How to choose the right order management system (OMS) for your business

order management system

[Updated post from March 18, 2021]

OMS, WMS, ERP, EDI…The world of e-commerce fulfillment is full of acronyms for different systems. When fast, accurate fulfillment matters more than ever before, merchants need to utilize as many tools as possible to streamline the fulfillment process.

An OMS (Order Management System) has become indispensable in the age of “I need it now” online shopping. When consumers expect near-instant gratification, an Order Management System is the key to coordinating an efficient flow of information from the moment an order is placed to when it arrives on their doorstep.

But what is an Order Management System, and why do brands need one for seamless fulfillment?

What is order management in e-commerce?

Before we start talking about order management software, we need to start with the obvious: what is order management?

Put simply, order management is the process of receiving, processing, and managing customer orders that come through your sales channels. The moment a customer hits 'purchase', it's your responsibility to make sure that it's seamlessly fulfilled, shipped, and delivered to your end customer within the promised timeframe.

The order management process involves the following steps:

The order management process starts when a customer places an order via your e-commerce platform or other sales channel. Inventory levels are adjusted to reflect the number of units available after the sale.

  • Customer orders are received and processed by the relevant fulfillment center where order fulfillment will take place.
  • A picking list is generated that tells warehouse staff what SKUs are needed to fulfill that order.
  • When picking is completed, the order is transferred to the packing area to be packaged for shipping. This also includes printing shipping labels and value-added services like subassembly.
  • The order is shipped to the customer, who should receive a tracking number so they can monitor its progress during transit.
  • The order is delivered to the customer at the address specified.

Why is streamlined order management important?

Every single order your business receives is an exercise in customer relationship management. Every step in the order management process, from placing an order to the moment that the parcel lands on a customer’s doorstep, is a crucial touchpoint that shapes customer perceptions of your brand. Executing all of these touchpoints without errors or delays is crucial to offer the seamless customer experience that online customers expect.

This might feel straightforward enough when your sales channels are only handling a few hundred orders per month. But order management becomes a full-time job when customer demand increases and your operation is under pressure to process orders quickly and seamlessly.

This is where having an advanced OMS system comes into the picture to ensure customer satisfaction and better business performance.

What is an Order Management System (OMS)?

An Order Management System, also referred to as an OMS system, is a software tool that assists retailers and 3PLs with fulfilling, tracking, and processing orders. An OMS uses advanced automation and integration with inventory management software, business intelligence systems, and enterprise resource planning (ERP) platforms to streamline order management and order fulfillment.

If you're an omnichannel retailer who sells goods across multiple channels, an OMS gives you a single point of truth by displaying outstanding orders in one dashboard. This reduces the risk of orders being lost or delayed by manual data transfers.

By automating the time-consuming and repetitive workflows involved in order processing and fulfillment, an OMS system helps prevent brands from becoming overwhelmed as their business grows. For example, many order management systems will automatically route orders to the fulfillment center closest to the end customer, which reduces both last-mile delivery times and shipping costs.

In sum, an order management system frees up more time for your brand to focus on enhancing the customer experience. More efficient processes from automating routine order management tasks are the best way to increase customer satisfaction and generate more repeat orders.

How is an Order Management System different from a Warehouse Management system (WMS)?

As fulfillment software grows more comprehensive, we’re seeing more platforms combine an Order Management System and a Warehouse Management System (WSM) into one.

But while OMS and WMS are talked about interchangeably, they play different (though overlapping) roles in the fulfillment process.

A Warehouse Management System controls the flow of activities within the fulfillment center and distribution facilities. This includes:

  • Optimizing storage strategies
  • Setting the material flows of SKUs as they enter/exit the warehouse
  • Coordinating the picking/packing process for faster turnarounds

An OMS, on the other hand, focuses managing the order fulfillment process itself.

What does an OMS do?

Track orders across multiple sales channels

Keeping track of orders that are being placed across sales channels is a big job, even for startup brands. Order management software provides one central location to process order information and check order status, helping to avoid delays to order fulfillment and maintain consistent order tracking across facilities. Two-way integrations with your e-commerce platform replace CSV files and manual uploads of new orders, which frees up more time to focus on other business activities.

Monitoring inventory levels

Inventory management i.e. knowing much inventory you have and where it's located, is essential to avoid overselling inventory or accumulating excess stock that's difficult to sell. Order management systems equip businesses with a range of inventory management tools, including real-time inventory visibility and automatic syncing, to sell online more effectively and avoid unforeseen stockouts of popular SKUs that cost valuable sales.

Automate the order fulfillment process

Streamlined order management, such as routing orders to the warehouse closest to your end customer for faster fulfillment, can only be achieved at scale by using an order management solution that embraces automation. By automatically feeding information through an array of interconnected systems, e-commerce companies can use AI and rules-based packing and routing to refine order management processes, remove human error, and eliminate costly minutes from picking and packing.

