Sales Order Management

What is Sales Order Management?

Sales order management is a set of consecutive actions that take place from the time a customer orders a product or service until the item is delivered. It’s a companywide process that starts with sales processes and ends with fulfillment and delivery.

Not to be confused with order management (OM), which primarily refers to the process of managing orders customers place themselves, sales order management refers to all the steps involved in processing a sales order. Since the sales team needs to close these deals before the fulfillment team can take over, the sales order process requires a few extra steps.

Synonyms

• Sales order processing
• Sales order management system (OMS)

Steps in the Sales Order Management Process

Quote

The sales order management process starts with a sales quote — a document that estimates the cost of a customer’s order and outlines payment terms. A sales representative creates the quote based on a customer’s needs and sends it to them for approval.

A quote is just the first proposed price a seller gives their buyer. Sometimes, the buyer accepts it as-is. But there is often back-and-forth between company decision-makers and the sales representative to agree on terms.

Sales Order

Once a buyer accepts the terms of the quote, it becomes a sales order. Once everything is organized on the seller’s side (e.g., payment terms, signature, PO number) they will reroute the order to the company’s warehouse.

In some cases, the buyer pays for the sales order upfront or puts a down payment. With many types of complex sales, however, the buyer sometimes makes a portion of the payment after delivery.

Inventory Sourcing

Depending on the level of product complexity, inventory sourcing could mean one or more of a few things:

• Locating existing product from the warehouse and using it for the customer’s order
• Producing a new product in-house or outsourcing production to an outside vendor
• Ordering product components from vendors and assembling them into products in-house
• Creating a completely customized product from the sales order’s product configuration

In any case, the warehouse team knows precisely how much of each item the buyer wants, how to create it, and when they need it based on information delivered from the sales order forms.

Fulfillment and Shipping

Order fulfillment for sales orders is similar to other orders, though it may take a bit longer. Here, the warehouse team packs and ships the items to customers or third-party vendors (e.g., channel partners or VARs).

Briefly, the fulfillment process includes the following steps:

• Picking items from the warehouse shelves (or production floor).
• Preparing orders for shipping. This involves choosing the right packaging and labeling items correctly.
• Processing shipment details. Warehouse staff will create shipping labels, organize carriers, and enter tracking numbers into their system.
• Sending orders out for delivery. In most cases, it’s a third-party carrier that handles the order until it reaches its destination.

Billing

In B2B sales, some or all of the billing process will take place after the buyer has added the sales order. During billing, someone from the billing or sales department will create an invoice, send it to the buyer, and follow up on payments. Then, accounting takes over and records all the payments.

In many cases, billing may be automated as part of an integrated system for managing customer relationships (CRM) and e-commerce websites. For example, customers can enter payment details into a website that triggers automatic billing once orders have shipped.

Advantages of Order Management Software (OMS)

Order management software puts multiple sales order processes on autopilot. It reduces errors, creates more efficiency, and makes it a lot easier for sales reps to track items from their customers.

Automation Brings Efficiency

Perhaps the most essential benefit of OMS is that it automates many sales order tasks. That means fewer manual data entries, automated shipping notifications for customers, and reduced wait times for fulfillment and delivery.

Without OMS, there are are several areas where sales orders are passed off:

• Sales sends orders to the warehouse.
• Warehouse team members relay these orders to the fulfillment team.
• Fulfillment staff prepare everything for shipping.
• Billing staff enter payment details and send customers invoices.
• Accounting records all payments.

Having OMS eliminates breakdowns in communication between teams and keeps the sales order process running smoothly. Rather than sending order documents between departments, it keeps all information in one place.

Improved Forecasting & Inventory Management

With access to real-time analytics and data-backed forecasting tools, OMS allows companies to better manage their inventory levels. Understanding product demand at any given time helps prevent stock-outs or the need for emergency shipments from third-party vendors. It also keeps them from having too much inventory on hand (which is incredibly costly).

More Accurate Order Tracking & Fulfillment

When sales reps use OMS, they have instant visibility into backorders, delivery dates, fulfillment statuses, and returns/disputes. By knowing precisely what’s going on with each order throughout the entire process, they can keep their customers (and themselves) informed and happy.

Faster Order Processing

In addition to accuracy, software that handles the procedure from start to finish makes order processing a lot faster. Fewer errors mean nobody has to go back and fix mistakes, nor do they have to wait on manual information exchanges.

If part of the warehouse or manufacturing process is automated, OMS also starts the production process as soon as the order is placed. Nobody even has to lift a finger.

Data Synchronization Across Platforms

OMS integrates with other business systems — enterprise resource planning (ERP), customer relationship management (CRM), billing, and help desk. The continuous data flow enables all departments to have an accurate view of sales orders. Plus, the information is searchable and any team can revisit it for further analysis if they need to.

Aside from streamlining the sales order management process, accurate cross-platform data (coupled with automation) makes future sales engagements, customer communication, and fulfillment much smoother. In the case of OMS, it also creates new data since it houses sales order information in a single system.

Improved Customer Relationships

With OMS, customers can track their orders from anywhere and at any time. Real-time tracking visibility (thanks to data synchronization) gives them peace of mind and makes them more likely to stay with the same vendor.

Customer satisfaction hinges on delivering orders on time and making sure customers have the information they need. With OMS, companies provide the best customer experience possible by keeping customers updated throughout the entire process, getting them their products faster, and solving issues proactively.

Features of Sales Order Management Software

Order management software automates business processes and provides real-time tracking visibility for customer purchases. On the backend, it keeps sales reps and inventory teams organized.

At the most basic level, here’s a look at some of its most critical features:

Sales Order Visibility

Visibility is probably the most essential benefit of OMS for sales teams. It provides a 360-degree view of the entire process — from purchase to delivery. Sales reps can use this information to answer customer questions, make sure orders are on track, and quickly resolve any issues.

Many OMS solutions also give customers the ability to track their orders in real-time. Self-service is becoming increasingly essential for the modern B2B customer, so visibility a bare-minimum function of order management software.

Order Tracking

Automated order tracking includes code, status updates, shipping details, and inventory levels. All teams within the organization must be able to access this information. That way, everyone has a clear understanding of how orders are progressing.

An order management system should also send updates to customers. This could be email notifications when orders ship, text messages for delivery updates, or push notifications (if the customer has an app from your company).

Integration with CRM

The only way to truly have a 360-degree view of customer data is to integrate sales and CRM information. So two-way integration with CRM is a nonnegotiable for any sales order management solution.

CRM helps sales and customer success teams access vital customer data (e.g., pricing, product preferences), which they can use to navigate issues and process future orders more quickly. Rather than input every customer order into CRM, an integration could handle this for every customer automatically.

Integration with CPQ

Most sales teams use CPQ software to send pricing estimates and turn quotations into sales orders. OMS needs to have a direct integration with CPQ in order for orders to send directly to the warehouse for fulfillment.

It also makes it easier to manage multiple sales channels (e.g., partner sales, B2B ecommerce), a commonality for many manufacturers and B2B product vendors.

Integration with Billing

Billing integration ensures customers won’t get charged for the wrong amount. It also gives businesses the assurance they’ll pay.A direct integration with the billing system allows orders to move through the process without any manual transfer of information. That way, customers can get invoices and make payments without any hiccups.

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