What Is Order Processing? From the Basics to Automation

This article discusses automated order processing, including what it is, how it differs from traditional processing, and how you can integrate automation into your order processing systems.

In modern business and eCommerce, order processing is more than a “process.” It is the veins and arteries of a functional, efficient, and safe financial operation. So, relying on manual processing functions will only slow the flow of orders through your business, which is a problem for companies looking to scale with customer demand.

What Is Order Processing?

Order processing is the extended set of practices and procedures for managing and fulfilling customer orders. This includes the workflow processes linking customer interactions with product purchasing interfaces all the way through final order completion.

In modern business operations, understanding the intricacies of an order-processing workflow is paramount. Common order processing steps include:

• Order Placement and Verification: The workflow initiation occurs with order placement originating from diverse channels such as a company’s website, order forms, a brick-and-mortar establishment, or an e-commerce platform. The need for precision encompasses a thorough check of customer information, payment particulars, and the availability of requested items in inventory.

• Inventory Sourcing: Post-order approval, the focus shifts to inventory sourcing. This step demands strategic coordination across warehouses, major distributors, and/or extensive e-commerce operations. It also necessitates collaboration with delivery partners and fulfillment vendors for each item within the order.

• Picking and Packing: The ordered items are methodically picked from warehouse shelves and prepared for dispatch. This stage adheres to stringent guidelines to ensure that items are securely packaged and accurately labeled, priming them for transit.

• Shipping: The subsequent phase involves entrusting the packaged order to a shipping carrier or logistics service. The choice of shipping method hinges on customer preferences, the nature of the goods, and the intended destination.

• Order Tracking and Updates: An essential aspect of customer engagement during this process is providing them with regular updates and tracking information. This transparency allows customers to monitor their order’s journey through shipping.

• Delivery: Finally, the process leads to order delivery to the customer, which might include additional services like installation or assembly in certain instances.

• Post-Delivery Analysis and Customer Service: The workflow extends beyond delivery. Customer service is pivotal post-delivery, addressing any returns, exchanges, or customer feedback. Crucially, an analysis of data derived from the order processing is conducted to unearth trends, operational efficiencies, and customer preferences, forming a feedback loop instrumental in refining future order processing and enhancing the overall customer experience.

Effective order processing is crucial for customer satisfaction and efficient business operations. It often involves coordination between various departments within a company and the use of technology to streamline and automate the steps.

What Is Automated Order Processing?

Leveraging automation in order processing is a strategic move that yields significant advantages, and most modern business and industrial operations are electing to take that advantage:

According to a poll from McKinsey, automation may boost productivity growth around the globe by up to 1.4% year-over-year.

Conversely, a 2021 report from Research and Markets showed that 80% of warehouses had no automation, which is a considerable sector for growth.

Issues with order processing can cause massive customer abandonment, with 57% of customers claiming they will leave a company after three late deliveries.

Automation infrastructure typically relies on interactive and cloud-based technologies to streamline manual tasks in an order processing workflow.

As compared to the components of the traditional order processing flow discussed earlier, we can see how automation plays a pivotal role in various stages of the process:

• Inventory Sourcing Automation: These systems are adept at checking and updating inventory levels across multiple locations. By reserving required items in real-time, they mitigate the risks of overselling and stockouts, maintaining a balance in inventory management.

• Picking and Packing Optimization: Here, automation revolutionizes warehouse operations. It directs staff along the most efficient routes to items, cutting down on picking time. Some more sophisticated systems even deploy robots for these tasks, further accelerating the process.

• Automated Shipping and Routing: This automation involves choosing the optimal carrier and shipping method, factoring in cost, delivery timelines, and destinations. Moreover, it streamlines the process by automatically generating necessary shipping labels and documentation.

• Automatic Order Tracking and Updates: Automated updates on order status, including detailed tracking information for shipped items, enhance the customer experience, and significantly lessen the load on customer service teams.

