Order management software is the branch of inventory management that deals with your company’s interactions with its suppliers and customers. Some types of business, like retail and restaurants, focus on the buy side of order management, dealing with suppliers; other types of businesses, like production companies, may focus more on the sell side of order management, dealing with customers.
Whether focusing on the purchasing or selling or both, the tasks of order management software include,
- creating sales orders or purchase orders
- generating invoices
- creating quotes and converting quotes into sales
- keeping track of supplier and customer records
- sending shipments to fulfill orders
- receiving shipments from purchase orders and addressing variances
Suppliers and purchases
On the supplier side, a company keeps track of its suppliers and its outstanding purchases orders. When a shipment arrives pursuant to an order, the company receives the shipment and checks the physical contents or shipment manifest against the order. If items are missing or damaged, the company records the variances to rectify with the supplier.
Orders may also be delivered in multiple shipments, so the company needs the ability to receive a partial order and then receive additions in later shipments in such a way as to determine when and if the full order has been received. Order management software is designed to be able to address this complex scenarios.
The task of receiving a shipment from a supplier is non-trivial if the shipment encompasses a large quantity of items. For example, if the company is receiving an order in multiple 40 foot long shipping containers from overseas, the task of receiving requires at minimum unloading the containers and recording what they contain. Companies that receive large order often employ a barcode system to record the received items in a way the minimizes the chance of human error. In some company-supplier relationships, the supplier provides barcodes on the shipped cases that the company can scan systematically while unloading truck. In other relationships, the company prints out and applies its own barcode stickers or product IDs while receiving the items. In other scenarios, a company checks off the received items from a list on an mobile device or computer, and in still other scenarios, a company checks off the received items on a paper and pencil list, which someone carries back to the office to be entered after the truck is unloaded. Whatever the scenario or company order management system, the task of receiving shipments and matching them up against orders is a main component of order management.
Order management software may include an automated process of creating orders based on stock levels and reorder points, though clearly this task overlaps with stock control. Since supplier information is maintained in order management systems, that information plus the stock levels and reorder points together can be sufficient for generating the orders themselves that are sent to the suppliers.
Sales and customers
Sales and customers are analogous to purchases and suppliers, with the variation that shipments for sales are packed and shipped instead of received. The analogy to receiving a shipment and checking it against a shipment manifest or sales order is the process of printing a pick list, pulling and packing the items contained in the order, and shipping it to the customer. As with receiving, a company may use a barcoding system to scan the items as they are packed or loaded into the truck.
On the sales side, quotes and invoices are another aspect of order management. Some companies begin a potential sale with a quote that represents a commitment to the customer for a terms of a sale. If the customer agrees to the quote, then the company converts the quote into a sale, and keeps track of the sale as it is fulfilled by shipping to the customer. The company may generate an invoice based on the sale, and may send that invoice directly to the customer or use it internally as the basis for generating an equivalent invoice in the company’s accounting system.
Inventory management software
Inventory management software that includes order management is able tie the orders as they are received or shipped to the quantities of items acquired or relieved from stock on hand, providing tight, always up-to-date, accounts of quantity on hand based on the transactions. Not all business types are amenable to keeping track of all the transactions, though, so many types of businesses use aspects of order management in combination with stock takes or physical inventories to keep track of their stock.
Examples from Finale Inventory
Here are a few videos of using Finale Inventory on related topics.
Creating a quote
Creating large sales orders (quickly)
Creating an invoice