Home Fulfillment What Is Order Management System(OMS)?

What Is Order Management System(OMS)?

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Capturing, monitoring, and completing orders across many sales channels is difficult for most firms, particularly high-growth businesses. However, luckily, we have an order management system to check inventory levels across warehouses, aggregate order data from numerous channels, and work with third-party logistics suppliers to get items to customers quickly. 

So, what duties should an order management system perform? What are the advantages of a centralized dashboard for taking, processing, and fulfilling client orders? And how do you determine what form of OMS your company requires? That is what this article will help you to find out. 

What is an OMS

What is an OMS

What Exactly Is An Order Management System (OMS)?

A system that monitors orders, fulfillment, sales, and inventory is known as an order management system or OMS. It allows the people and relationships required for items to reach the customers who purchased them. In the present day, order management necessitates a multifaceted system that impacts practically every aspect of how your company functions, including:

  • Customers
  • Channels of distribution
  • Product specifications
  • Stock levels and location
  • Purchase and delivery suppliers
  • Customer care or can know as returns and refunds services
  • Printing, selecting, packaging, processing, and delivering orders

An OMS aids in the organization and automation of essential aspects of the purchasing or fulfillment operations for both you and the clients. When an order is submitted and a shipping mode is chosen, an automated process for fulfillment is initiated. 

OMS systems help fulfill orders fast

OMS systems help fulfill orders fast

OMS systems help fulfill orders fast, whether it is sending from the closest and or more cost-effective place or prepping the product for in-store pickup. It also assists you in monitoring stock levels to minimize stockouts and backorders, as well as managing other stages of the customer lifecycle, like returns. It allows your staff and customers to see and monitor every purchase from beginning to end, and it assists you in analyzing the overall effectiveness of the process.

The most capable OMS solutions can provide fulfillment data and analytics, allowing retailers and distributors to monitor critical performance metrics which are KPIs. For instance, modern OMS solutions allow you to track order filling time, fulfillment expenses such as picking, packaging, and shipping, and even product defects and rates of return. The very first step in finding bottlenecks and building a strategy to remedy them is to track these and other KPIs.

What Must an OMS Do?

After we have defined it, let’s explore the most significant features, capabilities, and jobs that an order management system can assist e-commerce organizations with.

Capabilities of an OMS

Capabilities of an OMS

Keep Track Of The Inventory Levels Per Channel

The benefit of business today is that businesses may reach out to clients via a multitude of platforms. Customers can buy things in-store using POS software, self-serve through a company’s direct-to-consumer internet site, and even mix both online and offline activities with shipping choices such as purchasing online and picking up in-store which is usually known as BOPIS.

The third most difficult task for supply chain directors is managing inventories across several channels. Monitoring the quantity, speed, and fulfillment of omnichannel purchases may stymie your company if the proper foundations for scalable expansion have not been laid. An OMS will assist merchants in managing inventories across numerous sales channels by updating inventory levels throughout all sales channels, determining which SKUs perform best in every channel and refill accordingly, and viewing the most popular goods by area or channel.

Order Fulfillment Process Automation

Current OMS sees the whole supply chain as an integrated ecosystem, enabling retailers to automate internal procedures from ordering to fulfilling. E-commerce firms may use an OMS to push purchases through the handling, picking and packing, and delivering procedures as quickly as feasible. Besides, OMS aids in accepting payments independent of delivery location or order currencies. Companies can also use it to send order details to wholesalers or third-party logistics providers for fulfillment. Moreover, OMS can automatically provide you with printed shipping labels when you fill orders in-house. 

It does not just adapt to client orders that are near your warehouse. Whereas the OMS may route client orders from warehouses depending on their closeness to the destination, it also aids in the scalability of cross-border sales.

Take Care Of Reverse Logistics

We have all heard how important it is to have an order chosen, packaged, and dispatched as quickly as possible. However, many businesses ignore the reverse logistics activity, which involves having a consumer return a product to your warehouse and processing an exchange, credit note, or refund.

Take Care Of Reverse Logistics

Take Care Of Reverse Logistics

That would be a costly error to make when one out of every five things purchased online is returned. If the returns procedure was simple, the great majority of those consumers would return to buy. Your e-commerce firm may deliver a hassle-free returns experience for all parties involved by implementing an OMS. 

In the scenario that a consumer has to return things, an OMS may immediately print return labels. The return address will vary from package to parcel based on the buyer’s location, allowing you to receive and handle reimbursements as quickly as possible. Buyers can also get online tracking details to learn about the progress of their return. Apart from that, buyer support representatives receive real-time information about the item that a client has sent. Everyone receives the same quality of care, no matter what, how, as well as where they purchased an item.

Customer Information Management

An OMS platform serves as a basis for managing customer relationships. Retailers may use it to retrieve any data they have about a consumer, including historical purchases, location, and lifetime value. Since an OMS provides retailers with access to their consumer data, merchants may hyper-personalize any marketing communications they offer to buyers in order to earn another transaction.

