How Manufacturers Can Reduce Order Errors

Are you aware of how much order errors cost your business right now?

Figuring out the exact cost of a missed or incomplete order can be a nebulous 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 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.

This is why knowing how to reduce order errors is essential. Minimizing these mistakes not only saves costs but also helps maintain trust and reliability in your business relationships.

The main cause of all of this is, unsurprisingly, 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.

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In every sector, companies are still handling vital, complex transactions with outdated reduced-order-error software that is vulnerable to human error or simple mistakes.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 its busy season.

What are Order Errors?

Order errors occur when there’s a mistake in the ordering process, often due to human errors, communication breakdowns, or system limitations. These mistakes can include incorrect product quantities, wrong pricing, or data entry issues. 

Human errors, like typos or miscommunication, are common, especially with manual entry. Systems that aren’t integrated well can also cause discrepancies between inventory data and what’s displayed online or in-store.

Using order management software like OrderEase can automate these processes, reducing the risk of errors by syncing data across all systems in real time, improving accuracy, and streamlining order fulfillment.

Real Cost of Order Processing Errors

To truly understand the cost of order errors, it’s crucial to look beyond immediate financial losses and consider the long-term impact on operations and relationships.

The Less Tangible Costs of Order Entry Errors

So far, all of the costs that we’ve covered can fit neatly into a spreadsheet. But… 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 is a hard one to quantify. To give an example, political pollsters are notoriously often wrong and their entire career is to monitor perceptions. What there is no doubt about, however, is that a bad reputation comes with a high cost to your bottom line.

Consider this scenario:

1. An order error sours your relationship with Company A and you lose their business.
2. Meanwhile, Company A is approached by their friend who owns Company B, who is in the market for your services. 
3. Company A says they don’t want to work with you because they just had to fire you.  Now you’ve lost Company A’s business and Company B’s business. 
4. At the same time, based on the advice they received, Company B may tell other people to avoid your company because, “I’ve heard they’re unreliable.”

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

It’s not just word of mouth that can cause real problems for your company; a bad enough experience can spill over into your digital footprint as well.

To continue with the previous example, let’s say that your order error was so inconvenient to them, it compelled them to write about you online, calling you unreliable.

That might not be the end of the world for you. 67% of B2B buyers prefer to see a mix of positive and negative reviews, and 72% of them believe that negative reviews help them gain a depth of insight into their decision-making process. But, with enough order errors and enough annoyed customers, it could quickly become a problem.

Six Key Ways to Reduce Order Errors in Your Business

Reducing order errors is critical for improving profitability and customer satisfaction. The first step is to evaluate your current order-taking processes. 

Identify methods with the highest error rates like phone, fax, and email orders and reduce your reliance on them. From there, focus on these six steps to effectively reduce order errors:

1. Manage All Product Information in One Place

Managing your order information digitally is no longer a luxury; it’s a necessity. With supply chains fluctuating and constant product changes, relying on paper catalogs and order forms leads to errors. 

Manual order-taking can result in a 10% or greater error rate, which is far higher than digital systems. Centralizing your product data ensures that your sales team, administrators, and customers have access to the most up-to-date product and pricing information, reducing the chances of errors. 

Plus, errors can be corrected instantly, preventing mistakes from spreading across systems.

2. Encourage Digitally Submitted Orders Over Manual Ordering

Switching to digital ordering eliminates human error from the start. When customers place their orders through an online system, it reduces miscommunication, especially compared to phone orders or emails. 

This process ensures that product details and pricing are accurate, reducing order entry errors and improving order processing accuracy. By encouraging digital order submission, businesses can reduce the risks associated with manual order entry and improve efficiency.

3. Integrate Online Ordering with Internal Systems

Integrating online orders directly with your internal systems removes the need for manual data entry, which reduces typographical errors. This integration ensures that orders are processed quickly and accurately, speeding up fulfillment and reducing the operational workload. 

With systems like OrderEase, you can seamlessly manage orders from various sources (e.g., eCommerce platforms, Amazon, etc.) without relying on manual processes.

4. Use Automated Order Processing Software

OrderEase automates data entry and updates, reducing human mistakes. Automating repetitive tasks ensures that data is processed quickly and accurately, without manual intervention. 

This eliminates errors associated with traditional, manual systems and increases operational efficiency, saving time and money.

5. Implement Real-Time Inventory Management

Using real-time inventory management ensures that your system is always updated with the latest product availability. This prevents over-selling, shipping errors, and incorrect quantities. 

By integrating real-time data from your inventory management system, you can avoid stock discrepancies and improve order accuracy, reducing the risk of order processing errors.

6. Standardize and Automate Communication

Automated order confirmations, shipping updates, and notifications prevent misunderstandings between you and your customers. Standardizing these communications ensures everyone is on the same page, reducing the risk of errors during order fulfillment. 

Automating notifications and reminders about order status or delays keeps customers informed, which can prevent dissatisfaction and reduce errors.

