Order management systems offer order fulfillment software and inventory tracking for the back-end of your business. An OMS integrates into a WMS and eCommerce platforms. As a result, it can capture data related to sales & marketing from different sales channels. This insight offers new supply chain and product procurement strategies. Today, online platforms for eCommerce build-in OMS tools. Consequently small businesses do not need a stand-alone OMS. Nevertheless, they do need to understand what value a well rounded OMS offers. This Order Management System guide aims to deliver exactly that – a complete review of OMS’s value add to your business.
What’s an Order Management System?
After you customer clicks your buy box button, a system activates. What system? The order fulfilment system in the back end of your eCommerce business. After they click, ‘Buy’, your order management system actives.
For small businesses operating out of their garage, your OMS is simple. You grab the product out of a box. Build a shipping label on the eCommerce platform of the sale – say Ebay. If necessary, you box the product. Finally, you put the label on and set it out for pick up. These are the good days.
However, once you level up onto several sales platforms the game gets harder. For example, here’s some basic challenges in leveling this process up:
- New Sales Channels generate different order fulfilment SOP’s. (i.e. Ebay fulfilment differs from Amazon FBM orders).
- New SKU’s increase variability in order fulfillment.
- More products put higher demand on inventory management.
Keeping work flow optimized when confronted with these bottlenecks is hard. However, a Order Management System which ties channels into one platform, in tandem with a WMS can offer automation and precision into your operation. Let’s learn more about the in’s and out’s of a robust Order Management System.
What Does An Order Management System Do?
Multi-Channel Order Tracking
Stop logging into 4 different sales platforms each day! Ditch the different passwords. Save yourself time! An OMS synergizes all the days orders into one space. What’s more, an OMS records orders placed over the phone or in-sore. This decreases the administrative resources needed to navigate daily order organizing across multiple platforms. In turn, that frees the resources needed to focus on order fulfilment, branding, or supply chain management.
Software to Monitor & Manage Inventory
Inventory ebbs and flows. Products coming in and sales shipping out. How can you keep tabs on the present and forecast future sales? A true OMS helps prevent overselling, overstocking and poor forecasting.
Overselling – Don’t disappoint customers. When your platform offers products that do not exist in the warehouse, your brand’s credibility takes a hit. More than that, it leads to canceled orders and disappointed clients. Real time inventory numbers from an OMS prevent this scenario.
Overstocking – Alternatively, over-stocking on inventory chews up valuable storage space. If you’ve moved beyond your garage, you’re paying for every cubic foot of storage. Slow moving stock can sink your profit margins. Historical sales data delivered from an OMS provides insight on product procurement strategies.
Inaccurate Forecasting – In contrast to overstocking, proper sales forecasting can ensure continuity in future revenue streams. For example, if sales of a particular product tick up, then you can get ahead of pre-ordering more to catch the wave. Don’t leave money on the table by missing sales trends!
Multi-Channel Order Fulfillment
In review, an OMS offers order tracking and inventory management. How about order fulfilment? A proper OMS will go the extra mile and streamline order fulfillment. How? This process can instruct the correct warehouses closest to customers to fulfill their orders. It can offer auto-printing on shipping labels. As a result, same-day fulfillment and two-day shipping are achievable.
Product Return Automation
Did you know that 30% of orders get returned? Who’s managing all the kick backs? How is that process handled? Processing returns is critical to keeping customers happy. An OMS processes returns with streamlined continuity for your team. For example, they can copy the initial order & create a credit for the client. Similarly, an OMS can bundle usable returns back into current inventory.
Types of Order Management System
Manual Order Management
We mentioned this earlier. Those just getting started use a manual order management system. This is bearable for a while. However, it is not sustainable. Manual order management requires an owner to keep a running spreadsheet of daily sales. When scaling up SKU selection across several platforms, this becomes a labor intensive exercise. Again, this is time better spent on growing the business. Moreover, manually updating numbers offers opportunity to error. Errors go unnoticed until its too late. Backtracking to fix the error then consumes additional time and resources. Avoid this altogether!
