Order Management Challenges—ERP Integration is the #1 Solution 95% of Companies Face

By: Greg Bellis 

Order management directly impacts sales, revenue, operational efficiency, and customer experience. Yet a recent TrueCommerce study of supply chain leaders found that 95% face order management obstacles—making this a top-priority area for improvement.  

In this blog, we’ll explain the most prevalent order management issues faced by manufacturers, distributors, retailers, and other supply chain partners, and share a highly effective approach to improving order management efficiency. 

What is order management? 

Order management is the end-to-end processing of orders, from when they are placed to when the customer receives them, including any returns. This process includes capturing, tracking, picking, and shipping orders while managing all the associated data.  
 
The four basic steps in the order management cycle, all of which can benefit from automation, include: 

1. Receiving an order: When a customer clicks the “Buy” button. 

2. Fulfilling the order: This includes picking, packing, and shipping. 

3. Managing inventory: After items are shipped, inventory levels are reduced.  

4.  After-sale follow-up: This involves managing returns, refunds, and exchanges, as well as connecting with customers to gain feedback and optimise their purchase experience. 

An order management system (OMS) is an automated, unified approach to managing the order lifecycle. It offers near real-time visibility into inventory, fulfillment, shipping, and even post-sales customer interactions—including letting customers check their order status and track when it arrives. For eCommerce businesses, an OMS can sync key order data with the eCommerce platform to update customers, 3PLs, and other collaborators in the retail supply chain. 

Why is order management so important? 

Order management is perhaps the most vital aspect of delivering a competitive, differentiating customer experience. It also drives operational efficiency by reducing manual effort and errors.  
 
For instance, online and in-store shoppers demand accurate information on what products you have in stock, requiring precise, available inventory data. Their brand loyalty also depends on having the correct inventory at the right place and time and getting it to them quickly and in perfect condition.   

The more orders a growing business handles, the more critical order management automation becomes. Some scalability problems that efficient order management can solve or reduce include: 

• Maintaining accurate inventory data to strike the right balance between overstocking and under-stocking, even when you face seasonal or other demand fluctuations. 
• Minimising human error in the fulfillment process to help reduce returns, refunds, and reputational harm. 
• Improving order accuracy to reduce delays and other profit-sapping fulfillment problems. 
• Helping to optimise overall business efficiency, allowing staff more time to focus on strategic tasks and less need for manual activities, like entering data across standalone systems. 
• Accessing the timely, accurate data your executives need for analysis and decision-making. 
• Saving operational costs through improved labour efficiency, optimised inventory levels, and fewer shipping errors. 

What are the top order management challenges? 

Complex or ad hoc business processes, lack of integration across systems, and diverse customer requirements all contribute to order management inefficiencies. In The Supply Chain Trends Report 2024 by TrueCommerce, we found that respondents struggled most with these order management issues: 

• Inventory discrepancies (47%). Inefficient processes, human error, demand spikes, and supply chain complexities can all increase the chances that recorded inventory and stock count will not match. 
• Returns/reverse logistics issues (46%). The growth of eCommerce and omnichannel retail leads to more returns, as well as higher customer expectations for how brands handle returns.  
• Order volume fluctuations (39%). Businesses that are unable to scale their order processing to handle demand spikes often face increased returns, more lost sales, and more inventory inaccuracies.  

Some of the other common challenges that study respondents report include: 
 

Communicating with retailers	36%
Picking/packing efficiency	34%
Multi-channel fulfillment	31%
Slow transit times	27%
Working with 3PLs	12%

Inventory Inconsistences Due to Lack of Data 

Problems with inventory can result from poor communication and lack of integration with 3PL systems. As more and more businesses rely on 3PLs to manage their inventory and fulfill orders, keeping inventory in sync demands automation.  

You can only fulfill orders if you know what you have in stock. To overcome this hurdle, companies must invest in integrations with ERP or partner fulfillment systems, usually through EDI.  
 
Another common cause of inventory inconsistencies is retailers’ heightened demand for real-time inventory data, which puts more pressure on sellers to track inventory accurately. 
 
Either way, the last thing any seller wants to do is sell a product they don’t have in stock and can’t ship on time. That’s an unacceptable buying experience and a leading reason why consumers abandon brands.  

Why are so many supply chain businesses investing in ERP/EDI integration? 

ERP and other business systems offer visibility across finance, planning, purchasing, inventory, sales, and marketing. While some companies have a separate OMS that they need to integrate with ERP, many gain order management functions through their ERP system’s capabilities.  
 
For supply chain businesses, near real-time visibility on critical data elements like inventory levels, orders, invoices, and shipment notices is essential for competitive survival— emphasising the prioritisation of ERP integration.  

Many supply chain companies recognise this. In fact, 91% of respondents in the TrueCommerce survey plan to invest in new ERPs, with 70% making those investments in 2024 and 21% doing so by 2027. Nearly 60% are also focused on implementing or upgrading EDI.  

Implementing and integrating these solutions is a competitive necessity for any brand whose success depends on robust order management. EDI gives you a standardised, digital way to comply with diverse trading partner communication requirements on the front-end, while ERP manages order data and other business data on the back end. 

Many customers are seeking pre-integrated, web-based ERP and EDI offerings that can quickly add significant value. By eliminating the rekeying of order, customer, and tracking data across systems, ERP/EDI integration boosts order management efficiency, improves data accuracy, accelerates fulfillment, and delivers a more competitive customer experience.  

In many cases, customers who lack integration between EDI and ERP rely on their 3PL(s) for all their inventory and order management data. This makes it difficult to track inventory or even know what orders are in process. Often, there’s little integration, which means rekeying the 3PL data. Plus, if the 3PL’s systems go down, access to order data is lost, and its re-establishment is outside the customer’s control. 

With EDI and ERP integration to automate data exchange, you can identify product location, order fulfillment, and any order delays. 

Automated Order Data Exchange Boosts the Bottom Line 

Too many supply chain businesses focus solely on selling more products. A better first step is to enhance the efficiency of current processes—improving visibility on order data, closing gaps in order processing, and cutting the operational and reputational costs of errors and returns.   

What’s the bottom line? If EDI integration with your ERP environment isn’t on your short list of technology investments, consider prioritising it now. The result will be a better customer experience, leading to stronger customer loyalty, more new customers, and increased revenue. 

What’s Next? 

Solving integration challenges usually means taking a close look at internal systems and processes. Achieving smooth, reliable automation is more than complicated than simply deploying a new solution. However, it can make all the difference in today’s experience-driven business environment, and TrueCommerce can help you attain this.  

To support your decision-making with the latest competitive supply chain insights, download the Supply Chain Trends Report 2024.