What is an Order Management System (OMS)?
Written by Debra Weinryb, Content Strategist at diff agency
When you have a brand new business, only a few orders come in each day and you can easily fulfill them yourself at a low cost. However, as customer demands rise and sales multiply, your order management requirements will change. You may no longer be able to package and ship products yourself, neither quickly nor cheaply. Maybe you’ll need to fulfill orders through a warehouse, or through multiple warehouses to route orders to their destination.
This is where an order management system can help you meet your changing order management requirements and scale the operational processes you need. Integrating an OMS can help retailers address complexities including inventory management, inventory visibility, inventory routing, or facilitating an omnichannel experience.
By managing orders from all of your sales channels across customer, financial, inventory and supply chain touchpoints, an order management system can drive customer satisfaction, brand loyalty and repeat purchases. How effectively you manage your customers’ orders will directly impact the success of your business.
What is an Order Management System (OMS)?
Shopify defines an Order Management System (OMS) as:
“Any tool or platform that tracks sales, orders, inventory, and fulfillment as well as enables the people, processes, and partnerships necessary for products to find their way to the customers who bought them.”
Simply put, an order management system manages orders from all sales channels. Centralizing data in one system is critical to giving you a single view of demand, inventory and supply, so you can exceed customer expectations for buying, fulfilling and returning anywhere, anytime.
As the buyer landscape and expectations change, order management has adopted a multi-dimensional approach that touches many business operational facets. These facets include customers, sales channels, product information and location, inventory levels, returns and refunds, order printing and packaging, as well as order picking, processing and shipping.
Serving as a complete supply chain to your business operations, your order management system should be able to:
- Update inventory counts across systems and sales channels
- Forecast stock levels to ensure you don’t run out of products
- Accept orders regardless of payment currency or chanel origin
- Track all orders for both customers and customer service teams
- Communicate order details to warehouses or 3PLs for fulfillment
- Provide back-office functionality like accounts receivable, accounts payable, and the ability to generate invoices and accept payments
Order Management System benefits
Choosing to use an OMS can benefit retailers by providing a comprehensive view of inventory, suppliers, and manufacturing facilities to your warehouse and physical retail stores. A centralized order management system ensures fast, accurate and seamless experiences across your entire business and supply chain. It helps you stay organized, avoid costly mistakes, and respond faster to customer demands and marketplace changes.
Benefits you can expect from investing in a good order management system include:
- Eliminate chances of over-ordering
- Avoid unwanted inventory recounts
- Stop spending time or money selling slow moving products
- Improve efficiency and productivity with devices like barcode scanners
- More automated processes and less error-prone manual processes
- Increase customer loyalty by always having products that are in-demand
- Provide data to customers including order status, or manage returns and exchanges
How an order management system can support an omnichannel experience
An order management system can benefit companies who operate both physical and online storefronts to provide a single view of demand, inventory and supply. For example, if a customer places an order online and picks up in store, the retailer will require an OMS with multichannel inventory visibility and order fulfillment to track this order.
According to JRNI’s Annual Modern Consumer Research Report, nearly 74% of consumers research products online and purchase them in store. Even when consumers purchase online, 55% of consumers would schedule appointments with in-store staff if given the opportunity. Additionally, 57% of consumers research products in store and purchase online.
This research demonstrates that many ecommerce businesses today may require different operational requirements as customer demands change. An OMS can help merchants with omnichannel strategies by providing information on orders and inventory across all channels in real time.
Order Management System features to consider
Order management systems share many key features that support the sales process. This includes increasing time efficiency and reducing errors to help companies run smoothly. Here are 8 features you should look for when choosing your order management system (OMS):
1. Multi-channel order management
Your OMS should ideally bring all your channels into a centralized system. This ensures you can create sales orders whether customers order online or in store. This also keeps track of wholesale requests, and all of your orders from all commerce channels.
2. Product management
Inventory management is the foundation for your business. An OMS should help you see all your product information in a single place. You should be able to organize products by categories, and enter cost data and purchase prices.
3. Customer management
Customers are essential to driving business to your store. This is why it’s important to keep track of their interactions and payment status. An OMS should keep important information like a history of customer interactions, sales orders and shipments.
4. Inventory management
It’s important that your OMS tracks stock numbers for every product. This ensures you know how much inventory you can sell. Your system should consider every purchase or sale, whether it is physically in your inventory or a back order.