Using an E-Commerce Platform
What works better? Most folks find a natural transition to using an E-Commerce platform. Oftentimes, your own website’s backend can utilize an API to manage orders. This works to a point. It’s most efficient when all your orders come through on a single site – let’s say Shopify users or Etsy Sellers. However, most times sellers want to sell on the bigger platforms like Amazon or Google Marketplace. At this point, this order management system breaks down into a hybrid, between Manual & E-Commerce Platform based. Other challenges to solely relying on an E-Commerce Platform? Additionally, you’ll need products grouped into one warehouse to best keep track of inventory. So forget about getting a second location. What is more, your CSR needs full access to the e-commerce platform as well.
Standalone Order Management Software
Ideally, your business benefits from a standalone order management software system. This serves as the back bone of the business that can tie all platforms, warehouse locations, and orders together. This system tracks order data, customer info, and inventory stats. However, there is one draw back.
Integration poses a difficult challenge. Can this software seamlessly integrate into other software stacks already utilized? A perfect system can work in tandem with your shipping, accounting, and POS platforms. A less than perfect system can be bottle necked here creating data silos or stunt scalability
Benefits of An Order Management System
Automate Order Management Systems
Let your team work more with clients instead of with products. How? An OMS frees your staff to build relationships with clients. A brand is built by people not products. For example, the touchpoints of communication clients enjoy with your brand’s CSRs offer more emotional value to the brand than the product itself. After all, people remember how you made them feel, not exactly what you said. An OMS brings this level of liberation to your staff to focus on clients instead of crunching numbers and data. This helps with both client acquisition and retention.
Eliminate Errors In Order Management
Automating order management does free staff to do more human tasks. However, it also prevents them from doing human things like manual mistakes and errors. For example, lets say a Prime FBM order is placed for an Amazon listing. It’s guaranteed two-day shipping from your warehouse. However, a team member overlooks the order. Oops. The client didn’t get the product in time, and now wants to return it also. That’s twice the trouble!
Alternatively, a team member might register all the days orders, mark them complete, but then miss one shipping label when printing them out. The system now says the order is complete. But your angry customer will beg to differ in a week’s time.
Real Time Order Management Data
Processing Orders manually takes time. Updating numbers in different systems also takes time. As mentioned, they can be prone to error as well. Eliminate this lag time and in-accuracy with an Order Management System. It collects and updates information in real time. Consequently, your real time data informs your decision making and strategy sessions with much more clarity.
Brand Interaction & Customer Satisfaction
Again, touchpoints of communication between your clients and brand built rapport. The client wants concise, clear, and cordial communication with a CSR. That means the CSR can grab the information requested by the client, at a moments notice from the OMS. When a CSR provides accurate shipping and delivery info – clients leave happy. They remember how they feel after the interaction, not the specifics of the dialogue.
How to Choose The Right Order Management System
The best OMS integrates with systems or software already in place. A seller should not need to turn their entire SOP upside down to accommodate an OMS. If possible, ensure it integrates along side your accounting and inventory management tools.
Impact on Supply Chain
Review how the introduction of a new OMS impacts your supply chain. Does it work well in communicating strategic needs with suppliers? Can your 3PL warehouse partners utilize as well? Or will it simply create more work to employ it?
Reporting & Analytics
Choose an OMW which can offer the following:
- Delivers data driven forecasting
- Real time access to profitability numbers
- Provides insight into customer demographics based on sales history
- Sales channel & product performance review over-time
- Most importantly, complete tracking of business performance
Proper planning prevents poor performance. The sky is the limit for your business. However, the OMS is the ceiling. So ensure that your stack of software can grow in tandem with each other for the next five years. After all, you want your employees to train on a new system just once.
We keep discussing the benefits of customer service to the client. What about customer service to you and your staff on behalf of the OMS. Getting started with new software inedibility comes with challenges. You will need a helping hand getting launched and integrated. So make sure the team behind the software is just as good as the product.