Order Errors Exposed: The Hidden Costs of Manual Order Entry

Do you know how much order errors might be costing your business right now?

Figuring out the exact cost of a missed or incomplete order can be an ambiguous task. Not only do you have to worry about the time, money and effort it takes to rectify the situation with your buyers, your reputation as a trading partner drops with each failed transaction.

What’s really surprising is how often missed orders happen. They can be caused by a miscommunication in price, a typo on a form, or a small data entry error into an ERP system which can snowball out of control.

The main reason for all this, not surprisingly, is human error. It’s truly remarkable that in today’s digital world, most of the expensive, and even newsworthy mistakes, are made by human error. For example, a simple clerical error cost Citibank over $900 million in misallocated payments in 2021. And remember the Rogers outage in 2022? It lasted 26 hours and left 12 million people without wireless or hard-wired services. Human-error was the culprit behind that too. To make matters wrose, the economic toll on the Canadian economy was estimated at a staggering $142 million. That’s no small hit to the economy!

Mistakes like this aren’t uncommon. To be frank, they’re more the rule than the exception. 75% of all data loss of any kind comes from human error. For manually keyed entries, error rates can be up to as high as 4%. That means every 1000 data entries that your company makes, you could be seeing up to 40 errors — some of which will make an impact on your bottom line.

In every sector, companies are still handling vital and complex transactions with outdated systems that are vulnerable to human error or simple mistakes. Even if you’re not mistakenly losing $900 million, your profits are still getting eroded one preventable accident at a time.

For a supplier, it can go beyond just entering and shipping the wrong goods or incorrect pricing, it can also affect your reputation and credibility long term.

To fully understand the cost of an order error, let's use a sample case from a garden center at the peak of their busy season.

How A ‘Simple’ Order Error Can Cost Hundreds of Dollars

Trevor is the manager of a medium-sized garden center. He places an order over the phone with one of his key suppliers, requesting two pallets of 2 cubic foot bags of mulch. However, when the shipment arrives he realizes that he’s received two pallets of 3 cubic foot bags instead.

He calls the supplier to complain — and since his supplier has no record of what was said on the phone call, they have little choice but to absorb the cost of the error. They then issue the garden center a credit of $1.10 per bag, representing the difference between the cost of the request and what was delivered.

Taking the loss of revenue and time spent to rectify the mistake, this error ends up costing the garden center upwards of $600. This may not be the most expensive miscommunication in the short term, but spread across multiple orders and years, it adds up considerably.

Correcting an order error could cost a company 50% to 125% of the cost of the product in the first place.

When processing customer orders by phone, email, text, fax, or in person, the responsibility of the order error often rests with the supplier as they manually enter orders into their system. As the size of the order increases, so does the risk of errors in the order process costing your company money.

Should Erroneous Orders Be Compared to Completed Orders?

It’s a good idea to compare erroneous orders to the ones that go smoothly. By doing this, you can spot where things go wrong—whether it’s a pricing mix-up, wrong quantities, or just a simple mistake. This helps you figure out what’s causing the errors, whether it's human slip-ups, outdated systems, or communication errors.

When you compare the two, you also get a clearer picture of how much extra work the mistakes are causing. For example, if a completed order flows easily from start to finish, but a wrong one needs a bunch of fixes or even expedited shipping, that extra time and costs add up. Understanding these differences can help you improve your process, cut down on mistakes, and make everything run smoother in the long run.

The Less Tangible Costs of Order Entry Errors

So far, all of the costs that we’ve covered can fit neatly into a spreadsheet. However, there are some intangible costs consistent order errors can bring which are harder to quantify, including damaged reputation, or bad online reviews.

Damaged Reputation

This one’s tough to measure, but there’s no doubt that a bad reputation can seriously hurt your bottom line. For example, political pollsters, who make it their job to understand perceptions, still frequently get things wrong. Now, consider this scenario:

• An order error causes you to lose a relationship with Company A.

• Company A, in turn, tells their friend at Company B, who’s now considering your services, that they don’t want to work with you because of the poor experience.

• Not only have you lost Company A’s business, but now Company B is hesitant, and word starts spreading that your company isn’t reliable.

In the end, one error could cost you multiple clients—and even damage your reputation further as others hear about it. When 91% of B2B sales are influenced by word of mouth in some way or another, having a bad reputation can absolutely tank your company’s chances for long-term success.

Bad Online Reviews

A bad experience doesn’t just spread through word of mouth—it can also leave a mark on your digital footprint. Let’s go back to the example: if your order error was frustrating enough for the customer, they might take to the internet to share their experience, calling you unreliable.