Coordinating return management & reverse logistics

Order management also involves managing orders that are coming back into your warehouse after being returned by customers. While it's easy to dismiss returned orders as being less urgent than outbound orders, you still need to meet customer expectations for quick refunds.

Order Management Systems help ensure not only quick returns and exchanges but also getting returned merchandise back on the shelf so that you don't miss valuable resale opportunities. Whether it's automatically printing shipping labels or providing customers with regular updates, an automated return process is key to taking pressure off your customer service team.

Why is having an Order Management System important for your business?

Centralizing order and inventory management

Having to flick back and forth between a bunch of different management systems is both time-consuming and confusing for your team, and runs the risk of supply chain errors being missed. Condensing all your order information into one place via integrations increases efficiency and helps you to optimize order management. Moreover, having a comprehensive overview of your outstanding orders and inventory levels allows you to see patterns and trends in sales, SKU movements, and regional growth so you can make data-driven business decisions.

Maintaining high order accuracy

If customers don't receive their orders at the right time, in the right place with the right items, they're unlikely to shop with your business again. Yet order accuracy often suffers when order volumes increase and brands find themselves under pressure to process orders quickly.

If your business is relying on manual processes to manage orders, the likelihood of errors cropping up is much higher. In addition to lost customer loyalty, you also need to consider the cost of correcting orders, paying for return shipping, and creating bottlenecks in the fulfillment process.

Automating manual processes via an Order Management System ensures higher accuracy across each stage of fulfillment and less staff time being taken up by repetitive tasks and correcting mistakes.

Faster fulfillment

Time is of the essence when it comes to order fulfillment. The longer it takes to process orders and send order details to the appropriate facility, the longer it takes for the package to arrive on the customer's doorstep. Even minor delays at each stage of fulfillment can quickly add up and result in orders being shipped hours or even days late.

With an Order Management System, it's no longer necessary for brands to manually oversee every stage of fulfillment to shepherd things along. As OMS system automates the process of choosing a fulfillment facility, providing packing instructions, and selecting the fastest shipping method, meaning quicker delivery and higher customer satisfaction.

Provide a positive customer experience

Seamless order management is the foundation for providing customers with touchpoints that add value to the post-purchase experience. From order tracking updates during shipping to memorable unboxing experiences, meeting rising customer expectations is impossible without the transparency and automation provided by order management software.

How to choose the right order management system for your e-commerce business

There are several key features that brands should look for in an order management system to make sure it's capable of managing shifting customer demand and selling across multiple channels: 

Seamless integration with other systems

If an Order Management System can’t communicate directly with the other business tools you’re using, this is going to add inefficiencies to your fulfillment operation.

In addition to having an open API, it’s important that a prospective order management system offers native integrations with key e-commerce platforms like Shopify or Bigcommerce and returns management tools like Happy Returns to minimize development time. This makes it easy to coordinate your fulfillment operation effectively from day one.

Real-time inventory and order tracking

A flow of real-time data about inventory levels and online sales is essential for your business to be flexible and responsive to shifting consumer habits. If you’re making business decisions based on outdated or inaccurate information, this could negatively impact the customer experience or result in poor demand forecasting.

Access to up-to-date insights allows your business to be proactive about growth opportunities - and also identify order or inventory errors before they cause problems.

The ability to scale with your business

When looking for an Order Management System, you need to consider your long-term needs and fulfillment strategy. Implementing and onboarding staff onto new systems can be complex and time-consuming, so you don’t want to have to keep switching Order Management software because it lacks the ability to handle an increase in order volumes.

Growth opportunities can arrive in e-commerce with limited warming, which can cause widespread disruption and delays to order processing if your Order Management System isn’t able to keep pace. For this reason, it’s important to look for an OMS solution that can future-proof your e-commerce store.

Multiple warehouse locations

As consumers demand faster delivery times, multi-node fulfillment has entered the forefront of logistics. This involves maintaining multiple facilities at strategic locations close to important transit networks for faster, cheaper shipping to end customers.

For effective multi-node fulfillment, you need an Order Management System that’s capable of coordinating orders across multiple warehouses, which better positions you to meet customer expectations for quicker last mile delivery.

Partner with Ryder for superior order management

Investing in an Order Management System isn't just an expense. It's a revenue-generating exercise that leads to better customer relationship management and a more streamlined supply chain and business operations.

Through seamless integrations and advanced automation of manual processes, brands can manage inventory from one central location and gain valuable insights from sales channels in real-time. Finding the right order management system can be a big undertaking for merchants. Partnering with an experienced e-commerce fulfillment provider like Ryder who can supply you with an in-house OMS system means a faster onboarding process and better inventory control. By taking on a team of experts the manage orders on your behalf, you can focus on what matters most; providing memorable customer experiences.

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