Commerce

What Is Order Management and Why Should You Care?

It's important to deliver on consumer expectations.

boxes in a retail warehouse
[©MARKO/Stocksy United]

Editor’s note: This article was updated on November 6, 2020.

In the world of ecommerce, few things can top the excitement and anticipation of receiving a package on your doorstep. That was the case in our house, as I recently surprised my daughters with a newly released Harry Potter Lego set. I ordered online and looked forward to its speedy arrival. Thankfully, I (and more importantly, my daughters) weren’t disappointed. The package arrived on time and intact. In fact, we got to spend the whole weekend building a new wing of Hogwarts!

This is the moment of truth, the moment a merchant fulfills their brand promise to its customers. As our kids spent hours fitting all the pieces of Hogwarts together, building out Dumbledore’s office and the prefect’s bathroom, I couldn’t help but think of what went into getting the package to our door. So many interconnected pieces made it possible.

The ordering and fulfillment process for Legos — and millions of other products — can be either awful or awesome, and indeed can make or break a brand’s relationship with a customer. My kids would have been crushed (and let’s be honest — me even more so) if our order hadn’t arrived when expected.

What is order management?

Order management systems are the not-so-secret sauce that determine outcomes like this.

Order management has historically been thought of as everything that happens after the buy button. This includes downstream operational processes, people, systems, and partnerships to fulfill an order. But the foundation of modern order management systems goes even deeper. 

Consumers expect the whole process to work seamlessly, from the moment they check out to when they receive their order. They also want complete transparency around order status. Consumers want to know if there’s a problem in transit, and they want hassle-free returns. 

So what exactly happens after a shopper hits the buy button?

Once upon a time, order management systems were relegated to back-office systems, typically within the logistics division of a company. But that doesn’t work in a customer-centric economy, because order management is so central to the overall customer experience. Everything brands have done in the customer relationship management (CRM) lifecycle — awareness, marketing, site experience, consideration, acquisition, conversion, and more — leads to this one moment. In fact, this is the most important moment of value exchange. If brands fail to deliver on their end of the value exchange (money for goods and services rendered), does anything else that came before really matter? 

Now more than ever, order management systems (OMS) must deliver on that brand promise. 

So what happens after a shopper hits the buy button? Once a shopper begins to checkout, an intricate dance begins to carry out the order. There are up to 39 different systems that a storefront may interact with to complete an order. The most common are tax, payment, fraud, inventory management, accounting, ERP, and shipping. Here’s the step-by-step process:

1. First, a merchant must have an accurate view of inventory counts to prevent sell-throughs and overstocks

This view helps inform shipping origin, as products can be shipped from multiple locations, or split across multiple warehouses, distribution centers, stores, or even a third party.

2. After confirming inventory, order routing takes place

Is the product a standard item? Or, is there a customization process that may route to a specific warehouse? For special orders, a team may need instructions to construct by hand a personalized product.

3. Next up, shipping integrations

Fast and flexible shipping options are critical to earning loyalty and trust. In a 2018 State of eCommerce Delivery study, 58% of consumers said they chose one brand over another because they provided more delivery options. Further, 61% said that a positive delivery experience incentivized them to shop with a brand again.

4. Last, there’s delivery

Once the items have been picked, packed, and prepped for shipping, payment is captured, and the goods are on their way to the customer.

Order management is the brains behind each step in the fulfillment journey. Think of it as the conductor of an intricate set of business logic and workflows that take an order from cart to customer.

In the world of ecommerce, few things can top the excitement and anticipation of receiving a package on your doorstep. That was the case in our house, as I recently surprised my daughters with a newly released Harry Potter Lego set. I ordered online and looked forward to its speedy arrival. Thankfully, I (and more importantly, my daughters) weren’t disappointed. The package arrived on time and intact. In fact, we got to spend the whole weekend building a new wing of Hogwarts! 

This is the moment of truth, the moment a merchant fulfills their brand promise to its customers. As our kids spent hours fitting all the pieces of Hogwarts together, building out Dumbledore’s office and the prefect’s bathroom, I couldn’t help but think of what went into getting the package to our door. So many interconnected pieces made it possible. 

The ordering and fulfillment process for Legos — and millions of other products — can be either awful or awesome, and indeed can make or break a brand’s relationship with a customer. My kids would have been crushed (and let’s be honest — me even more so) if our order hadn’t arrived when expected.

What is order management? 

Order management systems are the not-so-secret sauce that determine outcomes like this.

Order management has historically been thought of as everything that happens after the buy button. This includes downstream operational processes, people, systems, and partnerships to fulfill an order. But the foundation of modern order management systems goes even deeper. 

Consumers expect the whole process to work seamlessly, from the moment they check out to when they receive their order. They also want complete transparency around order status. Consumers want to know if there’s a problem in transit, and they want hassle-free returns. 