Customer Information Management

Customer Information Management

An e-commerce company, for instance, can use data from its order management system to develop the following client segments, such as buyers located in Southern Asia, buyers having an AOV of $100 or more, buyers who have purchased one product but have not yet returned it, etc.

After that, each consumer category gets its own marketing plan. Those who are in Southern Asia will not receive duplicate general promotional emails as those who live in Germany. Buyers with a high AOV who are more inclined to buy are suggested expensive things. Bestsellers are prioritized in communications with first-time consumers. It is the kind of personalization that has been shown to increase conversion rates by 10% to 15% and it is made simple by customer reports that are automatically created within an OMS.

Combine Order And Financial Data

It is convenient to have all of your order information in one place. However, determining if you are earning a profit, and if that’s so, where and how is an important component of running an online business. Most OMS systems can interact with other back-office operations, notably your financial software. To combine inventory and sales figures, the system may take the data from your accounting software. You will be able to acquire insight into accounts payable and receivable, along with automating the preparation of invoices and purchase orders. There is no need for manual data entry.

What Are The Advantages Of An Effective OMS?

When firms decide to deploy an OMS, they frequently assess their supply chain for inefficiencies and locations that may be addressed. This study can sometimes result in benefits like faster fulfillment times. Here are some more benefits that may be obtained using OMS platforms.

Increase Order Accuracy

It would be dangerous for businesses if there is no OMS in order fulfillment. Manually processing orders with spreadsheets exposes you to human mistakes. Human mistakes from manual process management are the underlying cause of stock or fulfillment difficulties for 62% of merchants. This not only ruins consumer experiences, especially if you deliver the incorrect goods to the wrong client, but it also causes logistical difficulties. The frequency of returns you will have to handle keeps rising, as does the amount of money you will have to spend rectifying incorrect orders.

Order Accuracy

Select, Package, And Deliver More Quickly

While the cost of shipping is still important to modern customers, the speed with which an item is bought and delivered is significant. When purchasing online, 43% of consumers want next-day delivery, which firms must satisfy to ensure the possibility of repeat business. 

By verifying inventory across various warehouses, an OMS simplifies the picking and packaging process. It locates the fulfillment location with the current stock nearest to the customer. It directs customer orders to that location so that the goods may be chosen, packaged, and dispatched as quickly as feasible. 

Meet Or Exceed The Expectations Of Customers

Shipping is a sensitive matter for today’s customers. Customers value more than simply the timing of your purchase fulfillment procedure. 97% of consumers want to know the status of their purchase, including its present location and expected delivery date.

Meet customer needs

Meet customer needs

An OMS assists businesses in meeting these objectives. When a consumer requests an update on their order or return, most systems include tracking sites. 

Avoid Stockouts By Forecasting Inventory

According to data, 54% of shops do not have access to predicting software. While 18% are carrying too much cash in inventories. A lack of visibility into stock levels frequently leads to two major issues, which cost businesses up to 12% of annual sales:

  • Overstocking: Large amounts of unsold goods indicate that you have cash on hand, both in terms of the inventory as well as the storage costs you are paying to keep it.
  • Stockouts: Every year, merchants lose $1 trillion because they do not have enough inventory to meet demand. Buyers will have to be turned away, but you can persuade them to return after the inventory has been restocked.

An OMS with inventory tracking assists shops in dealing with these issues. This information may be utilized to anticipate how much inventory every warehouse will require, keeping each at the balance point of not holding too much or too little stock.

International Sales

The worldwide e-commerce market is projected to be worth $4.5 trillion. E-commerce businesses may contact clients all around the world. Before the implementation of an OMS, their main restriction was the processes required to accept and fulfill foreign orders. OMS assists e-commerce enterprises in expanding their global presence. Retailers can use it to: 

  • Accept payment in several currencies for overseas orders.
  • Send order data to 3PL suppliers in every country automatically.
  • Orders should be routed to the warehouse nearest to the end user.

Improved Inventory Management

Better sales visibility allows you to adjust inventory levels in order to satisfy client demand while avoiding surplus stock. A consolidated view prevents you from losing a sale due to inventories spread across numerous locations. All of this may boost cash flow while also increasing client loyalty and happiness. 

Improved Inventory Management

Improved Inventory Management

Data Entry Reduction

Since the same data is utilized in all sections of the sales and fulfillment process, reduced data entry is necessary, resulting in fewer mistakes.

Visibility

Everybody in your business has access to and can follow the status of orders, which improves customer support. Buyers can also utilize OMS to track the status of their orders. 

Analysis

OMS dashboards may help you make better decisions by emphasizing sales patterns, tracking key performance indicators, and projecting sales and stock levels.

The Way An Order Management Systems Works

An OMS starts by giving you transparency into available-to-promise (ATP) inventory in your warehouses and shops, as well as inventory from third-party providers such as 3PL companies and drop-ship sites. This aids inventory planning.

