What is order management? | Sage Advice United Kingdom

If your business sells products, you need a reliable order management process to keep everything running smoothly.

In this article, we explore how order management works, why it’s important, and how you can improve your processes to stay competitive.

Here’s what we cover:

What is order management?

From the moment a customer places an order to when it reaches their hands, every step must be tracked and managed efficiently.

Without a clear process, delays, errors, and frustrated customers quickly become a problem.

In simple terms, order management is the process of receiving, tracking, and fulfilling customer orders. It covers everything from inventory checks to payment processing and shipping, ensuring a seamless experience for both businesses and their customers.

Order management vs order fulfilment

While often used interchangeably, order management and order fulfilment are two distinct stages in the sales process.

• Order management is the big picture—it oversees the entire transaction lifecycle, from the moment a customer places an order to when they receive their product or service. This includes inventory checks, payment processing, and coordinating fulfilment logistics.
• Order fulfilment, on the other hand, focuses on the physical movement of goods. It covers everything from picking and packing products in a warehouse to shipping and final delivery. While fulfilment is a crucial part of order management, it’s just one step in the broader process.

What’s the difference between order management and omnichannel order management?

Traditional customer order management tracks and fulfils orders through a single sales channel.

Omnichannel order management integrates multiple sales channels—online stores, marketplaces, and physical retail locations—into a seamless system.

For retailers, this means customers can Buy Online and Pick Up In-Store (BOPIS), check real-time stock availability, or return items across different locations. Without a connected system, businesses risk overselling, stock discrepancies, and fulfilment delays.

Retail business management software streamlines omnichannel order management by syncing inventory, automating fulfilment, and ensuring a smooth customer experience—no matter where they shop.

How important is good order management?

Efficient order management is the backbone of a well-run business. It keeps operations smooth, customers happy, and finances in check.

Below, we explore the importance of order management and how it can help your business thrive.

1. Faster order processing

A well-structured order management system removes bottlenecks and automates key steps, from order placement to fulfilment.

It speeds up processing times, helping you get products into customers’ hands faster while reducing delays.

2. Fewer errors and order discrepancies

Mistakes like incorrect shipments, missing items, or duplicate orders can frustrate customers and lead to costly fixes.

By centralising your order management process, you reduce human errors, improve accuracy, and ensure every order is tracked properly.

3. Better inventory control

Good order management works alongside inventory tracking, giving you real-time insights into stock levels.

Knowing exactly what’s available, what’s running low, and when to restock helps you avoid stockouts, prevent overstocking, and keep supply chains moving efficiently.

One way to improve stock accuracy is by setting a reorder point—a threshold that signals when it’s time to replenish inventory before you risk running out.

4. Increased customer satisfaction

Your customers expect a smooth purchasing experience, from checkout to delivery.

When orders are processed quickly, shipping is accurate, and updates are provided in real time, customer trust grows—leading to repeat business and positive reviews.

5. Improved cash flow management

Efficient order processing helps you get paid on time, keeping your cash flow steady.

When payments are delayed due to order errors or fulfilment issues, it can put a strain on your business. A strong order management workflow ensures smooth transactions and minimises revenue disruptions.

6. Easier scalability

As your business grows, managing a higher volume of orders can become overwhelming.

Well-optimised order management processes allow you to scale up without sacrificing efficiency, making it easier to expand into new markets, handle seasonal spikes, and maintain high service levels.

7. Smoother returns and refunds

Returns happen, but how you handle them impacts customer loyalty.

A clear and efficient return process ensures refunds and exchanges are processed quickly, reducing frustration and making it easier for customers to shop with confidence.

The order management process explained

Handling orders is more than just taking payments and shipping products. It’s a process with multiple moving parts.

As your business grows, keeping everything running smoothly means ensuring sales, inventory, warehousing, and shipping are all working together seamlessly.

Most businesses follow a similar order management process, covering everything from the moment a customer places an order to when they receive it—and sometimes beyond.

Below, we break down the four key stages of the order management cycle and how you can optimise each one.

1. Order placement

The process starts when a customer places an order—whether online, over the phone, or in-store. At this stage, you collect key details, including product selection, quantity, payment, and shipping information.

If you’re using an order management system, this step can be automated in seconds, ensuring orders are logged accurately and customers receive immediate confirmation.

2. Order processing

Once an order is placed, stock levels are checked, payments are verified, and order details are confirmed. If the item is available, it moves to fulfilment.

If you use inventory management software, stock updates can be automated, reducing the risk of overselling or backorders.

3. Order fulfilment

Next, the order is picked, packed, and shipped. Delays or mistakes at this stage can impact customer satisfaction, so having an efficient fulfilment process is key.

Whether you’re managing fulfilment in-house or working with a third-party logistics provider, careful coordination helps ensure that orders arrive on time and in perfect condition.

4. Order tracking and returns

Once an order is shipped, your customers expect tracking updates so they can follow their delivery in real time. If they need to return or exchange an item, the process should be simple and hassle-free. A smooth returns experience builds trust and encourages repeat business.

Potential challenges in the order management process

Even with a structured system in place, managing orders efficiently can be challenging—especially as your business grows and order volumes increase.

If your order management process isn’t optimised, delays, errors, and inefficiencies can create unnecessary headaches for both you and your customers.

Below are some of the most common challenges that can disrupt your order management workflow and how to overcome them.

1. Manual processes slow you down

If you’re still relying on spreadsheets, emails, or paper-based systems to track orders, you’re inviting delays and errors.

Manual data entry is time-consuming and increases the risk of mistakes such as incorrect order details, lost invoices, or duplicated records.

Automating key parts of the process, like with order management services, helps you reduce bottlenecks, improve accuracy, and free up time for more strategic tasks.