So what exactly happens after a shopper hits the buy button?

Once upon a time, order management systems were relegated to back-office systems, typically within the logistics division of a company. But that doesn’t work in a customer-centric economy, because order management is so central to the overall customer experience. Everything brands have done in the customer relationship management (CRM) lifecycle — awareness, marketing, site experience, consideration, acquisition, conversion, and more — leads to this one moment. In fact, this is the most important moment of value exchange. If brands fail to deliver on their end of the value exchange (money for goods and services rendered), does anything else that came before really matter? 

Now more than ever, order management systems (OMS) must deliver on that brand promise. 

So what happens after a shopper hits the buy button? Once a shopper begins to checkout, an intricate dance begins to carry out the order. There are up to 39 different systems that a storefront may interact with to complete an order. The most common are tax, payment, fraud, inventory management, accounting, ERP, and shipping. Here’s the step-by-step process:

1. First, a merchant must have an accurate view of inventory counts to prevent sell-throughs and overstocks

This view helps inform shipping origin, as products can be shipped from multiple locations, or split across multiple warehouses, distribution centers, stores, or even a third party.

2. After confirming inventory, order routing takes place

Is the product a standard item? Or, is there a customization process that may route to a specific warehouse? For special orders, a team may need instructions to construct by hand a personalized product.

3. Next up, shipping integrations

Fast and flexible shipping options are critical to earning loyalty and trust. In a 2018 State of eCommerce Delivery study, 58% of consumers said they chose one brand over another because they provided more delivery options. Further, 61% said that a positive delivery experience incentivized them to shop with a brand again.

4. Last, there’s delivery

Once the items have been picked, packed, and prepped for shipping, payment is captured, and the goods are on their way to the customer.

Order management is the brains behind each step in the fulfillment journey. Think of it as the conductor of an intricate set of business logic and workflows that take an order from cart to customer.

Order management lifecycle

Transforming the customer experience with great order management

Ordering and fulfillment are at the heart of an exceptional shopping experience. Next-generation order management systems are customer-centric and integral to the front office. Why? Because these moments in the shopping journey can either annoy or amaze shoppers. They help determine whether a shopper completes a transaction and becomes a loyal customer, or clicks over to the competition. Let’s look at some of these moments. 

Providing flexible shipping/delivery options

Customers demand flexibility, from one-hour in metro areas and weekend delivery to in-store pickup and next day delivery. They expect these options to be displayed clearly on the product page. 

Providing accurate product availability information on the storefront

Don’t disappoint your customers with an out-of-stock notification after they’ve added an item to their cart. If a product is out of stock or running low, state so on the product page to give shoppers the most accurate view of available inventory. 

Offering self-service order status and returns

Customers should be able to check order status and receive updates on their terms, including text and email updates. They should also be able to change shipping details. Returns, too, should be self-serve, including printing out return labels and choosing how and where to return an item.

Empowering service agents

Service agents are on the front lines of the customer experience. They need to be empowered to assist customers with their orders in every way possible. That requires complete visibility into orders and customer activity. Their systems should enable them to place orders on behalf of customers and make shipping/delivery changes to existing orders. 

All of these add up to the greatest moment of value exchange between a brand and a consumer. Everything that a brand does in the customer lifecycle leads to this moment. Integrated order management systems drive operational excellence by orchestrating the entire supply chain.

Get started

Order management today is not just about processing orders. It’s about integrating customer-facing systems that impact the post-purchase experience (ERP, CRM, service, and commerce, for example) and making that available and accessible to all stakeholders in a unified platform.

At Salesforce, we call this customer-centric order management. This is a single platform for managing orders, customer records, fulfillment, inventory visibility, payments and invoicing, and customer care. We’re driving this sea change with Salesforce Order Management, the most customer-centric and flexible order management system built to support flexible omnichannel journeys at global scale. It’s powered by Salesforce CRM for a complete data record, pre-connected to Commerce Cloud, and natively supports Service Cloud for a single customer view of both order and transaction history. It’s also an integral part of a robust ecosystem that supports thousands of pre-built connectors, all leading to faster time to value and, more importantly, happier customers.

Order management systems are evolving to support a new magic moment of truth in ecommerce: delivery. Indeed, how the customer experiences order processing, shipping, and delivery will determine their view of and relationship to the brand. 

Luke Ball is a VP of Product Management. In his 10 years at Salesforce, Luke has led product and/or user experience in a number of different areas, including Social Studio in Marketing Cloud, Chatter and Community Cloud, Search in Platform, and now Order Management in Commerce Cloud. Luke lives in Berkeley, CA, with his wife, 2 daughters, yellow Labrador Retriever, and minivan.

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