An Order Management System, or OMS, is a tool that helps retail businesses track the likes of orders, inventory and fulfillment – all of which help to streamline and add a new layer of transparency from the initial point-of-sale to the last mile of delivery. And as the order management process becomes more complex with multi-channel sales and global supply chains, an OMS becomes all the more important for a business.
What is an Order Management System (OMS)?
The main role of an OMS is to help streamline and add transparency to the fulfillment process – from the initial sale to the delivery. These systems are designed to help fulfillment centers work smarter, not harder. They can be an especially valuable tool for e-commerce businesses, notably those that are regularly fulfilling a significant number of customer orders. If there isn’t a system in place to manage and track inventory and sales in real time, fulfillment becomes a challenge, with speed and accuracy suffering the most.
An OMS is designed to streamline the following tasks:
- Order tracking
- Inventory management
- Order fulfillment
- Return management
Some solutions, like ShipCalm’s Marvin, help solve challenges businesses face over their three core operational channels: e-commerce, in-person retail, and third-party resellers and marketplaces.
How Does an Order Management System Work?
How do Order Management Systems work? It’s a process from when the order is placed until the last mile of delivery – and there’s a lot more that goes into things than just managing, selling and fulfilling orders. Just think of an OMS as a type of order management software that provides a digital means of managing the total lifecycle of an order. These systems are designed to track information and processes, from initial order entry to fulfillment to delivery. It all starts with order placement, continues with fulfillment and provides details on tracking as well.
Here’s a closer look at how an OMS works relative to a product purchase:
- Initial order placement: The customer makes a purchase on an e-commerce platform, typically through an automated checkout form.
- Order fulfillment: The form is processed in a warehouse, where the product is picked, packed and shipped out. This is one of the key areas where an OMS truly shines, as such programs are designed to streamline order fulfillment without compromising accuracy.
- Inventory management: Inventory levels are monitored as products are sold and OMS solutions deliver this data in real-time back to the business. Good OMS’ are also robust enough to provide forecasting reports so businesses can better judge the level of inventory that they’ll need at certain points of the year based on past demand and future predictions.
OMS’ are also designed to help manage returns, aid in transparency and communication with your customers, and prevent overspending on things like storage and shipping costs.
5 Ways to Scale Your Business with an OMS
As businesses expand and order volumes increase, managing fulfillment processes manually becomes increasingly complex and prone to errors. An order management system (OMS) is a powerful tool that enables businesses to efficiently scale their operations by automating and streamlining key aspects of order fulfillment. Here’s how an OMS supports business growth:
1. Handling Increased Order Volume
One of the primary challenges businesses face as they scale is managing a growing number of orders. An OMS automates order processing, from the moment an order is placed to the point of delivery, reducing manual intervention and minimizing the risk of errors. By efficiently handling high order volumes, an OMS enables businesses to maintain fast and accurate fulfillment even as they grow.
2. Expanding to Multiple Sales Channels
As businesses scale, they often expand their reach by selling through multiple channels, such as their own website, marketplaces, and brick-and-mortar stores. An OMS provides a centralized platform to manage orders from various sales channels, ensuring a consistent and seamless fulfillment experience across all touchpoints. This multi-channel integration simplifies order management and allows businesses to scale their sales channels without compromising on efficiency.
3. Accommodating Growing Inventory
With business growth comes an expanding product range and increased inventory levels. An OMS offers robust inventory management capabilities, providing real-time visibility into stock levels across multiple warehouses and sales channels. This helps businesses optimize inventory allocation, prevent stockouts, and ensure timely replenishment. An OMS also supports efficient inventory tracking, enabling businesses to manage a growing number of SKUs with ease.
4. Optimizing Fulfillment Processes
As order volumes increase, optimizing fulfillment processes becomes crucial for maintaining efficiency and controlling costs. An OMS offers features like intelligent order routing, which automatically assigns orders to the most appropriate fulfillment center based on factors like inventory availability, shipping costs, and delivery speed. This optimization helps businesses scale their fulfillment operations while minimizing expenses and improving delivery times.
5. Enhancing Customer Experience
Providing an exceptional customer experience is key to retaining customers and driving long-term growth. An OMS contributes to a positive customer experience by enabling accurate order tracking, timely communication, and efficient returns management. With an OMS, businesses can provide customers with real-time order status updates, streamline the returns process, and ensure prompt issue resolution, fostering customer satisfaction and loyalty as the business scales.
By leveraging the capabilities of an order management system, businesses can effectively navigate the complexities that come with growth, such as increased order volumes, multi-channel expansion, and growing inventory. An OMS provides the automation, visibility, and optimization needed to scale operations efficiently, maintain high levels of customer satisfaction, and support long-term business success.
Benefits of Implementing an OMS
We already noted how the key benefits of implementing an OMS include streamlining order fulfillment and maximizing transparency throughout the process. But other benefits are worth noting as well. These include:
Saving time and money
An OMS allows businesses to work smarter, not necessarily harder. Essentially, these tools eliminate some of the labor-intensive processes by automating certain practices to accelerate order fulfillment without sacrificing accuracy. An OMS largely streamlines manual processes, automating the process and helping companies make more data-driven decisions in the future. Such systems can also help simplify order processing, especially those that involve certain complexities.
If time is money, then an OMS can also help save on the latter as well. An OMS is designed to help keep inventory costs low by delivering real-time insights on stock levels and sales data to help managers make better, more informed decisions.
Real-time reporting
An OMS provides real-time data at your fingertips, tracking the order from the initial point of purchase all the way to delivery. It’s easy to spot errors or inefficiencies in the process and quickly correct them. It’s also easy to analyze and assess how the process is operating to see where any improvements can be made along the way.