5. Returns processing
Your OMS should have returns processing capabilities with a procedure in place for reentering merchandise into your inventory after returns, reimbursing your customers, and ensuring a stress-free returns processing environment for merchants.
6. Easy integration with tools
An OMS should give you the flexibility to integrate tools you need to expedite and ensure an accurate order fulfillment process. For example, multi-channel support can help you sync with ecommerce or business applications like Amazon, financial apps, and fulfillment providers.
7. Multiple payment gateways supported
Merchants will benefit from providing buyers with the ability to pay regardless of channel origin or currency. Therefore it’s important to look for an OMS that supports multiple payment options and which can integrate with fraud check services for security.
8. Distance-based routing
An OMS should route orders intelligently based on distance. For example, if a company uses multiple fulfillment centres to ship orders, the closest fulfillment centre to the customer’s location will ship the order. This ensures the fastest and most efficient delivery.
Choosing an OMS Shopify Plus partner
If you’re looking for the next big opportunity to grow your ecommerce Shopify store, it’s time to consider using an Order Management System. An OMS will help you manage your orders across multiple channels and currencies as your business operations become more complex.
Following is a list of Shopify Plus’ OMS Partners that offer platforms for ecommerce growth. When choosing a platform, remember to consider each one’s strengths, unique features and weaknesses. When thinking about which platform to use, consider whether it will meet the needs of your current and future business requirements.
With Freestyle solutions and Shopify Plus’s integration, you’ll be able to process, ship, and manage orders. You can also track inventory levels and performance, generate purchase orders to replenish inventory to sell, see customer sales history, and manage interactions with call-center representatives.
Retailers can benefit from this feature-rich order and inventory management platform, with all the operational benefits of the cloud. This includes frequent and seamless functionality upgrades, and open APIs that enables easy integration to third party applications to help scale your store.
With Orderbot’s cloud-based order and inventory management system, you can process high volume orders from your Shopify store. This includes shipping notices, and syncing products and inventory data across your channels and websites. You can process payments, and keep a clear record of order history with inventory, order and fulfillment visibility.
The tool integrates with various accounting software including Quickbooks, Xero, and Sage 50, as well as multiple shipping vendors, including FedEx, USP, USPS, DHL and TNT. Customized integrations with ERP software like NetSuite or SAPB1 can simplify your order process flow.
Stitch Labs offers advanced Shopify inventory management for your growing needs, including features like multi-location support, geographic order routing, automated backorder management, inventory reporting, and more. With this cloud-based solution, you can streamline complex operations and focus back on multi-channel selling and growing your business.
The system integrates with top online marketplaces like Amazon, eBay and Etsy, as well as third-party apps like PayPal, accounting software like Xero, third-party logistics providers (3PL) and warehouse management systems (WMS). This helps you manage your business in one place.
TradeGecko is a cloud-based ecommerce inventory management system that automates and speeds up backend operations on Shopify. It helps merchants and wholesale buyers manage inventory, sales orders, and stock levels. This supports multi channel sales from a single platform.
The inventory management system integrates with popular channels including Amazon, Etsy Ebay, and Walmart, as well as many apps including QuickBooks, Xero, and fulfillment providers like Amazon and ShipStation, as well as additional integrations for commerce entrepreneurs.
Custom order management system
A custom order management system may be right for you if your operational systems and very specific processes cannot integrate with an off-the-shelf solution. For instance, if you are selling niche items like ice cream or meat for example, you may choose to build an OMS from scratch to streamline your food handling, storage and shipment processes.
At diff, we build custom Order Management systems. As an example, diff implemented a custom OMS for Popsockets to optimize everything from product assembly, custom-mass printing, to quality assurance and shipping. And the results of our custom work have been huge. We helped PopSockets increase sales, deliver to 45 countries and double their weekly shipping capacity.
Order management system: Consider your options
Deciding on the right order management system is a long-term commitment. Therefore it’s important to choose an OMS that supports the operational features you need for your business.
Remember to consider all of your business requirements when making a decision. Find the best option to ensure a smooth delivery of orders, and increased customer satisfaction.
If you can’t find an order management system that fits your present and future needs, it might be time to consider finding an agency (like diff!) to help you build a custom order management system. Get in touch with our team of ecommerce pros if you have any questions. We’re ready to help!
You can read more about ecommerce trends right here: Retail trends we don't want to see in 2020