What is Order Management and the Benefits of an OMS?
Efficient order management is the backbone of any smooth-running business. For companies managing a high volume of sales, whether online or offline, the ability to process and fulfill orders quickly and accurately is key to maintaining customer satisfaction and driving business growth. But how exactly can businesses achieve this level of efficiency? The answer often lies in adopting an effective Order Management System (OMS).
This blog will explore the ins and outs of order management, explain how order management software works, highlight its benefits, and guide you in choosing the right OMS for your business needs.
What is Order Management?
At its simplest, order management refers to the process of tracking, fulfilling, and managing customer orders. It begins the moment a customer places an order, whether online, in-store, or over the phone, and continues through every stage of the process, including payment processing, inventory management, packaging, and shipping.
The process doesn’t end with delivery but also encompasses handling potential returns, refunds, or exchanges. Effective order management is a crucial part of the overall supply chain, ensuring customer satisfaction while maintaining efficiency and reducing errors. It’s the backbone of any business striving to deliver high-quality service in a competitive marketplace.
The Role of Order Management in the Supply Chain.
Order management acts as the central nervous system of the supply chain. It ties together customer orders, inventory levels, warehouse operations, and delivery logistics. This ensures the right product gets to the right customer at the right time.
Why Streamlined Order Management Matters.
Efficient order management is crucial for any business and ensures:
- Faster and more accurate order processing, allowing customers to receive their products quickly and reliably.
- Seamless communication between teams, such as warehouse staff and shipping departments, ensuring everyone stays on the same page and avoids delays.
- Reduced errors that can lead to dissatisfied customers, such as incorrect items being shipped or missed deliveries, ultimately improving customer satisfaction and loyalty.
However, when order management is done manually or with outdated tools, it can quickly become a slow, error-prone, and costly process. Inefficiencies can pile up, leading to wasted time, increased expenses, and frustrated customers—a situation no business can afford in today’s competitive market.
Common Challenges in Traditional Order Management.
Businesses relying on spreadsheets or manual tools often face numerous challenges that can hinder their growth and efficiency:
- Poor inventory visibility: which makes it difficult to track stock levels accurately, leading to costly issues like stockouts that delay sales or overstocking that ties up capital in unsold inventory.
- Delayed order fulfillment: as manual processes and slow coordination between teams can increase the time it takes to process and ship orders, frustrating customers.
- Higher error rates: since manual data entry and outdated processes are prone to mistakes that can result in incorrect orders, lost shipments, or accounting discrepancies.
- Difficulty scaling operations: as the business grows, manual tools struggle to keep up with the increasing complexity, leading to inefficiencies and missed opportunities.
These challenges not only waste resources but also lead to unhappy customers and lost revenue. To overcome these issues, modern businesses require robust order management system software that streamlines workflows, improves accuracy, and supports growth seamlessly.
How Does an Order Management System (OMS) Work?
An Order Management System (OMS) automates and optimises the order fulfillment process. It centralises data from all sales channels (e.g., online stores, physical locations) to create a single view of orders, inventory, and customer information.
Order Management Systems are often directly connected to a company’s Warehouse Management System (WMS). While a WMS manages the storage and movement of inventory within a warehouse, an OMS handles tracking orders from various sources and ensuring they are delivered to customers on time.
Key Features of an Effective OMS.
- Order Tracking: Keep a close eye on the entire order lifecycle in real time, from the moment an order is placed to when it’s delivered to the customer. Track every step with precision to ensure smooth operations and timely updates.
- Inventory Visibility: Get a comprehensive view of your stock levels and locations across multiple warehouses. Easily identify what’s available, what needs replenishing, and where each item is stored for better inventory management.
- Automated Processes: Save time and reduce manual errors by automating key tasks such as order assignment to the right warehouse or carrier, generating shipping labels instantly, and sending accurate notifications to customers about their order’s progress.
- Seamless Integrations: Effortlessly sync with your existing systems like Enterprise Resource Planning (ERP), Customer Relationship Management (CRM), and accounting software to create a unified workflow. This integration ensures smoother data sharing and better overall efficiency.
The OMS Workflow.
Here’s how a typical OMS processes orders:
1. Order Collection
Once a customer places an order through a sales channel (e.g., your website, a third-party marketplace), the OMS collects these orders in one central system.
2. Inventory Check
The system automatically checks inventory levels to ensure stock availability. If inventory is low, it may trigger an alert or reorder request.
3. Order Routing
The OMS assigns orders to the nearest warehouse or fulfillment center for efficient delivery. Factors like location, stock availability, and shipping speed are considered.
4. Order Processing
The system generates pick, pack, and shipping instructions and directs the warehouse team to fulfill the order.
