Everything You Need to Know to Master Sales Order Processing

SixEleven

The entire order processing workflow is not as easy as everyone thinks. Thus, it requires a complex chain of subprocesses and documents to coordinate and communicate with the departments involved in it. 

One of these is sales order processing. This article tackles the definition of sales order processing, how it works, and its significance in the entire order fulfillment chain.

What is sales order processing

Sales order processing refers to the entire workflow sequence followed to complete a customer’s purchase. After the customer clicks “buy now” on a website or Facebook page, the system triggers a series of communications involving different departments. This includes the warehouse, logistics, and billing.

Nowadays, sales order processing requires technology that enables a business to process a high volume of orders. This helps them to keep up with customer’s expectations of getting their purchases to their doorstep quickly and easily.

To understand how sales order processing works, we should understand the basic documents required in this operation.

What is a sales order

A sales order binds the confirmation of sale between the seller and the customer. The seller produces this document as a part of their records.

This document indicates the item to be purchased, the total order amount, customer’s payment method, and fulfillment method. Depending on the agreement, an order may be fulfilled through the following methods:

• Digital copy. This involves the production and delivery of digital goods such as software, applications, or service subscriptions.
• Build to stock. Here, the seller creates and stocks items based on its anticipated demand.
• Build to order. Here, meanwhile, the seller creates the item upon receipt of a customer’s order. Usually, customized or personalized items fall on this category.
• Configure to order. Items are assembled to meet the customer’s unique requirements. Computer sets are a good example of this.
• Engineer to order. Here, meanwhile, product design work is done after receipt of order.

Sales order vs purchase order

B2B order processing requires both the sales order and the purchase order. However, the two differ on the purpose, creation, and delivery.

A purchase order is created by the customer to place their order for a product. Upon approval from their part, the seller must receive and approve this to fulfill their order.

A sales order, meanwhile, serves as sales confirmation to the customer. A customer may also receive a copy of this document along with their invoice.

How is it different from an invoice

Both documents are generated by the seller and required for bookkeeping. A sales order may be easily confused with the invoice, but they have distinctions in terms of purpose and timing.

An invoice indicates the amount owed or paid and their terms of payment. The seller usually generates an invoice after fulfilling a specific order.

A sales order, while containing the item amount and terms, focuses more on how they will deliver the product depending on the method agreed upon with the customer. It prompts the vendor to start assembling, packing, and designing a product.

The entire sales order process

• Order creation. First, the seller encodes the products in the system, along with its price and quantity.
• Allocation. The team will then allocate available free stock to order or reserve the next stock once it becomes available.
• List picking. For build-to-order and configure-to-order items, the fulfillment team picks the required items for assembling or building an item.
• Dispatch. Finally, the logistics provider fulfills the delivery of packed items, along with an invoice. The warehouse also updates the product stock inventory.

The Typical Steps in a Sales Order Process Flow

Sales order processing is a common occurrence in the retail industry. Here is an example of the typical steps involved in the sales order process:

• Order Receipt: The sales order process begins once a customer creates a purchase order. This purchase order contains information on what the customer wants, the price they agreed to pay, their billing address, and delivery or service address.
• Sales Order Generation: The purchase order is processed manually or using an automated system that checks the product’s availability at your warehouse and verifies the price quotation. Once the details are confirmed, a sales order is created.
• Order Confirmation: Your finance department will verify the details of the order, ensuring that the customer’s payment has been processed successfully.
• Order Preparation: After confirming the sales order, your staff should be able to prepare it for picking and sorting or production. The order should be packed into appropriate containers, safely sealed, and labeled for shipping.
• Shipping: This step involves transferring the order to a logistics partner who will be responsible for delivering the product to the customer. Once the order has been fulfilled and received by the customer, the sales order process is complete.

The Importance of Managing Your Sales Order Flow

Effective sales order process management is essential for keeping your business running smoothly and your customers happy. By having a system for managing your orders—from placement to delivery—you can avoid costly errors, prevent delays, and maintain accurate inventory levels.

A streamlined process ensures seamless communication between your sales, inventory, and shipping teams, reducing confusion and boosting productivity. Your customers will also appreciate accurate delivery timelines and real-time order updates, enhancing their overall experience.

Plus, it allows you to identify and eliminate bottlenecks, optimize workflows, and scale your operations. In today’s competitive market, mastering your sales order flow helps you build trust and drive success.

4 Benefits of Optimizing Your Sales Order Processing

Improving your sales order process is key to enhancing operational efficiency, boosting customer satisfaction, and driving business growth.

1. Process Orders Faster

Optimizing your sales order processing workflow reduces bottlenecks, allowing you to process orders quickly and meet tight delivery deadlines effortlessly.

2. Maximize Productivity and Profitability

Having a sales order processing system frees up your team to focus on higher-value tasks, increasing output and boosting your bottom line.

3. Minimize Errors and Improve Accuracy

Automation and clear workflows reduce manual mistakes, ensuring accurate orders and happier customers.

4. Streamline Workflow Using Cloud-Based Solutions

Cloud-based systems centralize data, enabling real-time updates, seamless collaboration, and better decision-making across teams.

3 Ways to Optimize Sales Order Processing

Optimizing your sales order processing involves implementing steps that improve efficiency, reduce errors, and enhance customer satisfaction. Here’s how:

1. System Audit

Regularly auditing your sales order system helps identify bottlenecks, outdated procedures, and inefficiencies. By analyzing your current processes, you can pinpoint areas needing improvement and implement better workflows to streamline operations.

2. Automation

Automating repetitive tasks, like order entry, invoicing, and inventory tracking, significantly reduces human error and speeds up the process. Automation ensures that orders move seamlessly through each stage, enabling faster sales order processing and better allocation of resources.

3. Forecast Demand

Accurate demand forecasting ensures you maintain the right inventory levels to meet customer needs without overstocking or understocking. By analyzing historical data and market trends, you can optimize order fulfillment, minimize delays, and improve customer satisfaction.

AboutSixEleven

SixEleven is the first Davao-Based solution-oriented contact center designed to provide quality services in Sales, Marketing and Customer Support in the Philippines.