• Automated Delivery Processes: Although humans or external carriers usually carry out the actual delivery, automated systems are crucial in efficiently optimizing delivery routes and schedules.

• Efficient Management of Returns and Exchanges: Automation extends efficiency to handling returns and exchanges. By enabling customers to initiate these processes online and automating the corresponding backend logistics, the system ensures a smooth, hassle-free experience.

• Data Analysis and Feedback Integration: An invaluable aspect of automated order processing is its capability to collect and analyze extensive data at each step. This provides deep insights into customer behaviors, identifies process bottlenecks, and pinpoints areas ripe for improvement.

Integrations of automated order processing systems enable businesses to substantially diminish manual errors, conserve time, and elevate customer satisfaction. The empower scalability, as these systems can handle increased orders with less effort than their manual counterparts. Moreover, the rich data harvested through automation is a goldmine for strategic decision-making and boosting operational efficiency.

In essence, automating order processing is not just about adopting new technology; it’s about transforming business operations to be more efficient, responsive, and data-driven, catering to the dynamic demands of the modern marketplace.

How Can You Integrate Automated Order Processing With Inventory Management?

Automation in order processing is an operation strategy that applies technology to polish and improve the order fulfillment cycle. Adopting this practice will thus greatly impact efficiency and accuracy in terms of operations, not to mention customer satisfaction.

However, there are a few ways to integrate as follows:

1. Implementation of an Order Management System (OMS): An OMS can turn into that game-changing automating tool that helps ease into many processes revolving around orders such as entry, real-time tracking of inventory, and updates on the status of an order, all helping in streamlining communication with customers.

2. Using Enterprise Resource Planning (ERP) Software: ERP systems provide an end-to-end solution that integrates every aspect of business operations, from order processing and inventory to accounting and customer relationship management. Such integration aids in enabling the seamless information flow amidst several organizational functions.

3. Automating Inventory Management: It is essential to adopt software that automatically updates the stock level and simultaneously offers real-time information. Such information will help manage stocks and automation intelligently to avoid overstocking or stockout risks.

4. Integration of E-commerce Platforms with Backend Systems: Any business operations conducted in the online marketplace require synchronization of e-commerce platforms with OMS and ERP systems. This is since the central systems of the business can then be automatically fed into and processed against several online-placed orders.

5. Using Warehouse Automation: Adopting automated picking and packing, conveyor belts, and robotics can significantly enhance the positive effects of its speeds up to order processing in a warehouse.

6. Shipping and Logistics Automation Utilization: This involves using software solutions that determine the best and most appropriate means for shipping and carriers, ship out labeling through automation, and accurate cargo tracking.

7. Implementation for Customer Service Automation: Customer service automation, such as chatbots or automated response systems that can give feedback on issues like the status of orders, returns, product information, and many others, will streamline customer service operations.

What Are the Benefits of Automated Order Processing?

In modern applications, the significance of automated order processing is undeniable. Automation stands at the forefront of contemporary business strategies, providing a foundation for making processes more accurate and efficient.

The integration of automation within your order processing apparatus manifests a plethora of primary benefits that encompass:

• Elevated Efficiency: Notably, automation makes most processes much more efficient across an operation, from the initial phase of order entry to the final shipping. For example, a case study from Infosys showed that Cummins Power reduced its sales cycle by 67% through purchase order automation.

• Minimization of Errors: A characteristic of automated systems is their inherent capacity to reduce human errors in areas like order entry, inventory management, and shipping. The effect is a notable increase in the precision and accuracy of order fulfillment, increasing the overall dependability and integrity of the process.

• Inventory Management: The support of real-time inventory tracking by automation is critical in sustaining stock. Following this, automation helps manage costs related to surplus inventory and plays a vital role in mitigating stockout risks.

• Customer Satisfaction: These systems are good at providing timely updates and comprehensive tracking information, significantly improving the customer experience.

