In the bustling digital landscape of today, effectively managing orders is akin to leading a symphony. Each order is like an instrument that needs to play its role at just the right moment to create a seamless performance (a well-functioning business). This is where an Order Management System (OMS) comes into play—a conductor that ensures your e-commerce, retail, or wholesale operations are perfectly in tune.
Get ready as we dive into the details of order management systems: what they are, how they function, and why they’re the key ingredients for achieving business success. We promise to keep it engaging, enlightening, and worth your time!
What Is an Order Management System?
An OMS allows you to organise and automate essential aspects of the purchasing/fulfillment processes for both you and the customer. When an order is placed and a delivery mode is chosen, an automated process is initiated for fulfilment. Whether it’s shipping from the closest and/or most cost-effective location or prepping an item for in-store pickup, OMS systems help you fill orders fast.
It also allows you to check inventory levels to avoid stockouts and backorders, as well as manage other stages of the customer lifecycle, such as returns. It allows your employees and customers to observe and follow each order from beginning to end, as well as analyse the overall process efficiency.
Why Do You Need an OMS?
- Efficiency: Forget about tracking orders manually; that’s outdated. An OMS automates the entire process, saving you time and minimizing errors.
- Customer Satisfaction: Quick and precise order fulfilment keeps your customers happy.
- Scalability: If your business is expanding, an OMS can easily adapt to handle more orders without any hassle.
- Data Insights: Gain valuable insights into trends, potential issues, and growth opportunities through comprehensive analytics.
How Does an Order Management System Operate?
Picture your business as a lively kitchen. Orders come in (appetizers), they’re prepared (cooked), and they’re sent out (served). Here’s a breakdown of how an OMS functions, step by step:
Step 1: Order Capture
The OMS springs into action as soon as a customer places an order. Whether it’s through your website, a marketplace like Amazon, or a physical store, the OMS collects all these orders in one centralized dashboard. It’s like having a universal remote for all your sales channels.
Some OMS platforms can connect with social media shops, allowing you to manage orders from Instagram and Facebook as well. Social selling is a game changer!
Step 2: Inventory Management
Next, the system verifies if the product is available. Here’s where it gets clever:
– Updates inventory in real-time across all sales channels.
– Notifies you when stock is getting low.
– Recommends reordering based on past data.
Think of it as your inventory guardian, making sure no customer ever encounters the dreaded “out of stock” message.
Step 3: Order Processing
Once the inventory is ready, the Order Management System (OMS) kicks into action:
- Payment Confirmation: Ensures that the payment has been successfully received.
- Order Validation: Checks for any mistakes or discrepancies (like an incorrect shipping address).
- Fulfilment Assignment: Allocates the order to the closest warehouse or fulfilment centre to reduce shipping time.
Step 4: Shipping and Fulfillment
This is where the Order Management System is the OMS full form truly excels:
- It connects with shipping carriers to create labels and monitor packages.
- Select the quickest and most economical delivery option.
- Keeps customers informed with tracking updates.
- As a bonus, it can manage split shipments, allowing customers to receive part of their order if some items are delayed.
Step 5: Managing Returns
Handling returns can be challenging, but an Order Management System (OMS) simplifies the process:
- Creates return labels effortlessly.
- Monitors returned products.
- Automatically adjusts inventory levels.
- A smooth return experience fosters trust and loyalty with your customers.
Benefits of the Order Management System!
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Streamlined Sales Channels
The hassle of managing various platforms is a thing of the past. With an Order Management System (OMS), you can integrate all your sales channels—be it Shopify, Amazon, or your brick-and-mortar store—into a single, organized solution.
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Abundant Automation
From directing orders to updating inventory, automation takes care of repetitive tasks, minimizing errors and allowing your team to concentrate on strategic initiatives instead of data entry.
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Happy Customers
When customers are aware of the precise arrival time of their orders—and those orders arrive as scheduled—they are more inclined to make future purchases with you. An Order Management System (OMS) allows for real-time order tracking and keeps customers updated. Plus, hassle-free returns through an OMS help eliminate any post-purchase stress.
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Growth Scalability
When you’re beginning on a smaller scale but have big growth plans, it’s essential to have a system that can evolve alongside you. An Order Management System (OMS) is designed to manage an increasing number of orders, connect with more sales platforms, and facilitate international shipping as your business expands. Think of it as moving from a bicycle to a high-performance sports car—ensuring seamless transitions, regardless of how fast you’re moving.
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Data-Driven Decision Making
OMS platforms typically include analytics tools that offer valuable insights such as your top-selling items, busiest sales times, and average delivery durations. These data points can help shape your inventory management, marketing tactics, and enhancements in customer service. It’s almost like having a magic mirror for your business!
Types of Order Management Systems
Usually, companies maintain ledgers books and other accounting materials in physical format. Moreover, some companies keep all the accounting data in a single computer. You will find different types to choose from and maintain with an order management system.
Some of these types are-
Individual and enterprise systems
Companies can purchase OMS software as discrete modules that do not interface with other sections of their organisation. However, more comprehensive platforms can combine your OMS with other software modules, ensuring that your data is stored in a single digital area. In this manner, your OMS data is linked to your customer relationship management finance, and other business applications.
Cloud-based options and on-premises
OMS solutions can also be offered as local software or in the SaaS/cloud paradigm. SaaS offers faster and easier setup, “pay as you grow” options for improved scalability, and access from anywhere with an internet connection via a browser or mobile app. Furthermore, the vendor hosts the program, resulting in a better user experience and increased reliability.
How to choose the right OMS!
