Midsize business

Eliminate customer disappointment with entity relationship diagrams

Initially developed for database and design schema by Peter Chen, entity-relationship diagrams (ERD) have also provided considerable benefits to businesses. 

ERDs are a relational flowchart used to visualize how distinct entities relate.

Creating a visual representation of all the parts involved within a business process and how these entities relate makes it easier to detect any gaps or areas of improvement.

For example, ERDs can help analyze relationships between different operational departments or standard order management processes.

This article will explain some basics of entity-relationship diagrams and their value to the order management process, and ultimately, a smooth experience for your end customer.

What are entity-relationship diagrams? 

Entity-relationship diagrams are graphical representations that depict real-world data processes in relationships among people, objects, places, or events. In an order management system, an ERD can help define the rules and relationships between the customer, their order, order items, payment so that the right parts get to the right places.

Use cases for entity-relationship diagrams

An ERD can be used as a logical data model to outline all the steps after an individual customer places an order. In this scenario, there are several possible entities: the customer, the product, the payment, the fulfillment entity, and the order shipment. 

Another common use case for ERDs is analyzing an organization’s sales processes. Whenever there is a routine process involving more than one entity interacting with others, an entity-relationship model can analyze the complete process. 

Three Types of entity-relationship-diagrams

There are three types of entity-relationship diagrams: conceptual, logical, and physical:

  • Conceptual ERD is a simple object-based representation of the entities and relationships in a system. 
  • Logical ERD is a more detailed chart-based representation of the system that shows the actual relational tables that will exist in the database
  • Physical ERD diagram is a more advanced graphical model that shows how data should be structured in the database. 

Now let’s look at how ERDs are utilized in the following example.

Entity-relationship diagram example

Below is an example of a basic conceptual ERD for an order management process. Before digging into this example it’s important to understand an entity-relationship diagram can be composed of up to 5 components: 

  • Entities are definable things or concepts that play a role in a system. In an ERD, entities are usually nouns like customer, invoice, product, or event. The entity may take the form of a table, object, or ERD symbol, and are identified through primary keys and foreign keys. Oval shapes represent these.
  • Attributes (including multivalued attributes or composite attributes) are properties or characteristics of entities. Attributes of the customer entity could include name, address, account number, etc. 
  • Relationships show the nature of the association between two entities. Diamond shapes represent these.
  • Actions show how entities share information in a database
  • Connecting lines or double lines show the direction and rules of relationships, known as cardinality (more on this later).

This diagram depicts six entities: 

  • the website
  • the customer
  • the order
  • items
  • order code
  • and order transactions 

We can see that the customer’s attributes include customer name, address, and number. The relationship set between the customer and the order is that the customer places the order, the order has an order code, and so on. This shows the basic function and entity set involved in the order management system so that your company can be sure to stay focused on stakeholders and the parts of the system that bring value to them.

The next step towards building out the order management system is a logical ERD. The logical ERD will show which information should be stored in the database structure and entity-relationship rules (or cardinality).

Logical ERD for an ordering system

In the logical ERD above, we can see four entities: the customer, the order, the order line items, and the product. You can also see the connecting lines between the entities that show the relationship's cardinality.

The cardinality defines the maximum or minimum number of relational occurrences between entities. For example, a customer can have only one account number, but one customer can have many orders.


The three types of cardinality templates are one-to-one, one-to-many, and many-to-many. 

One-to-one: In a logical ERD, a one-to-one cardinality is shown with a line with two tick marks, as depicted below. An example is a customer account that can only be associated with one email address, while one email address can only be associated with one (not multiple) customer accounts.

One-to-many: An example of a one-to-many relationship would be an order that must have at least one order line item, but can have up to many order line items. “Many” is shown with crows feet—the relationship of one order to many order items would be shown with the following cardinality line:

Many-to-Many: Many-to-many relationships are usually reserved for physical ERDs as they are most relevant to database design. An example would be an order table that contains many orders, each of which must be associated with at least one product, but up to many products. In the other direction, the product table contains many individual products, each of which may be part of zero or many different orders.

Without the proper cardinality relationships, your order management system would be prone with errors. It would be impossible to keep track of which customer order which items, where orders should be sent, and numerous other faults.

Best practices for utilizing entity-relationship diagrams in your business

Businesses that are new to applying ERDs to their processes can benefit from the following best practices:

Outline only what’s necessary to understand the process clearly

When mapping out a business process using an ERD, it helps to think in the abstract. ER models are intended to be simplified representations of what occurs in actuality. Only include what’s necessary to understand how entities relate within a specific process. All other details should be recorded in other documentation. 

Look for any redundancies or missing areas

Each entity type should be distinct, unique, and easily identified by its associated attributes. All other weak entities should be removed or further fleshed out. If there are any challenges in defining entities, it’s a good time to consider whether these entities are truly useful in the specific business process and if any other entities would be better alternatives.

Design your ERD for your intended purpose

There are many generalizations and ways to approach the entity-relationship model. But the best is one that fits and clearly illustrates your business process. As long as you provide all the necessary information for your teams to understand how a process should run, ERDs can be customized according to how they support your overall operations.

Avoid mistakes in your order management process

When fulfilling orders of various sizes, weights, and item numbers, having a predetermined logic for picking, packing, and shipping is critical. What if your warehouse personnel had to independently determine shipping best practices for each individual order?

Although ERDs can be a little tricky, a basic understanding of these diagrams enables you to communicate and codify the relationships and rules that govern your order management system. Similarly, activity diagrams are used to demonstrate the order in which actions must occur and bring clarity to the process. These tools can be further used as maps to build the database table to bring your order management software to life. 

The good news is you don’t necessarily need to build your order management system from scratch. There are numerous options for business-ready, customizable order management software solutions. These enterprise-grade solutions include order fulfillment, processing, tracking, inventory management, invoicing, and more. 

A properly functioning order management software that matches the correct items and orders to the right delivery processes saves your business time and money, and keeps your customers coming back.

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