• Cost Savings: An advantage of automation is its ability to reduce the necessity for manual labor in the ambit of order processing. This reduction can translate into considerable cost savings from operational expenditure.

• Scalability: Automated systems can efficiently manage increments in order volumes in real-time, surpassing the efficacy of manual processes. This scalability attribute is imperative for businesses that aspire to expand their operations without a proportional escalation in overhead costs.

• Data-Driven Decision Making: The aggregation and analysis of data from automated systems offers critical insights for operators and businesses. These insights are integral to making well-informed business decisions, leading to optimized processes across the enterprise.

• Enhanced Resilience: With the integration of advanced systems specializing in security scanning and fraud detection, automation significantly fortifies the security framework of the order processing workflow.

• Improved Compliance and Record Keeping: Automated systems are intricately designed to ensure heightened adherence to regulatory stipulations. Furthermore, they are instrumental in maintaining detailed records for auditing activities and comprehensive operational analysis.

Incorporating automation into order-processing workflows offers a broad spectrum of benefits ranging from operational efficiency and precision to fortified security and compliance.

What Are the Challenges of Adopting Automated Order Processing?

There are significant benefits to implementing automation—but that implementation will often come with challenges. Identifying these challenges helps to avoid failure when adopting automated systems.

The following are some of the challenges that may come up:

• Initial Capital Investment: Automated order processing systems represent a considerable investment. This means businesses must budget for new software licenses, hardware requirements, and possibly infrastructure expenses. They should also consider the cost of integrating the new system with existing ones in the total cost of ownership.

• Complexity in Integration: Integrating the new automated system with existing systems and business processes can prove complex. This may call for in-depth planning and careful execution to realize smooth integration without disruptions in operational management.

• Training and Adaptation: Adequate employee training is necessary for the new automated systems. There is also a temporary projected decrease in productivity during the transition period while employees adjust to the newly installed workplace technology. Overcoming resistance to change among those accustomed to traditional processes can be equally demanding.

• Data Security and Privacy Concerns: With automation comes the need for robust data security measures. Automated order processing and customer data handling systems must be secure, requiring ongoing attention and resources to protect against cyber threats.

• Maintaining Systems: Automated systems require regular maintenance and updates for proper and efficient functioning. Downtime or system crashes can lead to severe disruptions in order processing, causing delays and customer dissatisfaction.

• Scalability and Flexibility Challenges: As the business scales up, automated systems supporting the company should also be scalable. The initial setup should be flexible enough to accommodate growth and absorb future technological advancements.

• Quality Control: While automation can enhance efficiency, there is a tendency for reduced quality control if not properly monitored. Companies should ensure that the automated systems comply with their quality standards.

• Dependence on Technology: Overdependence on automated systems can be disadvantageous. In the event of technical hitches or cyberattacks, the business may be unable to process orders, leading to the necessity to invest significantly in backup systems and contingency plans.

• Regulatory Compliance: Automated systems must adhere to relevant industry standards and regulations. This is particularly challenging in industries with stringent regulations requiring vigilant monitoring.

• Challenges of Customer Personalization: Automation may limit the ability to personalize order processing to individual customer preferences in specific industries. Striking a balance between personalization needs and overall efficiency remains a challenging task.

It’s necessary to have a strategic approach accompanied by careful planning and a willingness to invest time and resources. It’s also about balancing incorporating new technologies and maintaining the human touch at all critical points in the customer experience journey.

Automate Orders and Order Processing With Cognito Forms

The first touchpoint of the order process is where the customer makes their order – and where automation can boost that customer experience. With Cognito Forms, customize order form templates that integrate with your online or e-commerce business workflow. Payment processing on Cognito Forms is secure and integrates with major payment providers like Square, Stripe, and PayPal – all while providing smart form features to enhance the payment journey.

Enhance your efficiency with automation and reduce operational hiccups by using Cognito Forms.