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Smooth Integration
Your Order Management System (OMS) should easily connect with the tools you already rely on, such as your e-commerce platform, accounting software, shipping services, and customer relationship management (CRM) systems. This integration removes the burden of manual data entry and ensures that all your systems function harmoniously.
Example: If you’re using Shopify alongside QuickBooks, seek an OMS that can integrate with both to automatically sync orders, update inventory levels, and manage financial records.
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Flexibility
Every business has its unique processes. A flexible OMS allows you to adjust workflows, reporting formats, and dashboards to suit your specific requirements.
Example: A subscription box service might require features for managing recurring orders, while a wholesale distributor may focus on processing bulk orders. An OMS designed to fit your particular needs will enhance efficiency and accuracy.
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Scalability
You may currently be managing 50 orders each month, but what if that number skyrockets to 500? A scalable Order Management System (OMS) guarantees that your operations can handle growth without faltering as your business expands.
Example: Systems like NetSuite or Orderhive are built to accommodate rising order volumes and new sales channels as your business evolves.
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Customer Support
Technical issues can arise unexpectedly. When they do, having a responsive and knowledgeable support team is crucial to reduce downtime and keep your customers happy.
Example: Seek out 24/7 customer support or a dedicated account manager, particularly if you operate on a global scale or during off-peak hours.
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Budget
Why It’s Important: OMS platforms are available at different price levels. Although it might be appealing to choose the least expensive option, overlooking crucial features or the ability to scale can lead to higher costs later on.
Example: A small startup may begin with a budget-friendly choice like Zoho Inventory, but as they expand, they might transition to more comprehensive systems such as Cin7 or Brightpearl, which provide enhanced functionalities.
Also Read: Understanding Online Order Forms: A Beginner’s Guide
Order Management System – OMS full form and real-life action!
Let’s understand this with a real-life scenario E-Commerce Store
Picture managing an online fashion boutique that offers the latest styles. You have your website and a presence on Amazon, and you sometimes host pop-up shops at festivals or shopping centres. Without an Order Management System (OMS), tracking inventory across these different sales channels can be a real challenge. Overselling occurs frequently, leading to disappointed customers when they discover their orders can’t be fulfilled.
How an OMS Solves This:
An OMS keeps your inventory synchronized across all platforms in real time. So, when someone purchases that trendy hot pink blazer on your website, the stock levels on Amazon and your pop-up sales app are updated immediately. This means no more unintentional overselling, and you can relax knowing your customers are always happy. Plus, you can manage all your orders from a single dashboard instead of juggling multiple platforms.
Also Read: Why Order Management Systems Are Key for Restaurants
Vital Components of Order Management System (OMS)
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Order Capture
This involves gathering customer orders from various sales platforms, such as websites, marketplaces, and physical stores.
Why it matters: It centralizes and streamlines order tracking.
Example: A Shopify store and an Amazon seller account can consolidate orders into a single dashboard.
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Inventory Management
This process monitors stock levels in real-time to avoid overselling or running out of products.
Why it matters: Keeping accurate inventory leads to satisfied customers and improved planning.
Example: The system automatically reduces inventory counts once an order is confirmed.
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Order Processing
This step verifies orders and prepares them for fulfilment, including checking payments and preventing fraud.
Why it matters: It helps avoid delays or issues during order processing.
Example: Orders are assigned to the closest warehouse or fulfilment centre based on where the customer is located.
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Fulfillment
This includes the picking, packing, and shipping of products.
Why it matters: Prompt and precise delivery fosters customer trust.
Example: An Order Management System (OMS) connects with logistics companies like FedEx or DHL to create shipping labels and monitor packages.
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Shipping Management
This tracks shipments, provides delivery updates, and manages split shipments when necessary.
Why it matters: Clear shipping information enhances customer confidence.
Example: Customers receive tracking links through email or text notifications.
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Returns Management
This efficiently manages returns, exchanges, and refunds.
Why it matters: It streamlines post-purchase processes, boosting customer loyalty.
Example: Automating the creation of return labels and restocking inventory.
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Reporting and Analytics
This offers insights into order patterns, customer behaviour, and operational performance.
Why it matters: Making informed decisions supports better business growth.
Example: Recognizing best-selling items or identifying slow-moving stock.
Why OMS is a must-have for your business!
An Order Management System (OMS) is more than just software; it’s a transformative tool. Whether you’re running a budding startup or a well-established company, an OMS can give you a competitive edge by automating tedious tasks, improving customer satisfaction, and providing valuable insights into your business operations. No matter which business you run, be it hotel or retail, using order management system is the right investment.
Consider the benefits:
- Streamlining processes: Wave goodbye to cumbersome spreadsheets and the risk of human error. An OMS simplifies order processing, inventory control, and shipping, saving you time and enhancing overall efficiency.
- Enhancing customer satisfaction: Today’s customers demand quick deliveries, precise orders, and real-time tracking. An OMS ensures that you can meet these expectations, keeping your customers informed and happy.
- Delivering valuable insights: An OMS goes beyond just tracking orders; it offers crucial data that empowers you to make informed decisions. From spotting trends in customer purchasing habits to forecasting inventory requirements, this information can be incredibly beneficial for your business growth.
Are you ready to elevate your order management?
If you’re committed to expanding your business, think about investing in an OMS tailored to your needs. It will not only save you time and energy but also streamline your order process, ensuring satisfaction for both you and your customers.
To remain competitive and build your business, you must take orders through multiple channels. Customers should have a pleasant experience regardless of where or how they place their orders, and your inventory and fulfilment operations must be swift and accurate. OMS software is a valuable tool for managing inventory, accepting orders from many channels, fulfilling orders, and processing refunds.
Also Read: Understanding Sales and Distribution Management