How Can We Reduce Order Processing Errors?

To minimize order processing errors, businesses must refine their processes and leverage technology:

1. Integrate Real-Time Data: Implementing an integrated order management system that syncs real-time data across sales channels and your ERP ensures that all information is accurate, helping you reduce order processing errors.
   
   
2. Train Your Team: Properly training your staff on accurate order handling and data entry reduces human errors and improves accuracy in order processing.
   
   
3. Centralize Order Information: Storing all order data in one system eliminates data fragmentation and reduces errors caused by multiple systems.

Using Software to Reduce Order Errors and Improve Accuracy

To effectively reduce order errors and streamline your order management process, OrderEase offers a comprehensive solution that automates data entry, integrates real-time inventory updates, and connects seamlessly with your existing systems like ERP and POS.

 By centralizing all order information in one platform, OrderEase minimizes human error, enhances accuracy, and ensures faster fulfillment, helping businesses save time and money while improving customer satisfaction. This smart, automated approach to order processing is key to mitigating costly mistakes and maintaining a smooth, error-free operation.

1. Automate Data Entry

Manual entry is prone to errors. Our system automates data capture from various channels like Amazon or eCommerce platforms, reducing the risk of mistakes during order entry. Automation ensures orders are processed quickly and accurately.

2. Integrate Real-Time Data

By syncing data across your sales and ERP systems in real-time, OrderEase ensures all information is accurate. This minimizes data errors in business, keeping inventory and order details consistent across platforms.

3. Improve Order Verification

OrderEase automates the verification process, ensuring correct product details, pricing, and stock availability before an order is processed. This reduces errors and speeds up the verification process.

4. Use Digital Order Submissions

Encouraging customers to place orders digitally reduces the chances of human error. OrderEase ensures that orders submitted online are accurately captured and processed without manual intervention.

5. Real-Time Updates and Notifications

OrderEase provides real-time updates on order status, shipping, and availability. Automated notifications keep customers informed and reduce errors related to communication breakdowns.

6. Centralize Order Data

Centralizing all order data in one platform ensures that there’s no fragmentation across systems. With OrderEase, you can access accurate and up-to-date order information from a single source, reducing errors and improving consistency.

Why Do Order Entry Errors Happen?

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 cause of all of this is, unsurprisingly, 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. 

Mistakes like this aren’t uncommon.  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, complex transactions with outdated systems that are vulnerable to human error or simple mistakes. 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. 

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

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 order error costing your company money.

How to calculate the real cost of order errors

When looking at the true cost of order errors, there are six main points that you have to consider to know your potential losses:

1. Your average error rate: It’s vital to know a ballpark figure of how many entry errors your company makes every month.
2. The cost of fulfilling orders: Look at how much it costs your company in labor to make / fulfill an order, correctly or incorrectly. 
3. The cost of returning an item.
4. The cost to ship the right items, potentially with expedited shipping to make amends with your customer.
5. The lifetime value of a recurring customer you may have just lost.
6. The cost per customer acquisition to replace that customer.

It might sound like a lot to consider, but we’ve helped to simplify the process. We’ve included an order error calculator in our OrderEase ROI Calculator for Wholesalers so you can get an estimate of what you could be saving if you didn’t have to worry about human error. 

Final Thoughts

The best way to reduce order errors and achieve these main three goals is by working with a solution that has the ability to automate and integrate with data from your ERP or accounting system to a sales rep and customer-facing interface.

There are many software solutions that provide this functionality to a degree, but don’t offer the full package. If you’re a company that 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.

Since not all online ordering and product information management systems are built alike, you want to work with one that suits your needs. OrderEase can handle any challenges your company is facing with data entry or interfacing with your customers. We can help you reduce order errors, increase efficiency, and build great customer experiences while building your sales channels.

Book a discovery call with OrderEase Today!

FAQs

What’s the best way to reduce order errors in a multi-supplier environment?

The best way to reduce order errors in a multi-supplier environment is by centralizing your order management system. By consolidating all orders from various suppliers into one platform, you can ensure uniformity in processing, which reduces the risk of mistakes like incorrect stock levels or miscommunications about product details. A centralized system, like OrderEase, allows for real-time tracking and management of orders from multiple suppliers, automating data capture and reducing manual errors. 

How does reducing data errors in business improve profitability?

Reducing data errors improves profitability by cutting down on costly mistakes such as incorrect orders, shipping delays, and payment discrepancies. These errors often result in lost revenue, additional costs for corrections, and damaged customer relationships. By automating data entry with solutions like OrderEase, businesses ensure real-time accuracy across their systems, reducing the need for costly manual fixes. 

How do I know if my order management process is error-prone?

You can identify if your order management process is error-prone by looking for frequent issues like customer complaints about wrong items or delays. Relying heavily on manual data entry, inconsistent order tracking, and high return rates are clear signs of error-prone processes. If invoicing or payments are often delayed or mismatched, this further indicates that your system may have inefficiencies.