You can use custom order statuses to organize your order process. This is an internal tracking process and you can tie customer notifications to it. After you have set up custom order statuses, you can then open an order and apply it.
To apply a custom status to an order, mouse over tracking and click orders
One an order by clicking on the order number.
Under the detail tab, there is a section for order status. Any custom order statuses you have created will appear in the drop down menu for you to choose from. If you set up an email associated with the custom order status, you can also click the checkbox for send email notification with this order status change and the email will automatically go to the customer, after you click save changes.