Order Processing Meaning & Definition

Published by MBA Skool Team, Last Updated: June 10, 2015

What is Order Processing?

The process of picking, packing and delivery of packed items to a shipping carrier is known as order processing. It is generally conducted at distribution centres.

Order processing involves the following steps:

Step-1 Picking-

It refers to the collection of articles in a specified quantity before shipment, to fulfil the customer’s orders. Picking could be of three types:

a. Piece picking- When the orders are picked one piece at a time, it is known as piece picking. This is generally done in repair part distributors or mail order catalogue companies.

b. Case picking- A case as a whole is picked instead of a single item.

c. Pallet picking- Here, the whole order is picked in one go and is shipped to the customer.


Step-2 Sorting-

This stage refers to the sorting of the picked articles according to their destination, type size etc. depending on the customer’s orders.

Step-3 Pre-consolidation or package formation-

In this the pricing, labelling weighting of the package is done.

Step-4 Consolidation-

This is the final step. Here, the final packets are consolidated and filled in to the container. Ready to be transported to the customer.

The above process is a much generalised process. Depending upon the characteristics of the products and the industry, this process can be modified to suit the specific needs of the customers. The factors that need to be considered while designing an order processing are:

i) Nature of the product- Shipping of vegetable and those of clothes needs two different processes.

ii) Nature of the order- Some orders are very huge and some are rather small. Shipping few kilograms and shipping huge tons of products are two different things.

iii) Nature of shipping package- Shipping of boxes of biscuits and cans of milk require different processes.

iv) Costs- Depends on time required, products weight that is to be shipped etc.

v) Availability of work force and labour also affects the processes. If labour is not available, the processes need to be automated.

vi) Seasonality- Demand of some products varies according to seasons. The order processing changes with the seasonality.


To keep a business going, it is very necessary to fulfil the orders in time. It is also necessary to maintain the quality in order to keep the customer happy.


Hence, this concludes the definition of Order Processing along with its overview.

This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

Browse the definition and meaning of more similar terms. The Management Dictionary covers over 2000 business concepts from 5 categories.

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