Do you often use the word 'order' in everyday life? In the dictionary, 'order' can mean 'sequence,' 'a tidy state,' 'to command,' 'to instruct,' or 'to place an order.' Let's look at what 'order' means in B2B business and how it works.
① What “order” means
In B2B business, an 'order' generally means a purchase order arising from a transaction between companies. It includes the documents or electronic requests one company issues to buy goods or services from another. The term is also used for a customer's demand that is decided in advance and rarely changes, and for the supplier's resulting opportunity. A customer can collect and review supplier proposals through an RFP (Request for Proposal), and compare vendors' prices through an RFQ (Request for Quotation). Winning a single PO (Purchase Order) takes far more effort, and a much longer commitment from a sales rep, than meets the eye. It reflects a deep connection with the customer, along with persistence and patience, and it shows that the supplier's team and its sales rep earned the customer's trust.
When a customer's 'order' comes in, the supplier first checks it to confirm that all the information is accurate. This includes the product specifications, quantity, price, delivery schedule, and payment terms stated in the order form. Once the order details are confirmed, the supplier checks its own inventory for the order and, if necessary, adjusts the production plan so it can meet the order requirements. After confirming the order can be fulfilled, the supplier notifies the customer of approval, starts the order processing procedure, and enters the order into the order management system. Raw materials are purchased for the order, and sales and production staff get together to adjust the production schedule. When production is complete, a quality inspection checks that the product meets the customer's order specifications. If it passes, the product is packed properly for safe delivery and the shipping documents are prepared. The supplier then coordinates the delivery schedule with the carrier and tracks the shipment. Once the product is delivered, an invoice is issued and the customer pays under the agreed payment terms. After delivery, the supplier checks customer satisfaction and, if needed, provides technical support or additional services. A B2B customer's order often involves a large transaction and contains detailed information on product supply, delivery, payment terms, price, discounts, and delivery schedule.
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② How to choose B2B customers
In B2B business, a supplier's sales rep who wants to secure an 'order' (a concrete request to buy a product or service) must first create 'demand': the potential or actual market need that leads to those orders. You help customers understand your product or service, show them why they need it, and spell out the unique value you offer. That captures their attention and builds their desire to buy. At the same time, you develop tailored products or services that solve the customer's specific problems and meet their needs. By educating, winning, and satisfying customers this way, you create 'demand.'
In general, attracting new customers and retaining existing ones means spending more on sales and marketing than on production management. Sales and marketing cover promotion, building trust, getting through a complex sales process, and delivering customized solutions. The production management resources needed to secure and fulfill an order come into play only after the customer relationship is established and the order is confirmed, so they can be managed in a relatively predictable and efficient way. This suggests that B2B companies must invest heavily in winning initial customers and gaining market share, and that this process demands relatively more resources than production or order processing.
When managing B2B customers, start by separating 'one-time customers' from 'repeat customers'. For a one-time customer who will definitely order only once, sell at the highest possible price to maximize profit. It is much like why restaurants at busy train stations or highway rest stops, which enjoy heavy foot traffic and a near-monopoly, charge high prices despite mediocre food and service. But if a one-time customer could become a repeat customer, study the current supplier (your competitor) in detail and enter first, even at the expense of profit, to win as much Share of Wallet (SOW) as possible.
Next, let's look at how to manage 'sustaining customers.' They fall into three broad types: 'volume customers,' 'margin customers,' and 'strategic customers.' 'Volume customers' are usually large customers. You can supply them relatively large volumes and secure supply references, but raising prices is very difficult, almost impossible. So you need to secure profit by focusing on managing supply costs. The most common way to cut costs is to reduce the number of product types you supply. Mass production through economies of scale lowers production costs, and inventory management and holding costs come down too. With fewer product types, you can also buy the same materials in bulk to lower purchasing costs, and less complexity in production improves overall production efficiency. Quality control, marketing, sales, and after-sales service costs fall as well.
Next are 'margin customers.' In B2B business, the price of the same product can differ by customer, depending on transaction size, contract length, and the customer's market position. When managing a 'margin customer,' the key is to manage price and cost together to get the most profit possible. However, if such a customer finds out that its price differs from what other customers pay and becomes unhappy, it can damage your market reputation and brand. Build your strategy carefully and watch how you communicate. Be ready with an explanation in advance: because volumes are generally small and the design is customized, prices may be higher than for bulk buyers.
The last type of 'sustaining customer' is the 'strategic customer.' By certain criteria, these customers bring a supplier important value, and they often shape its overall growth, profitability, and market position. A strategic customer may account for a large share of revenue, or may be essential to keeping overall costs down. Others have a long-term relationship with the supplier built on a high level of mutual dependence, are important accounts that would easily switch to a competitor if neglected, or follow a different business cycle from other customer groups and so offset losses in a downturn. Some are profitable for the supplier in the long run even if profitability dips for a while. Suppliers often keep these 'strategic customers' even when profits from other customers have to cover the cost.
To be continued