needs of omni-channel consumers.
Because of these changes in customer expectations, businesses are faced with numerous challenges regarding order management, fulfillment, and distribution. Here are just a few of these challenges:
- To start, businesses are experiencing transportation issues as customers expect faster delivery times, as well as free shipping and free returns. Companies like Amazon and Zappos can have orders delivered in 1-2 days, which is becoming the norm in the minds of many consumers.
- Inventory management is another obstacle businesses are facing as they move toward having multiple distribution sites. These businesses are realizing they need more visibility into their inventory and need real-time information about product availability, order status, etc.
- Many companies are also seeing scalability issues, as they are unable to accommodate increases in both demand and growth. With more channels for customers to access, companies are failing to meet the needs of their consumers and are struggling to handle increases in sales volume.
- Finally, businesses are faced with profitability issues as they are experiencing an influx in both fulfillment costs and shipping costs. Free shipping and free returns can wreak havoc on transportation budgets, but are still services that businesses must offer if they want to stay competitive in today’s world.
To tackle these obstacles head on, companies must change the way that they manage their operations, and the best way to do that is by adopting an Omni-channel Order Management (OcOM) solution. In order to ensure a seamless customer experience for consumers, businesses and retailers also need to focus on ensuring a seamless supply chain process with a single OcOM solution.
Unlike traditional order management systems, OcOM processes allow businesses to meet the demand of heightened customer expectations, while still keeping their overall operational costs low. With an effective OcOM system, businesses can improve order routing, gain greater visibility into inventory, and improve overall levels of customer satisfaction – all of which are crucial to remain competitive.
Conduct landed cost calculations, measure vendor and forwarder performance or evaluate lead and cycle times.
