Order Management for Small Business: The Ultimate Guide

There are several main tasks required to support for order management for small businesses. The first one is maintenance and repair & operations (MRO). This covers the resources and processes required to keep systems and equipment running efficiently. Processes required for this include things like preventative maintenance, undertaking repairs as issues arise, fulfilling the tasks needed to support day-to-day operations, and engaging in inventory management. 

Work-in-progress (WIP) includes partially-finished goods or projects that still need to be completed. As a small business, you must calculate the progress and cost of ongoing projects including raw materials, manual labour, and overheads. 

In addition, you’ll also need to calculate carrying costs; these refer to the total cost of holding inventory. This includes the costs required to store and process inventory such as rent and utilities and employee salaries but also includes financial costs like costs related to the perishability of goods. Carrying costs are typically calculated by dividing your total inventory value by how much it costs you to store goods over a given time.

Overstocking is another core part of order management for small businesses. Overstocking involves holding too much inventory, known as surplus inventory. This happens when businesses buy more product than they sell and this inventory is left to sit in storage, which damages their profitability. 

Stockouts is another issue you need to look out for, this is when you run out of inventory and can’t fulfil customer demand. 72% of stockouts are attributed to issues within retail stores such as poor ordering and replenishment practices. 

First-in, first-out (FIFO)

First-in, first-out is one of the most popular forms of order management. In this method, the oldest items in your inventory are shipped out first. This helps cut down on waste, which is particularly important for efficiently managing goods that spoil. One drawback of this method? It can increase the income tax a business needs to pay as the older, cheaper inventory is sold to customers first, leaving businesses with a lower cost of goods sold (COGS) and higher reported profits.  

Just-in-time (JIT)

In the just-in-time (JIT) inventory management approach, inventory items are ordered and scheduled to arrive at exactly when they are needed, with businesses holding zero stock on their premises. This approach is ideal for helping to minimise waste, ensure greater efficiency, and reduce storage costs. On the downside, businesses rely on suppliers to ship on time and any delays can have knock on effects and halt production. 

Moving average costs (MAC)

The moving average cost (MAC) is a dynamic approach that involves a business calculating the average cost of a product after each purchase or change to their inventory. Businesses work out this calculation by dividing their total stock value by the quantity they currently have in stock. This approach is straightforward and easy to calculate and put into play. On the other hand, in instances where there are larger price fluctuations, this approach may not accurately reflect the true cost of the inventory they sell. 

Order management can be simplified and improved with the right order management software for small businesses. The best tools make use of AI which you can use to automate and optimise many of your order management processes. 

For example, many tools allow you to automate order routing; you can use order management software to automatically perform actions on certain orders such as holding orders for validation or routing inventory to specific warehouse locations. AI-powered data analytics and forecasting can give you detailed insights into your processes and operations and allow you to make data-informed decisions. 

The best order management software typically integrates with your ecommerce platforms and sales channels. This allows you to centralise orders from all your sales channels and automatically import inventory details, making it easier to manage your sales and inventory without manually updating multiple sales platforms.

The right tools can also help you run a greener business and hit sustainability goals by supporting you to operate more efficiently and reduce waste. They can do this by allowing you to reduce your reliance on paper with tools like mobile barcode scanning for picking and centralised digital systems. In addition, by improving inventory control you can rely on your software to reduce overstocking and wastage, as well as lowering your energy consumption and carbon footprint. 

Order management software can help streamline your business in a number of ways. Firstly, it’s a brilliant tool for improving your invoicing and accounting as you can use this software to centralise and analyze your accounting data and automate processes like invoice generation. Order management software can be a great way to help reduce errors when it comes to payment processing, invoice creation, and inventory tracking. 

These tools can also offer in-depth business insights into business operations, inventory levels, customer behaviour, and sales patterns. By collecting and centralising extensive data across your sales, inventory, and ecommerce channels you can get insights into things like optimal inventory levels, revenue and  product popularity. These insights can allow you to gain a deeper understanding of your business, products, customers and overall operations, highlighting where you can improve. 

These tools are especially important if you want to help improve inventory management as they can deliver real-time visibility and control over stock levels, order processing and fulfillment. By giving you visibility into your inventory and automating order inventory management based on the levels of stock, you can avoid issues such as stockouts and ensure you better meet customer demand and avoid waste with perishable goods. 

Moreover, this software can also help you improve credit management and cash flow. It does this with features like integrations with accounting systems that provide real-time insights into order history and accounts payment, automatic order processing, and enhanced forecasting based on historical sales trends data and payment patterns that allow you to better forecast and manage your future cash flow. 

The first step to choosing the right Order Management System (OMS) is to understand your business's unique needs and most pressing goals. What are the biggest issues you're facing right now? Is it picking-and-packing errors, overstocking, or delays in shipping? By identifying your core issues, you can set up objectives for what you want your software to help you accomplish. Overarching goals like cutting costs, improving efficiencies, and reducing your carbon footprint should also be factored in. 

Once you've intensified your goals, review software features. The best tools should allow you to centralise and automate your entire order lifecycle, provide real-time visibility into your inventory, integrate your sales and ecommerce channels with your software, and provide detailed analytics and automation capabilities. 

Take the time to discuss your current issues and needs with your potential provider and ask them to run through a demo of the product so you can understand how it performs and how its features can help you with your specific use cases. 

Need more guidance on how to choose the right order management software for your small business? Download our guide on how to choose the best order management software for you. 

Mintsoft is one of the leading small business order management software solutions on the market. Offering a host of diverse features to help you improve and automate your order management processes, Mintsoft offers automated workflows and order processing, full visibility into your real-time inventory, advanced data analytics, and over 150 pre-built integrations with, marketplaces, shopping carts, couriers and accounting systems.

To see Mintsoft for yourself, book a demo with one of our product experts, for a personalised view of how the system could work for your small business.

Our customer Ed Warren, Owner of Kecks said, “With Mintsoft, we can pick single orders so fast and it's helped our business in terms of Trustpilot reviews. We get so many reviews saying ‘great product, fast delivery.’ It helps my business feel like it's getting a great customer satisfaction rating – which for me is everything, as it helps with repeat business.”