An OMS can also pull inventory reports so ecommerce managers can anticipate what type of stock they’ll need based on historical data and future forecasting. Such data is all updated in real-time, providing key insights on demand. It’s another example of the ways an OMS helps businesses work smarter, but not necessarily harder.
Improved overall customer satisfaction
In the end, it’s not just the business that benefits from implementing a robust OMS, but the customer too. The customer or end user wants any order they place to be delivered quickly and in good condition. They also want the correct item that they ordered. Failure to deliver on these expectations is likely to hurt your brand image, create issues for your customer service teams, and result in lost trust with consumers. But meeting or exceeding these customer expectations, with the help of the right OMS, can go a long way toward building brand loyalty and turning one-time customers into lifelong ones. A happy customer tends to mean a well-functioning operation. An OMS can provide a big assist in achieving this.
Key Features to Look for in an Order Management System
Thinking about making the jump to an e-commerce Order Management System? It goes without saying that not all solutions are created equal. All solutions have their share of key features, advantages and disadvantages over competing systems. Regardless which OMS you ultimately decide to go with, there are some common features to be on the lookout for to get the most out of any system. Here’s a look at some of them:
- Inventory management: One of the key features of an OMS is its ability to manage inventory and provide real-time data and forecasting. An OMS that offers inventory management can help strike the perfect balance between running out of stock on items and overstocking them.
- Multi-channel order processing: Also known as “multi-channel order management,” this consists of processing and fulfilling orders across multiple sales channels. These channels may include e-commerce, online, physical stores, apps and more.
- Sales integration: A robust OMS integrates operations into one centralized system. This assists with multi-channel order processing and inventory management. It also helps provide insight on forecasting stock expectations, helps inform users of which products are selling well and which are not, and can also help users assess demand based on geography and location.
- Returns: In a perfect world, all sales are final – but that’s not reality. As much as an OMS helps optimize fulfillment and delivery, it can also help streamline product returns.
- Advanced analytics: If you’re running a large operation, you already know how difficult it can be to have full visibility over all of your operations. That’s where a robust analytics tool can come in handy, as many good OMS tools have the ability to provide a more “macro” overview of your entire operations – allowing you to make key decisions.
Challenges Faced by Businesses When Implementing an OMS
One of the biggest challenges faced by small business owners when deciding to implement an OMS is simply committing to it and committing to training their employees on the system. While there’s also an upfront cost associated with implementing these platforms, the return on investment is typically more than worth it in the long run.
Another challenge is navigating some of the data and security concerns that may come with implementing such a solution. One of the best things that a business can do when implementing an OMS is to rely on its partner for guidance. A good solution is also likely to come with good support to help get your system up and running, while providing training and assistance.
Factors to Consider When Selecting the Right OMS for Your Business
In addition to looking out for the key order management system features that we discussed earlier in this piece, some other factors are worth considering when deciding on an OMS for your operations. Here’s a closer look at some of these factors you’ll want to weigh:
- Integration complexity: Is the system going to be simple to integrate or will it take significant time? Also, be sure to weigh how well it will integrate with existing systems.
- Cost-effectiveness: Is the return on investment going to be worth it with the programs you’re considering?
- Training: How difficult is it to learn the OMS you’re considering? Does the vendor you’re working with offer any training or orientation?
Beyond anything, any OMS must be able to meet – or even exceed – the needs of your business. It should also be able to scale with your business as it grows and evolves. If the program can’t do that, it’s not worth pursuing.
Final Thoughts
As you can see, you can’t downplay the value of an OMS in today’s e-commerce operations. Failure to implement one that works for your company is only going to set you back – and not move you forward. Yet, it’s important to weigh the pros and cons of any system that you’re considering. It’s also important to weigh the overall benefits of an OMS against the challenges of implementing one. When it comes to order management solution vendors, ShipCalm is your go-to provider. For more information on ShipCalm’s comprehensive OMS solution and for pricing details, contact us today.
FAQs
What is the role of an OMS in e-commerce?
An OMS is a solution that can help an e-commerce company streamline their order fulfillment process and track orders and data in real-time, from the point of purchase to delivery.
How does an OMS improve order processing?
Simply put, an OMS makes order processing much more efficient by automating the process. An OMS also offers various value-added benefits, such as inventory management, predictive analysis and more.
Can an OMS handle returns and exchanges?
A good OMS can help streamline the return process as well as other services. An OMS solution can help create shipping labels, distribute tracking numbers, identify local carriers and even help notify members of your team to process the refund.
Is integration with other systems necessary for an OMS?
If you want to maximize the potential of an OMS, yes. While not necessary, OMS solutions that integrate with customer management solutions, supply chain programs, finance programs and more can help further streamline operations and improve overall warehouse management.
What level of technical expertise is required to operate an OMS?
It all depends on the system that you wind up going with – and this should also be a key consideration that you weigh when shopping different platforms. OMS solutions are fairly easy to implement so long as you know what to expect and have an understanding of some of the key challenges. It’s also important to commit to training and learning the OMS to get the most out of any solution.
Are there differences between cloud-based and on-premises OMS solutions?
Cloud OMS solutions run in the cloud while on-premise solutions are installed on and operate within a company’s own IT infrastructure. There are pros and cons to each type of system, beyond just the location. On-site solutions tend to be more reliable and secure than cloud solutions. But cloud solutions are often less expensive and more flexible.
How can businesses measure the success of their OMS implementation?
It’s all about tracking performance against any goals or checkpoints that have been established when you began using the OMS solution. If you’re not experiencing efficiency improvements, cost reductions or an improved experience for your customers, it’s time to reassess the solution and make improvements so that it works for your business the way you need it to.
