Thanks to global brands like Amazon, customers expect lightning-fast shipping and real-time updates about the status of their goods.
While you might not be able to match the speed of Amazon Prime, you can deliver a positive, memorable experience through efficient shipment processing and sales order management. Here’s what you need to know.
What’s sales order processing?
Sales order processing refers to the steps that occur after a buyer places an order, including sending a confirmation email, picking and packing the merchandise, and shipping. This type of processing, also known as “order management,” typically applies to businesses that ship products to customers after accepting an order through a dedicated platform.
If your business sells products directly on your website, any customer who purchases something online initiates the sales order process, but sales orders also apply to larger shipments, like manufacturing companies placing large orders for materials.
Developing a great sales order system helps you monitor and optimize your order process, identifying steps that cause delays or increase your lead time. Having these insights helps you develop more efficient workflows and remove bottlenecks to achieve higher customer satisfaction, regardless of the size of your company.
Sales orders, invoices, and purchase orders
As the name suggests, sales order processing deals specifically with sales orders, but it’s sometimes confused with invoices and purchase orders.
Purchase orders
A purchase order differs from a sales order in two key ways: who generates it and what it’s for. A buyer generates a purchase order outlining the type and quantity of goods they want from the seller. The seller then issues a sales order in response to a purchase order, confirming that the company can meet the buyer’s terms, and they will often send an order confirmation email containing the sales order.
Invoices
When looking at a sales order versus an invoice, the difference lies in when you send it to the buyer. As the seller, you’ll generate both a sales order and an invoice, but you’ll generate and generally send a sales order immediately after receiving a purchase order, confirming you can provide what the customer wants. You’ll send an invoice request payment after providing every service or shipping every product the sales order outlines.
The invoice also defines how long your customer has to pay for the shipment. Some common repayment conditions are within a specified number of days after delivery, such as 30 days.
For instance, in the world of eCommerce, sales orders are typically initiated in business-to-consumer (B2C) transactions, whereas invoices are used in business-to-business (B2B) transactions.
The sales order processing flow
The sales order processing flow will vary depending on the size of your company, the industry you operate in, and whether or not you use a third-party logistics provider. However, there are a few common steps in this flow, regardless of what your company sells.
1. Receive the purchase order
The processing journey begins when you receive a purchase order.
How the customer provides purchase details varies — depending on what you offer, it can be done over the phone, through an app, or online. To initiate a sales order, you’ll need to know what products the customer wants, the specific quantity, and where they want you to ship their order. When you send a response, make sure you include all of this information as a form of confirmation that you’ve received their request.
2. Create the sales order confirmation
For companies with robust order management software, steps one and two occur simultaneously. Shortly after they receive a purchase order, their software generates a sales order and sends a copy to the customer.
The best eCommerce platforms will integrate with your inventory management software, ensuring that customers can only order items that are readily available — which saves you from canceling an order that you can’t actually fulfill.
3. Picking, sorting, and packing
Once you’ve confirmed an order, it’s time for someone to find it in your warehouse and begin the packing process. During picking, warehouse workers generally use a barcode scanner to update the inventory management software with what items they removed from your stock. This process keeps your inventory accurate and up to date.
Next, warehouse personnel will pack the goods in a sealed, appropriately sized package. They’ll then affix a shipping label and prepare the item for pickup.
4. Shipping
Shipping includes all aspects of moving product from your warehouse or distribution center to the customer’s door.
The last-mile leg of the shipping journey — the final stage of delivery, which is usually a driver taking a package to the customer’s house — is one of the most important and costly. To create an efficient sales order process flow, you must address the last mile appropriately. This might mean partnering with a reputable third-party logistics provider that has an established network of distribution centers and carriers, providing updates as a package progresses through the supply chain, and notifying customers about any delays.
5. Invoicing
If you deal in retail goods, you likely bill customers at the time of purchase. However, if you didn’t handle payment during the initiation of the sale, you’ll need to generate an invoice.
You could print out an invoice and include it in the package or send an electronic invoice when the product ships. Regardless of which method you choose, make sure you include payment terms on the document so the customer knows how long they have to remit the funds.
How to optimize your sales order process
Sales order processing is a long chain of events, so if any stage in the workflow is inefficient, the overall customer experience will suffer. Proactively managing and optimizing your sales order processing strategy will help you limit delays and optimize customer satisfaction. Here’s how.
Track current workflows
Before you can optimize your sales order processing strategies, you need to understand your current workflows. Track every detail, from how long it takes to deliver a product after receiving a purchase order to more granular data, like picking and packing accuracy.
It’s best to look at the big picture to determine how long each step takes, then pick apart individual stages in the process. Analyzing broad metrics will help you determine how efficient your workflows are. Then, if you find a deficiency, the stage-specific data lets you pinpoint what problems exist and how to fix them.
Automate the process
With automation, you can drastically reduce the likelihood of human error and shift the burden of redundant work off your employees.
Modern technology solutions and software integrations are precursors to automation. The best inventory and order management solutions have built-in automation capabilities and can integrate with other software to exchange data and promote transparency across stages.
Look into demand forecasting
Demand forecasting helps you predict inventory needs and optimize reorder calculations. When you’ve got a good grasp of consumer demand trends, you can stock your warehouse with enough product to quickly fulfill incoming orders.
Plus, demand forecasting reveals much more than basic inventory needs. By anticipating your customers’ wants and preferences, you can also gauge your need for things, like packaging materials, delivery services, and shipping labels.
Use inventory and warehouse management software
Inventory management software is what separates the average business from top performers. With the right inventory management technology at your fingertips, you can tap into real-time data about orders, picking and packing efficiency, stock levels, demand, and much more.
When exploring prospective solutions, prioritize holistic offerings that provide both inventory and warehouse management technologies. Sourcing both technologies from one reputable vendor will streamline your implementation and integration processes.
The best solution to drive order process success
Ready to optimize your sales order processing workflows? Partner with Fishbowl, a leader in inventory management technology from sale to delivery. Fishbowl also provides robust manufacturing software that automates purchasing, vendor management, and order approvals.
Don’t let inefficient sales order processing hold your business back. Achieve unmatched visibility and accelerate your supply chain with Fishbowl.