Order management is the promise your company makes to customers—to deliver their orders on time and at the agreed price. To keep this promise, your financial and operations teams must work in perfect harmony. When these areas function smoothly, you see improved customer retention, higher margins, and better cash flow management. Order management should be viewed as a strategic decision with measurable results. In this article, we’ll discuss the steps that help you quickly understand and see the benefits of effective order management.
1) Why is order management a strategic competency?
· Every order represents a contractual commitment to your customer.
· A failed order destroys trust, and rebuilding lost trust is expensive.
· Reliable order fulfillment makes marketing investments effective, while inconsistent delivery wastes your budget.
· Order flows connect customer experience with working capital. Purchasing and supply decisions have a direct impact on cash flows.
When order management is elevated to a strategic level within the company and receives proper attention, customer complaints decrease, resulting in improved working capital flows.
2) How do you assess order “health”?
· Customer perspective. Is the buyer receiving the right product on time, as promised?
· Operational perspective. Are processes predictable, auditable, and require minimal manual intervention?
· Financial perspective. How much capital is tied up in inventory, rush shipments, and returns?
These three perspectives must be balanced – optimizing only one area creates risks in others. Only when all areas function well can you expect good results.
3) Key metrics and evaluation frequency
· OTIF (On-Time, In-Full). Whether orders were completely fulfilled and delivered on time. This should be evaluated daily.
· Perfect order rate. Measured weekly. Shows how many orders were completed without incidents.
· Cash-to-Cash cycle. Measured monthly. Links purchases with cash returns.
· Manual touches per order. Measured weekly. Shows how much manual work is needed to fulfill orders.
· Rush shipping costs as % of logistics expenses – measured monthly. Measures the cost of unplanned actions.
These metrics must be visible to all related teams that contribute to orders in the same way. For example, if you measure these metrics only for the picking and shipping team but don’t evaluate the supply team’s work, you’ll face situations where orders weren’t shipped simply because there were no products in the warehouse, which the picking and shipping team isn’t responsible for, and so on.
4) Strategic measures you can implement immediately
· Automatic product reservation during checkout protects against overselling and reduces cancellation rates.
· Order routing based on optimal fulfillment paths reduces transit time and costs.
· Clear, real-time order status information for customers reduces inquiry volume and increases trust.
· Supplier evaluation links these to delivery frequency, batch sizes, and penalties.
· Continuously improve picking and packing processes, especially recurring ones. This reduces manual touches and error risk.
5) Organizational habits
Even the most efficient order management system won’t work if attitudes and employee behavior don’t change. Therefore, you need to establish clear KPIs and communicate properly.
· Hold weekly 30-minute meetings to review order management metrics with all related departments. Focus mainly on TOP products and recurring exceptions.
· Clearly defined and understandable procedures. One-page instructions for picking, exceptions, returns – teams will actually use these.
· Publicly display metrics. Visible OTIF and rush shipping costs quickly change behavior.
· Celebrate achievements together. Reward teams that improve metrics.
Well-managed orders are a fundamental aspect of any trading organization
Order management is more than logistics. It’s a process that can be measured and, most importantly, improved. The better your order management process works, the more satisfied your customers are, and the more successfully your company operates in the market. For order management to work properly, implement essential KPIs, document your processes, deploy technical solutions, and continuously improve.
