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Whether you’re a brick-and-mortar retailer, an e-commerce merchant, a multi-location businesses, or a B2B vendor, you most likely have growth on your mind. Growth can translate to more revenue, more loyal customers, and/or more liquidity to invest in making your business better. But for merchant businesses, growth also means more orders from more customers across more sales channels. And this inevitably means more logistical complications.
When high-value, low-volume retailers experience business growth, manual order management may become untenable. An order management system uses specialist software to manage the order process across multiple channels more effectively and efficiently. Here, we’ll look at the key features and benefits of order management systems (OMS).
OMS explained: What is an order management system?
The process of order management encompasses the whole lifecycle of an order, from the moment the order is placed, throughout the fulfilment process to the moment the invoice is settled. For merchants, order management is a key facet of operations management. But as merchant businesses grow, higher order volumes can place a huge strain on manual order management processes. This can lead to a greater propensity for human error which may damage the brand’s reputation and finances.
An order management system (OMS) is a digital platform that can be used by merchants, suppliers and logistics partners to ensure the quality of service at scale.
Because order management is multifaceted, OMS platforms need to be able to manage a wealth of data, including customer data, product information and inventory levels in order to improve visibility and transparency for businesses, customers and third-party partners.
What is the difference between OMS and ERP?
Because enterprise resource planning, also known as ERP systems, can be configured to do the same things as OMS platforms, the terms are often used interchangeably. However, while OMS is used exclusively for managing orders, ERP is designed to be a more comprehensive back-office solution with a broader range of functions including accounting, supply chain management, HR and more.
What does order management software do?
Now we know what order management software is for, let’s take a closer look at what it actually does. While capabilities vary from one platform to another, OMS generally encompasses a range of functions, including:
Automated order fulfilment
OMS platforms facilitate the automation of internal order fulfilment processes, helping them to process, pick and post orders quickly and efficiently.
An OMS can receive orders from virtually anywhere and feed them through to fulfilment partners or automatically print postage labels if you fulfil your orders internally.
Inventory tracking across multiple channels
When receiving orders across your website, your in-store POS, blended retail approaches like click & collect and third-party channels such as Amazon, eBay and Etsy, keeping track of inventory turnover can become challenging.
Order management software allows merchants to track their inventory across multiple channels in real-time. It can also yield useful insights such as which products sell best on each individual channel or region.
Manage customer information
A good OMS will also act like a CRM. They can provide a centralised repository for customer information, allowing merchants to target customers based on location, buying habits or average order value (AOV).
Make returns easier
As well as considering logistics, merchants need to account for reverse logistics, i.e. handling swift and effortless returns that maintains customer brand perception even if there is an issue with an individual product.
OMS platforms can automatically print returns labels to go out with each order, with different return addresses for different regional fulfilment centres, making for faster returns and refund processing.
Centralise order and financial data
By integrating with other back-office solutions, OMS platforms can merge sales and accounting data to provide real-time insights into the profitability of your operations. Invoice and purchase order creation can be automated, and users can see data from accounts payable and receivable in real time.
The benefits of an order management system
An order management system aids businesses by removing friction from the order management process and improving speed, reliability and visibility. Through business automation and efficient data management, OMS makes it easy to implement the best practices of order management. These are:
- Centralised inventory management
- Effective use of automation
- Efficient processing of returns
- Frictionless order fulfilment
- Comprehensive and effective staff training
Faster order fulfilment
OMS helps to streamline the picking and packing processes leading to faster order fulfilment. It can check inventory across multiple locations, identify the nearest fulfilment centre to a customer’s address, and break down the barriers to expedient delivery.
More accurate orders
Human error can lead to inaccurate orders that create logistical headaches while potentially damaging customer relationships. Manual order management has a higher propensity for human error. OMS, however, uses robust automation to match customers to products, driving down order return rates and safeguarding merchants’ reputations.
Increased customer retention
OMS provides a frictionless customer experience not just during the ordering process but, crucially, during the returns process. Given that over 95% of customers will return to a brand if they have an easy returns process, an OMS could be a useful ally in the battle to increase customer retention.
Improved inventory forecasting
Overstock can be damaging to a merchant’s cash flow, while a deficit can result in lost orders and revenue. OMS excels in improving merchant’s inventory forecasting by providing insights from multiple sites in real-time and utilising historical data.
Greater profitability
While it’s easy to see order management software as just another fixed cost to erode future profit margins, OMS can actually save money and boost profitability. It can reduce a company’s rate of returns by facilitating smooth order fulfilment, improving customer retention thereby boosting revenues, and preventing lost sales from inventory deficits.
Frictionless growth
Finally, OMS can forge a strong link in your business management chain, expediting the order process, boosting revenues, improving customer retention and driving revenues. All while making processes more efficient. Greater revenues combined with more efficient processes can be the fuel that businesses need to support growth without the growing pains.