2. Inventory mismatches lead to stock issues

Selling products that aren’t in stock or running out of high-demand items creates frustration for both you and your customers.

Without real-time inventory tracking, it’s easy to mismanage stock levels, leading to stockouts, overselling, or excessive holding costs.

Integrating order management with inventory tracking ensures you always have an accurate view of what’s available.

3. Order fulfilment delays frustrate customers

Slow or disorganised fulfilment leads to late shipments, incorrect orders, and increased costs.

Whether the issue is warehouse inefficiencies, supply chain disruptions, or poor coordination between teams, fulfilment problems can damage your reputation.

Streamlining your fulfilment process—through automation, better warehouse organisation, or third-party logistics—can help you meet delivery expectations.

4. Limited visibility across the order journey

Customers expect real-time updates on their orders, and you need full visibility to track progress, resolve issues, and prevent mistakes.

If your teams or systems aren’t connected, it becomes difficult to provide accurate order updates, leading to delays and customer dissatisfaction.

Centralising your order data gives you better control and ensures everyone has access to the latest order information.

5. A complicated returns and refund process

Returns are an inevitable part of selling products, but if your returns process is slow or unclear, it can frustrate customers and create extra work for your team.

Unclear policies, delayed refunds, or a lack of tracking can push customers away. A structured, easy-to-follow returns system helps you retain customers and avoid unnecessary disputes.

6. Managing multiple sales channels is chaotic

If you sell across multiple platforms—such as an online store, marketplaces, and physical locations— keeping everything in sync can be challenging.

Without a unified system, you might struggle to track orders, sync inventory, and ensure a seamless experience for customers.

An integrated approach keeps your sales channels connected and your data accurate.

7. Payment and invoicing issues create cash flow problems

Errors in payment processing, invoicing delays, or mismatched financial records can lead to disputes, late payments, and cash flow disruptions.

If you’re manually managing invoices or struggling with reconciliation, it’s time to look at automated invoicing and payment integration to keep your records clean and payments on track.

8. Scaling without the right processes in place

As your business grows, so does the complexity of managing orders. What worked when you had a handful of orders may not work when you’re processing hundreds or thousands.

Without a scalable order management strategy, you risk overwhelming your team, increasing order errors, and missing out on growth opportunities.

Investing in the right systems and processes early on can help you scale smoothly.

9. Lack of coordination between departments

If your sales, warehouse, finance, and customer service teams are working in silos, miscommunication is inevitable. Orders might get lost, shipping might be delayed, or customers might receive conflicting information.

Ensuring seamless communication between teams—whether through shared systems, automation, or regular updates—keeps your operation running smoothly.

Order management best practices

A well-structured order management strategy helps your business stay efficient, reduce errors, and keep customers happy.

Below are key best practices to streamline your process and improve how you handle orders.

1. Automate where possible

Manually managing orders slows you down and increases the risk of mistakes.

Automate key steps—such as inventory updates, invoicing, and order tracking—to improve accuracy, speed up fulfilment, and free up time for more strategic tasks.

2. Keep inventory and order data in sync

Real-time inventory visibility prevents stockouts and overselling. By integrating your order management system with inventory tracking, you always have an accurate view of stock levels, making it easier to plan purchases and avoid fulfilment delays.

For businesses handling complex supply chains, ERP software can provide a centralised solution—connecting order data, warehouse operations, and financials in one streamlined system.

3. Standardise your order management workflow

A clear and consistent order management workflow keeps your team aligned and reduces errors.

Define roles, responsibilities, and step-by-step processes, so orders move smoothly from placement to delivery without unnecessary bottlenecks.

4. Offer multiple, flexible payment options

Your customers expect a variety of payment methods, from credit cards and digital wallets to invoicing and bank transfers.

Offering flexible payment options makes it easier for them to complete purchases and helps reduce payment-related delays.

5. Prioritise communication and order visibility

Your customers want real-time updates on their orders.

Sending confirmation emails, shipping notifications, and tracking links keeps them informed and reduces the number of support inquiries your team has to handle.

6. Optimise returns and refunds

A seamless returns process encourages repeat business. Make sure your return policies are clear, your refund procedures are simple, and your exchange process is easy to follow.

This reduces frustration and builds customer loyalty.

7. Integrate your systems for end-to-end visibility

Order management doesn’t work in isolation. Connecting your order management system with inventory, finance, and customer service tools ensures your data flows seamlessly across departments.

This helps reduce errors and improves decision-making.

8. Monitor key order management metrics

Tracking key metrics—such as order accuracy, fulfilment speed, and return rates—helps you spot inefficiencies and make data-driven improvements. Regularly reviewing these numbers ensures your order process stays optimised.

One critical metric to monitor is excess or slow-moving stock.

If inventory sits unsold for too long, it can turn into dead stock—products that take up storage space and reduce profitability. Keeping an eye on inventory turnover rates and adjusting your ordering strategy can help you avoid unnecessary waste.

9. Plan for seasonal demand and scaling

If your business experiences seasonal order spikes, planning ahead is essential.

Forecast demand, maintain buffer stock, and optimise fulfilment processes, so you can scale without delays or mistakes.

10. Speed up fulfilment with smart warehouse management

Inefficient picking, packing, and shipping processes create unnecessary delays.

Use warehouse management strategies—such as barcode scanning, batch picking, and strategically placed inventory—to improve fulfilment speed and accuracy.

Take your order management to the next level 

A well-run order management process keeps everything moving—reducing errors, speeding up fulfilment, and strengthening your cash flow.

But without the right tools, it’s easy to get stuck in delays, manual work, and disconnected systems.

With order management software, you can bring everything together in one place—automating key processes, syncing inventory in real time, and improving fulfilment speed.

That means fewer mistakes, faster processing, and a smoother experience for both you and your customers. When orders flow seamlessly, so does your business.