Why Every Business Needs an Order Management System

Nowadays brands engage with customers across various touchpoints - online stores, retail outlets, mobile apps, marketplaces, social media, and more.

This means having an efficient and streamlined inventory and order management is crucial.

An order management system (OMS) is a software solution that helps businesses manage orders seamlessly across all sales channels and the entire order lifecycle - from order capture to fulfillment, shipping, returns, and more.

It is a centralized system for managing orders, inventory, and workflows.

• Defining an Order Management System (OMS)
• Automated order workflows
• Key capabilities of an OMS
• Ecommerce platforms, ERPs, accounting software, CRMs, and other systems
• Operational efficiency, higher sales, and improved customer experience

An order management system (OMS) is a computer software system used to efficiently manage the complete order cycle in various industries such as retail, ecommerce, manufacturing, etc.

It handles the full order process from order capture to order fulfillment.

Definition

An OMS is defined as an integrated software platform that manages and streamlines order processing, order fulfillment, and all related order data across different channels and business activities.

It centralizes, automates, and optimizes the order workflow in a business.

Key functions

Some of the key functions and aspects of order management process include:

Order capture - Capturing order information from multiple channels like ecommerce stores, marketplaces, brick-and-mortar stores, over the phone, etc.

Order processing - Managing the full lifecycle of orders including order status, order history, modifications, cancellations, returns, etc.

Fulfillment and shipping - Integrating with fulfillment centers for prompt order allocation, picking, packing, and shipping.

Invoicing and payments - Generating invoices, receiving payments, settlement, and reconciliation.

Analytics and reporting - Providing insights through reports and analytics on orders, inventory, shipping performance, returns, etc.

An OMS improves operational efficiency, minimizes errors and delays, enhances customer experience, and provides end-to-end visibility across the entire order-to-cash process.

Some of the Best OMS Platforms

These are some of the best Order Management Systems today! 

NetSuite

A comprehensive cloud-based ERP system offering order management, inventory control, and financial management for mid-sized businesses.

QuickBooks

Primarily known for accounting, QuickBooks also provides basic order management features, best suited for small businesses with simple order processes.

IBM Sterling

A robust order management solution designed for large enterprises, handling complex order fulfillment, inventory management, and supply chain orchestration.

Kibo Order Management

A cloud-based platform specializing in omnichannel order management, catering to retailers with complex fulfillment needs and a focus on customer experience.

Salesforce Order Management

Part of the Salesforce ecosystem, it offers order management integrated with CRM for a unified view of customers and orders, ideal for businesses prioritizing customer relationships.

Zoho

A suite of cloud-based business applications including order management, inventory, and shipping, suitable for small to medium-sized businesses seeking an affordable all-in-one solution.

Odoo

An open-source ERP system with order management capabilities, highly customizable and scalable, offering a good balance of features and cost-effectiveness for various business sizes.

An order management system allows businesses to manage orders through their entire lifecycle - from placement to fulfillment to post-sales.

Understanding the stages of an order lifecycle enables efficient order processing.

Stages of an Order

Order placement - The order process starts when a customer places an order on a company's ecommerce platform or through other sales channels.

Details like products ordered, quantities, buyer information, and payments are recorded.

Order validation - The order details are verified by the OMS to ensure accuracy and completeness.

Payment authorizations happen at this stage.

Order Processing - The order is allocated to inventory or supply chain as per fulfillment type - ship from warehouse or dropship.

Related workflows like picking, packing, and shipping are triggered.

Order tracking - Customers can track the status of their orders in real-time as they get processed.

Tracking information is synchronized across systems. 

Order fulfillment - Products are picked, packed, and shipped through integrated logistics carriers.

Customers receive shipping confirmations and tracking IDs.

Order delivery - The order reaches the customer and is considered fulfilled when it is delivered successfully.

Post-sales support - Customers may request returns, replacements, or exchanges which need to be facilitated. Payments also need reconciling.

Tracking Orders

An OMS provides complete visibility into each order with status updates as they move through different stages.

Dashboards give real-time visibility to customers as well as internal teams.

Automating Workflows

Order workflows can be complex involving multiple teams, systems, and touchpoints. 

An OMS helps streamline and automate order workflows through:

• Rules-based order orchestration
• Routing orders to appropriate teams
• Integrated communication across channels
• Process automation to eliminate manual efforts

This ensures faster and error-free order processing across the lifecycle.

The OMS acts as a central workflow and data hub for order execution.

Learn the key capabilities of the order management system, and know why to integrate in your organization.

Inventory Management 

An OMS gives you real-time visibility into inventory across multiple warehouses, stores, and dropship locations.

As orders come in, inventory levels are automatically updated. The system can automatically allocate inventory to orders based on business rules and replenishment levels.

