Order Orchestration

What is Order Orchestration?

Order orchestration refers to the comprehensive process of managing, coordinating, and automating the various stages and elements involved in fulfilling customer orders. It is a critical aspect of supply chain management that encompasses a wide range of activities, from the moment an order is placed until its final delivery.

Orchestration touches the following areas of the order management process:

• Order receipt and validation
• Inventory management
• Order processing and fulfillment
• Logistics and distribution
• Customer communication and service
• Returns and exchanges
• Data analysis and optimization

Today, AI and machine learning facilitate the order orchestration process. Advanced technology helps companies make real-time decisions, forecast demand, optimize routes, and provide better customer service. The ultimate goal is to achieve a seamless flow of activities that maximizes efficiency, minimizes costs, and enhances customer satisfaction.

Synonyms

• Order management
• Order orchestration and fulfillment
• Order orchestration system (OOS)
• Order process automation

Order Orchestration vs. Order Management

Since there’s some overlap in order orchestration and order management functions, people frequently confuse the two terms.

• Order management refers to the overall process of managing the order lifecycle. It covers every stage, from initial order placement to final delivery, returns, and post-sale services.
• Order orchestration is a subset of order management. It focuses specifically on coordinating and automating the steps and decision-making associated with fulfillment.

Order management requires a significant amount of human decision-making and intervention. Managers and staff members oversee different stages of the order lifecycle and make decisions based on the available information.

Orchestration deals with the seamless integration of systems and processes. This includes synchronizing inventory systems, automated picking and packing processes, and coordinating with logistics providers.

Simply put, order management is a complex, human-driven function. Order orchestration uses software and process automation to reduce the human input required to perform that function.

Objectives of Order Orchestration

Optimize Supply Chain Operations

At its core, order orchestration leverages advanced technology to integrate various components of the supply chain. This ensures each step in the order fulfillment process is seamlessly connected and operates in harmony.

• Better inventory management by automatically tracking, reordering, and updating stock levels.
• Enabling multi-channel fulfillment through website, retail POS, warehouse, and third-party seller integrations.
• AI-driven demand forecasting that fine-tunes supply chain operations and provides valuable insights.
• Automated picking and packing that streamlines logistics and enhances visibility.

With an integrated approach, each system shares the same data. This means that when a customer places an order, the inventory is automatically updated across all channels.

Based on historical data and real-time customer demand, the order orchestration system can place a purchase order with suppliers before stock runs out. This minimizes stockouts while preventing overstocking and costly markdowns.

Provide Excellent Customer Experience

Compare modern orchestration processes to traditional order management practices from a customer standpoint. When a customer places an order on a website, it transmits the sale to the warehouse to be processed. If there isn’t enough stock available for the ordered item, it’s placed on backorder or canceled altogether.

The customer doesn’t have to worry about stock availability with an order orchestration system. The customer sees real-time inventory status on the website, places an order, and receives a confirmation email.

On the seller’s side, the software instantly reviews the order and sends it to the best-suited store or warehouse to handle its fulfillment. Or, the system splits it between multiple locations based on geographic location and stock availability for faster delivery.

The Amazon Effect is real — customers expect fast, if not instant delivery. With an order orchestration system, small ecom brands using 3PLs can compete with the biggest retailers, which often have their own distribution networks to offer ultra-fast shipping.

The customer gets everything they need — up-to-the-minute communication, full transparency, a fast delivery, and an easy return/exchange process.

Reduce Costs

Admins use order orchestration software to customize routing logic, which helps them optimize shipping costs, speed, and operational efficiency.

They also use it to…

• Use filters to keep specific locations based on assignment and visibility preferences
• Implement rules for particular groups and order types to meet complex routing needs
• Temporarily shut down locations based on date ranges and order thresholds
• Split orders by item or quantity to reduce shipping costs and boost customer satisfaction
• Specify items that need special handling with custom assignment rules

All these functions protect businesses from excess overhead costs like inventory, labor, and utilities. They also reduce the financial risk associated with overstocking, stockouts, incorrect orders, and poor handling practices.

Improve Accuracy

Businesses can significantly reduce the time and resources required to manage each customer order by automating order processing, inventory checks, and logistics coordination. In addition to speeding up fulfillment times, this minimizes the likelihood of human error, leading to more accurate and reliable operations.

The Order Orchestration Process

Order Creation

The first step of order orchestration happens as soon as a customer places an order. The ecommerce site’s checkout tool automatically sends the order information to the central system.

