Sales Order Management Process: How to Optimise It?

In today’s technology-driven business landscape, sales order processing is a mission-critical function in any organization. 

As a result, most companies typically employ a set of automated sales order processes to fill customer orders. 

However, the scope of these sales order processes is dictated by the industry, market, and the nature of the product and organization. 

For example, sales order processing for a SaaS software engineering entity variably differs from that of fast-moving consumer products.

What is the sales order management process?

Sales order management is a sequence of defined activities a business follows during purchase and order fulfillment processes— from customer purchase through to product delivery.

Modern sales order management processing is aimed to ensure that each touchpoint that the seller engages in (from billing to production and logistics) delivers the information required to execute a customer order. 

Therefore, it makes it possible for businesses to fully optimize sales order handling from inception to delivery, using a single centralized system.

Typically, the process requires collaboration between different departments of a company within an order’s lifecycle. Sales order management seeks to guarantee a seamless transition from order placement, processing, inventory management, warehousing, and invoice management to product shipping.

Sales Order vs Purchase Order

Whilst often confused, a sales order and purchase order are essentially the same but on other sides of the order management spectrum. 

The disparity relates to who generates each. 

To contextualize this, a sales order is generated by the seller to confirm that a sale has actually been made. 

Sometimes called a customer order, a sales order basically details the specifications of the goods sold, their quantities, delivery information, and the payment methods. 

On the other hand, a purchase order is sent by the customer to outline what they seek to purchase. 

So, in practice, a seller essentially generates a sales order after receiving a purchase order from the customer. 

Furthermore, once a sales order is generated, the purchase becomes legally binding, and no additional negotiation is permitted.

Steps involved in sales order management process 

Receiving orders

The order receipt is the first phase of any sales order process. 

This serves as an initial quote to provide pricing and order details that the seller will employ for the rest of the process, such as requested products, shipping details, and quantities.

Preparing a sales order

This process is powered by an order management system (OMS) that is employed to determine whether the company actually maintains the right goods in stock.

If it does, the system then raises its own sales order, and then transmits the details to the relevant warehouse managers.

Unfortunately, organisations without an automated OMS perform such tasks manually where a worker receives the purchase order, meticulously checks stock, and then raises the sales order.

Picking and Packaging

This next step basically revolves around the warehouse as staff collects customers’ goods to sort and deliver them. 

They may use barcode scanners to speed up data entry, and communicate with the OMS or inventory management system that an item has been taken off the shelf. 


During this step, outbound goods are transferred to a logistics partner who delivers the product to the customer. Here, goods can be sent out individually, partially or in bulk. 

However, partial shipments increase shipping costs and are more sophisticated to manage.

Creating invoices

If a payment was not duly handled by the sales department, an invoice might need to be generated to receive payment from the client. 

Invoices can be mailed out with the package itself or generated electronically and emailed to the client.

Why should you optimize a sales order management process? 

  • To reduce human errors that occur with manual data entry, such as typos, or even wrong shipment inputs.
  • To improve validation when handling the multiple checks required during order fulfillment. For example, confirming the right shipping address for a specific order, especially when processing hundreds of orders every month.
  • To streamline and manage sophisticated orders such as partial shipments when dealing with data entry and order management.
  • To achieve faster order fulfillment as a lack of automation wastes time duplicates effort, and reduces overall productivity. Furthermore, manual entry often leads to confusion and lost sales as a business operates in the dark and can’t be sure if they possess sufficient stock to fulfill orders.
  • To realize cost savings by making it easier and faster to pick and ship customer orders. Additionally, there are fewer chances of errors, and in turn, fewer costs related to returns and reshipments.

Tips to optimize a sales order management process

Identify the issues

Identifying pain points is vital as every order management process aims to bridge gaps. 

However, these gaps have to be identified early to achieve meaningful results with your sales order management processes.

Capturing an order

In today’s era of omnichannel retail, there are multiple channels that serve as a pipeline for orders, from e-commerce websites to brick-and-mortar stores. 

And every one of these orders needs to pass through a centralized order-capture engine.

During order capturing, data is collected pertaining to customer information, payment details, product information, and payment details— either manually or through digital tools. 

In some B2B transactions, order data is collected by an Electronic Data Interchange (EDI) electronic system that standardizes purchase orders, invoices, and or even through a customer portal.

Conduct audits 

In order to optimise your sales order management processes, it is imperative to start with an audit. 

Audit exercises help you understand where you need to go, especially if you do not have a solid idea of where you currently are.

Utilise inventory management software 

Inventory management underpins almost the first half of the sales order workflow. 

Without visibility into the stock you have at any given time, you cannot update inventory information in real-time.

As a result, you shall always be at risk of unexpectedly stocking out, or worse, overstocking goods that you cannot sell. 

This is why it is crucial to employ inventory management software to efficiently track and manage stock. Additionally, they help to generate business intelligence insights to enable you to analyse what is profitable and what is not.

Analyse demand forecasting data 

Data opens up doors to new dimensions unseen to the naked eye. 

Data can be used for demand forecasting leveraging inventory management data points to predict future demand. 

These data points can range from historical sales data, to seasonal factors to enable a company to calculate when consumers are going to desire specific products, and in what quantity— with high granularity. 

Order tracking 

It is not unorthodox for orders to change midway through the fulfilment process. 

For example, clients may choose to update quantity or preferred ship dates. Or the company may even run into a shortage, requiring the modification of an order. 

Regardless of the circumstance, dynamically responding to such changes is a critical element of the order management process. 

However, you cannot respond to what you cannot track. Hence, the requirement for order tracking mechanisms. 

Furthermore, order tracking enables you to provide customers with visibility into their orders, either via email, or through a customer portal. 

Manage reverse logistics 

Reverse logistics is a logistics vertical that handles instances when goods come back up the supply chain, from client to manufacturer/supplier. 

For instance, customer returns. However, unsold goods, end-of-life goods, and delivery failures can all be reasons for goods to come up the supply chain.

The lack of reverse logistics management mechanisms that act quickly and efficiently may lead to human error, slow processing, spiralling costs, and in turn, dissatisfied customers.

Make your order management process more transparent for the buyers. 

It is imperative to improve the visibility of your order management process for customers while also exploiting data tools to also provide detailed analytical reporting. 

This is because modern customers now expect regular order updates, with promise and shipping updates, and even prompt notifications if delays occur. 

Automation and order management process

These processes requires complete automation of the entire order lifecycle to interlink every stage of processing to enable businesses achieve accurate location visibility of every order.

Automation speeds up the entire sales order process with specialised software streamlining and simplifying the complex processes that underpin fulfilling just one sales order.

This specialised software is called an order management software (OMS). 

It automatically extracts details from the quote and a sales order, to reduce the likelihood of miscommunication during sales order management steps. 

In practice, the OMS tracks items to ensure the customer’s order arrives, giving relevant business departments and customers a clear vision of the order.

An OMS also tracks the billing process and automatically invoices the client when the delivery is complete. 

So, whenever changes are made to an order, all the relevant teams can view the updated information and respond accordingly. Thus, fostering seasmless collaboration, error-free shipping, and delivering faster fulfilment times.

In summary, OMS software should facilitate the sales order management process by automating the:

  • Tracking of sales orders.
  • Management of sales orders based on the purchase date, delivery date, warehouse location, and current status.
  • Sending notifications or alerts to let a business know about overdue orders.
  • Generation of purchase orders for suppliers off the back of a sales order, especially if there isn’t enough stock at the warehouse at the time of purchase.
  • Reservation of stock for future sales, partial orders, or specific sales channels.

Visit us at Cenports for more information on optimizing sales order management processes.

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