This may not seem like a huge issue at first. In fact, studies show that 67% of B2B buyers prefer seeing a mix of positive and negative reviews, and 72% believe that negative reviews give them valuable insights into a company. However, with enough mistakes and dissatisfied customers, those negative reviews could quickly start to pile up, turning into a bigger issue for your reputation.

How to Calculate the Real Cost of Order Errors

Understanding the true cost of order errors involves more than just looking at a single mistake. To get a full picture of your potential losses, consider these six key factors:

1. Your Average Error Rate: Start by estimating how often errors occur in your order process. Knowing this will help you understand the scope of the problem.
2. The Cost of Fulfilling Orders: Take into account how much labor is required to process each order, whether it’s done correctly or not. Mistakes mean extra time and effort, which costs money.
3. The Cost of Returns: If an order is wrong, there’s often a return process. Calculate how much it costs to handle returns, from shipping to restocking.
4. Shipping Correct Items (and Potentially Expedited Shipping): If you need to correct an error, you may need to ship the right items quickly to make things right. Factor in expedited shipping costs.
5. The Lifetime Value of a Lost Customer: Losing a customer isn’t just about the immediate sale. Consider the future revenue you’ve lost from that customer who won’t be coming back.
6. The Cost of Acquiring a New Customer: To replace the customer you lost, you’ll have to invest in marketing and sales efforts. This can be costly, especially when you're trying to regain trust.

It may seem like a lot to take into account, but we’ve simplified the process for you. Our OrderEase ROI Calculator for Wholesalers includes an order error calculator, giving you a quick estimate of what you could save by reducing human error.

Proven Strategies to Minimize Order Errors & Boost Efficiency

Reducing order errors is essential for improving profitability and strengthening customer trust. The first step is to evaluate how your business handles order intake and submission. Start by identifying the methods that have the highest error rates—such as text, phone, fax, and email—and then work on reducing your reliance on them. This is a crucial step in the right direction.

After cutting back on those error-prone processes, here are three must-try strategies to put in place:

1. Keep All Your Product Info in One Place

Back in the day, only the biggest suppliers could afford fancy digital systems for managing product info. Luckily, that’s no longer the case. These days, it’s not just accessible—it’s essential.

Think about it: with supply chain issues, price changes, and new products constantly popping up, using paper catalogs or outdated tools just doesn’t cut it anymore. Plus, manual processes come with a high error rate—around 10% or more. That’s way higher than what you’d see with digital solutions.

By centralizing all your product information in one digital hub, everyone—from your sales team to your customers—can easily access accurate, up-to-date data. And if there’s ever an error? It can be fixed instantly across the board. Compare that to the old paper system, where a small correction was a huge hassle.

2. Go Digital for Customer Orders

Here’s a simple way to cut down on order mistakes: get your customers to place their orders digitally. It’s easier for them and better for you. 

With an efficient and effective online ordering system, customers can have clear access to your products, pricing, and inventory. They can handle their own orders, which means fewer chances for misunderstandings or miscommunication that happen over the phone or email.

By letting customers take charge, you’re shifting the responsibility for order accuracy to them. And let’s be honest—that’s a win for everyone involved.

For more information on online ordering, read our blog Why Your Business Needs To Commit To Online Ordering.

3. Connect Digital Orders to Your Internal Systems

Once customers and sales reps are submitting orders digitally, why stop there? Go the extra mile by connecting those orders directly to your internal systems.

This eliminates the need for anyone to manually re-enter order details, cutting out typos, errors, and extra work. Plus, it speeds up order processing and fulfillment, making everything more efficient for your team and your customers.

By integrating your digital ordering system with tools like your ERP or accounting software, you’re streamlining the entire process—saving time, reducing mistakes, and keeping everyone happy.

Case Study: Century Drill & Tool Case Study

Simplify & Automate: How to Implement These Strategies Effectively 

To achieve these goals and reduce order errors, your business needs a platform that seamlessly automates and integrates your ordering processes. The ideal solution connects your ERP or accounting systems with a customer-friendly interface, creating a streamlined process that minimizes manual effort.

There are many software solutions that provide this functionality to a degree, but don’t offer the full package. If you’re a company who receives orders from marketplaces like Amazon, EDI orders from large retailers, and PDF orders from franchises, most software solutions aren’t built to accept all these orders digitally.

OrderEase stands apart by offering a complete solution. Our platform can handle a variety of ordering channels while reducing errors, improving operational efficiency, and enhancing the customer experience. Let us help you simplify your order management, reduce costly errors, and create a seamless process that supports your business growth.