Then, it sources and allocates inventory. After receiving an order, the central system checks for available stock across various fulfillment locations (e.g., warehouse, retail store).

It assigns each item to a specific location based on predefined business rules. If the entire order can’t be fulfilled from one location, the system splits it between multiple locations.

Order Fulfillment

After assigning inventory to each location, staff see the update pop up on their end and start working on it. When it comes to orchestration, warehouses have three moving parts: picking, packing, and shipping.

• Picking — Crews pick inventory from the shelves to fulfill orders.
• Packing — The system groups picked items together, prints a packing slip and shipping label, and passes it along to the packagers. It also generates a tracking identification number (TID) for customer order tracking
• Shipping — Staff organize the packed order and prepare to send it off for delivery.

For each process, there’s usually a corresponding software module that connects with the central order orchestration hub. As soon as someone from the fulfillment team begins working on the order, they’ll update its status in the system. From there, inventory levels change automatically.

Order Shipping

When the carrier collects the shipment from the warehouse, they’ll scan it. The system updates the shipping status and assigns a TID. The carrier scans again when it reaches the next location (e.g., transit point, loading dock), and this process continues until final delivery.

If there’s an issue en route, the customer can use their TID on the ecommerce site or carrier’s platform to access real-time tracking information about their order’s journey.

Each time someone scans the label, it updates the shipping status. Once it reaches its destination, the system marks it as “delivered,” and records a signature to prove someone received it. It also notifies the customer of successful delivery.

Inventory Adjustment

At the same time packaged items leave the facility, the central system changes inventory status levels (though most larger companies actually do this once someone begins working on the order). It deducts items sold based on each order’s fulfillment data and location-level stock counts.

If an item isn’t available in any of the specified locations, the system alerts admins to take action (e.g., restock or backorder). For common items (like a basic color vs. a seasonal one), it might take that action automatically.

It also updates inventory status on the ecommerce site and mobile app (if they have one), so future customers can see stock availability and make informed purchasing decisions.

Return Processing

If a customer wants to return an item, most central order orchestration systems generate a return label for them automatically. Most businesses offer pre-paid return labels, which they pay for when the customer decides to use them.

Once customers use the label and send back their purchase, staff scans the tracking number and determines why someone returned it (if not specified). If everything checks out, they process a refund or exchange.

For refunds, some systems generate a credit memo linked to that customer’s information in other platforms like QuickBooks or SAP Business One. Others simply make the refund in their own system. For exchanges, central systems update order status to “exchanged.”

In both cases, the customer gets a notification of the change and any necessary tracking information.

Order Settlement

The central system updates financial records by tracking balance due, payments received, refunds, and transaction fees. Most companies automate payment processing and recording by integrating with payment gateways and accounting software.

Key Features of an Order Orchestration System

Ecommerce companies, retailers, manufacturers, distribution centers, 3PLs, and wholesalers use an order orchestration system (OOS) to manage and streamline the whole order fulfillment process. It’s crucial in modern supply chain management, particularly in the context of ecommerce and omnichannel retail.

Essential features include:

• Order capture that supports multichannel selling (through online stores, mobile apps, social media platforms like TikTok Shop and Amazon, and retail POS orders)
• Inventory management with automated updates across multiple locations and sales channels
• Intelligent order routing that factors in proximity, inventory levels, shipping costs, and preprogrammed rules for splits and exceptions
• Order processing automation for order verification, fraud detection, payment processing, and warehouse team alerts
• Customer communication workflows for order confirmation, shipping notifications, and status updates.
• Integration with shipping carriers for rate quotes, label generation, tracking, and delivery optimization
• Real-time order tracking, so customers see a progress update every time their package is scanned into a new facility or out for delivery
• Returns management, including automated return authorization and tracking
• Analytics and reporting for order fulfillment KPIs and historical data analysis
• System scalability for an increasing transaction volume
• Integrations for enterprise resource planning (ERP), configure, price, quote (CPQ), and customer relationship management (CRM) systems, plus APPI support for custom integrations
• Compliance and security measures to protect order data.

At its core, an OOS automates the sequence of fulfillment steps necessary to process customer orders. This extends to various supply chain elements, including order management, inventory management, fulfillment, and delivery. By integrating these elements, an OOS ensures a smooth and efficient flow of operations, from order capture to product delivery.

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