Following that, the OMS fulfills orders through powerful order collection, validation, and release; select, package, and ship features, including drop-shipping; delivery confirmations, and customer interaction.

Depending on the order, a full-featured OMS facilitates payments and communicates data with banking systems. If a customer needs to return the product, the OMS establishes procedures for processing returns across all channels, completing exchange requirements, crediting the customer’s account, and controlling the dispositioning process.

The Most Important OMS Takeaways

  • Online order management systems are consolidated systems that monitor all orders, despite how they were delivered.
  • While features differ, OMS functions to aid in retail channels and services, consumer database management, and accounting connectivity. 
  • OMS systems are commonly used amongst orders from many channels, such as websites, physical shops, etc. but even online merchants can take advantage of controlling all sales processes through identity management. Furthermore, they may more easily take orders from multiple internet channels, such as their websites, apps, social media, and so on. 

Top 5 Most Popular Order Management System In The World

Are you confident that your company needs an order management system? Here are the top 5 excellent choices to consider while shopping for a new OMS or replacing an old one.

QuickBooks

QuickBooks is a household brand in the accounting software industry. This program provides a wide range of functionality on a single platform, allowing you to access and complete all of your accounting tasks in a single integrated location. Although QuickBooks is a household brand in the accounting software industry and has a wide range of functions, it is the finest small company order management software since it only permits a few transactions and has a restricted number of users.

QuickBooks dashboard

QuickBooks dashboard

Key features:

  • Enhance brand exposure and grow your market by utilizing numerous platforms
  • Track inventories and the fulfillment process from anywhere, at any time
  • Connect to other e-commerce sites
  • Business information and reporting tools to help you make the best choices

Pros:

  • Flexibility
  • Affordable
  • Accessible from any location

Cons:

  • Often crashes
  • A maximum number of users and transactions are permitted

Zoho Inventory

Zoho Inventory is a free cloud-based OMS that helps you manage your orders by performing basic processes. There is also a premium edition with more features at a lower cost. Zoho Inventory is an excellent OMS for small businesses. The only significant disadvantage is that the system cannot be used offline.

Zoho Inventory dashboard

Zoho Inventory dashboard

Key features:

  • Orders and stocks are tracked, and sales reports are generated to assist with decision-making
  • Multi-warehouse management, digital payment methods, and invoicing are all available
  • Backorders and drop shipments are fulfilled
  • Send order status updates to your consumers

Pros:

  • Price is reasonable
  • It is possible to connect it to other Zoho products
  • Consistent creativity

Cons:

  • Working offline is not possible

NetSuite

NetSuite is a multichannel OMS that manages your orders from the moment they are made until they arrive at the consumer, including some incredible automation tools. It is an excellent OMS that can help organizations of all sizes.

NetSuite dashboard

NetSuite dashboard

Key features:

  • Buy, fulfill, or return from any location
  • The entire order management procedure is automatable
  • Orders are delivered on time
  • Direct distribution from warehouses, drop-shipping, store fulfillment, and continuity/subscription options are all available
  • To optimize your revenues, set up client and currency-specific pricing

Pros:

  • Consistent creativity
  • Simple to use

Cons:

  • It may be expensive for users

Skubana

Skubana is among the top order management systems, allowing you to operate your e-commerce company efficiently by precisely handling orders and even providing projections depending on your past to assist you to expand. Skubana is a good product with a lot of functionality, however, with that comes the problem in using the system.

Skubana dashboard

Skubana dashboard

Key features:

  • Monitor pricing and stocks across numerous marketplaces and suppliers
  • Sales reports to assist you in making decisions
  • All of your warehouses, channels, and items are shown on a single dashboard
  • Orders should be sent to fulfillment centers automatically

Pros:

  • Good forecasting tools 
  • Excellent client service

Cons:

  • The lengthy and steep learning curve

LinnWorks

LinnWorks is a single platform that allows you to manage all of your order management requirements. It enables you to manage orders from all around the world and capitalize on every income opportunity. LinnWorks is a configurable platform that adjusts to your demands, yet, as one user pointed out, this order management system includes complicated and lengthy processes that can be difficult for beginning users.

LinnWorks dashboard

LinnWorks dashboard

Key features:

  • Connect to various e-commerce sites
  • Several channels are linked to a single selling and fulfillment procedure
  • As your firm grows, it adapts swiftly
  • A review of your company’s performance to assist you in making decisions
  • Your activities will be automatically synchronized across many of market places

Pros:

  • Customizable

Cons:

  • New users may find it difficult

Conclusion

You must take orders from several sources in order to remain competitive and develop your business. Buyers should receive the same outstanding experience despite where or how the order is placed, and your stock and fulfillment operations must be efficient and precise. Order management system software is a vital tool for monitoring inventory, accepting orders from various channels, fulfilling orders, and processing refunds. The systems are very useful when combined with comprehensive ERP software, allowing your order management data to be connected with CRM, accounting, supply chain, and other systems.

 

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