Fulfillment and Shipping

A key capability of an OMS is automating order fulfillment workflows.

As soon as an order is placed, fulfillment tasks are triggered based on your predefined business rules.

The system generates pick lists and packing slips to streamline the picking and packing process.

It integrates with shipping carriers to auto-generate shipping labels and confirm shipments. You can offer multiple delivery options and set carrier business rules.

The OMS tracks the entire delivery process providing visibility into order status.

Returns and Exchanges 

An OMS equips you to efficiently handle product returns and exchanges.

It allows for creating return requests and generating return labels for customers.

Returned items can be linked back to the original order and refunds or replacements can be processed automatically based on return reason codes.

The system updates inventory appropriately when items are returned to stock. Customers can also initiate exchanges from their online accounts.  

Invoicing and Payments

It can generate invoices with itemized order details including discounts, taxes, and shipping charges applied. Invoices can be sent to customers via email or print.

For B2B orders, bulk invoicing, consolidated invoicing, and recurring billing capabilities simplify the invoicing process.

The OMS can also integrate with payment gateways to collect payments online.

Analytics and Reporting

An enterprise-grade OMS provides powerful reporting and analytics capabilities.

It offers on-demand access to reports on orders, inventory, shipping, returns, fulfillment KPIs, customer lifetime value, and more.

Users can create customized reports with drag-and-drop tools.

The reporting dashboard gives real-time insight into key metrics. The system can also output reports to an ERP or data warehouse for enterprise-wide visibility.

With an OMS, data-driven decisions become easier.

For financial trading

• Improves trade execution through automated order routing, allocation, and processing. This leads to reduced costs and better customer service.
• Provides a consolidated view of orders across various systems. This enables better visibility and tracking.
• Helps comply with financial regulations around recording and audit trails.
• Allows algorithmic trading strategies to be easily implemented by connecting trading signals to order execution.
• Enables STP (straight-through processing) to reduce manual errors and delays.

For ecommerce businesses  

• Automates order workflows from checkout to fulfillment, reducing operational costs.
• Provides inventory visibility across warehouses and channels, helping avoid overselling. 
• Enables faster order processing, shipping, and delivery leading to improved customer satisfaction.
• Provides cross-channel visibility of customer orders and returns for better customer service.
• Improves supply chain efficiency through integration with 3PLs, shipping carriers, etc.
• Provides reports and analytics for better business insights and decision-making.
• Helps scale order volumes seamlessly during peak seasons and promotions.

The right OMS unlocks substantial productivity and efficiency gains across the order-to-cash cycle, allowing companies to better serve customers, reduce costs, and enable innovation.

Leading solutions are highly flexible, scalable, and extensible to support future business needs.

For an order management system (OMS) to provide value, it needs to integrate with other key business systems.

Some critical integrations include:

ERP, CRM, Accounting System Integration

An OMS should seamlessly connect with enterprise resource planning (ERP), customer relationship management (CRM), and accounting software.

This integration enables:

• Real-time order and inventory data flow between the OMS and ERP - ensuring inventory levels are accurate.
• Customer data flow between the OMS and CRM - providing customer service teams with full order details. 
• Invoice and payment data flow between the OMS and accounting system - keeping financial records up-to-date.

With robust integrations, there is a central source of truth across systems for order, inventory, customer, and financial data.

This is essential for efficiently managing orders end-to-end.

Ecommerce Platform Integration 

For online stores, connecting the OMS with the ecommerce platform allows orders to automatically flow into the OMS as they are placed on the website.

This eliminates manual order entry and provides full order visibility as soon as an order is placed.

Data can also flow the other way with order status updates from the OMS flowing back to the customer account pages on the ecommerce platform.

This keeps customers informed automatically at every stage.

Choosing and Implementing an OMS

When selecting an OMS, it's crucial to evaluate integration capabilities and ease of implementation.

Cloud-based SaaS OMS solutions often offer quick connections with popular ERPs, CRMs, accounting software, and ecommerce platforms. 

APIs and pre-built integrations accelerate implementation so that key systems can start sharing order data faster.

It's also wise to choose an OMS that offers customer implementation services for complex system environments.

With the right solution choice and integration approach, an OMS can rapidly start enhancing order operations across sales channels.

Conclusion

An order management system is a critical component of business operations for companies that deal with order fulfillment and shipping.

For ecommerce retailers, an OMS supercharges order fulfillment capabilities.

It enables faster order processing, reduced errors, lower operational costs through automation, and better inventory visibility.

An OMS integrates order capturing, processing, risk management, and settlement - ensuring compliance, reducing risks, and improving productivity.

The right OMS implementation can deliver a real competitive edge to companies dealing with order fulfillment.