5. Shipping and Updates
Shipping labels are automatically generated, and customers are notified about their order status, including real-time tracking links.
6. Analytics and Feedback
Post-delivery, the OMS gathers valuable data on delivery times, order accuracy, and customer feedback for future optimisation.
The integration capabilities of an OMS are invaluable, as they enable businesses to link every step of the order process seamlessly.
Benefits of Implementing an OMS.
Adopting order management software comes with a host of advantages, making it indispensable for scalable business operations.
1. Improved Inventory Management and Stock Visibility
With an OMS, businesses can track inventory levels across multiple locations in real time. This minimises stockouts and overstocking, ensuring optimal inventory levels at all times.
2. Enhanced Order Accuracy and Faster Fulfillment
Automated workflows drastically reduce manual errors like selecting the wrong product or misplacing orders. Additionally, orders are routed and processed more quickly, improving delivery speeds.
3. Better Insights into Customer Behavior
An OMS captures valuable data on customer preferences and buying habits. This can help businesses forecast demand, launch targeted marketing campaigns, and personalise customer experiences.
4. Streamlined Operations and Cost Savings
Automation eliminates time-consuming manual tasks, freeing up employees to focus on strategic activities. It also reduces operational costs by improving accuracy and resource allocation.
Considerations When Choosing an OMS.
Choosing the right order management system software will depend on your business’s unique needs. Here are key factors to consider:
1. Scalability
Ensure the system can grow with your business. As your operations expand, the OMS should be able to handle increased order volumes, whether during seasonal peaks or long-term growth. Additionally, it should support new sales channels, accommodate a growing product catalog, and adapt to changes in your business model without requiring a complete overhaul.
2. Integration Capabilities
Choose an OMS that seamlessly integrates with your existing software, such as ERP, CRM, or e-commerce platforms. A well-integrated system ensures a unified flow of data across all business operations, reducing manual work, minimising errors, and enhancing efficiency. Check for pre-built integrations or APIs to connect systems easily and ensure smooth operation.
3. User-Friendliness
The software should be easy for your team to learn and use, regardless of their technical expertise. Look for features like intuitive dashboards, straightforward navigation, and customisable workflows. Comprehensive customer support and training options are also vital to ensure your team can make the most of the system from day one.
4. Cost vs. Value Analysis
Consider both the upfront investment and ongoing costs of the OMS. Evaluate these expenses against the value the system provides in terms of improved efficiency, time savings, and enhanced customer satisfaction. Look for features that can directly impact your bottom line, such as order accuracy, faster fulfillment, and reduced operational bottlenecks.
Research the vendor’s experience, customer reviews, and technical support offerings. A well-established vendor with a history of satisfied clients is more likely to provide dependable service and regular updates. Look for case studies or testimonials from businesses similar to yours to gauge how effective the system might be for your needs. A reliable vendor can make a significant difference in maintaining the system’s long-term success and ensuring ongoing support as your business evolves.
Conclusion: Efficient Order Management is the Key to Growth.
For operations directors, warehouse managers, and managing directors who deal with the complexities of fulfilling customer orders, an Order Management System is a game-changer. It simplifies processes, reduces costs, and ensures customer satisfaction by delivering a seamless experience.
By investing in the right order management system software, your business can scale operations efficiently, gain powerful inventory insights, and meet evolving customer expectations with ease.
If you’d like to learn more about how an OMS can revolutionise your business operations, get started by exploring our resources or speaking with a systems consultant today.
Frequently Asked Questions (FAQ's)
Order Management is the process of overseeing and organizing all aspects of fulfilling customer orders, including inventory management, shipping and delivery, and customer service.
An Order Management System (OMS) is a software solution that helps businesses manage and track customer orders from purchase to fulfillment. It streamlines the process by automating tasks, providing real-time inventory updates, and integrating with other systems such as e-commerce platforms and shipping carriers.
An OMS can improve operational efficiency by reducing manual tasks and human error, resulting in cost savings. It also provides valuable insights into inventory levels, order status, and customer behavior, allowing for better decision-making and improved customer satisfaction.
Training ensures that staff can effectively use new tools, technologies, and processes. Well-trained employees are more confident, efficient, and resistant to errors, contributing to smoother warehouse operations overall.
Yes, most OMS solutions offer integration with popular e-commerce platforms like Shopify and Magento, as well as shipping carriers like UPS and FedEx. This allows for seamless communication between systems and ensures accurate data across all channels.
An OMS can streamline the process of handling returns and exchanges by automating tasks such as issuing return labels, restocking returned items, and updating inventory levels. This not only saves time but also improves customer satisfaction by providing a smooth