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Order Management 101

What is Order Management?


In the strictest sense, Order Management is the process of accepting sales orders, making promises to execute orders based on available resources and managing the execution of orders so as to deliver on the promises made to customers. However, the general definition of Order Management is much broader and includes managing quotes and contracts, billing, processing of payments and financial accounting in addition to the above.

What is an Order Management solution?


An Order Management solution is an IT solution that – directly or through integration with other solutions – enables a company to effectively and efficiently manage the Order Management processes for:

  • Managing products, catalogs, prices, promotions and accounts
  • Managing quotes, contracts and rate agreements
  • Configuring products and orders
  • Checking product availability
  • Proposing complementary/supplementary/alternate products
  • Managing credit terms and conditions
  • Picking, packing and shipping of orders
  • Managing inventory
  • Monitoring order status
  • Billing
  • Processing of payments
  • Managing rebates
  • Financial accounting
  • Analyzing sales performance

What is the goal of an Order Management solution?


The goal of an Order Management solution (or any IT solution) is to help realize the business strategy. An Order Management process (and solution) must be designed to improve a company’s competitive positioning in the market.


Often companies focus too much on Order Management KPIs and lose sight of the ultimate goals for Order Management. It is important to recognize that increasing the efficiency of sales order processing adds little value unless it translates into cost reduction. Similarly, creating differentiation in the minds of customers (through reduced order cycle time, richer customer experience, etc.) has little value unless it translates into increased sales and customer retention.

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