An order management system, or OMS, is a streamlined, digitized way to manage the flow, processes, and communication required across the entire order time frame.
Modern logistics have made most customer’s experiences seamless and pain-free – there’s little to do other than wait from the moment you place your order to when it finally arrives at your doorstep. For service and goods providers, things are a little bit different. From data entry to warehousing and after-sales responsibilities, there are hundreds of tiny tasks that go into carrying out each successful order.
This can include a wide variety of facets that cover every area of a business, such as:
- Customer communication
- Sales channels
- Inventory information
- Product details
- Supplier logistics
- Packing and shipping
Whether you’re aiming to cater to niche customers or handle large B2B shipments, a good order management system can mean the difference between watching your business plateau and stagnate, or broadly increasing the throughput, efficiency, and troubleshooting capabilities of your business.
How Does an Order Management System (OMS) Work?
While most companies differ quite a bit in terms of how they internally handle orders, most retail order management systems work according to the same governing principles.
These are based on the 6 basic steps of any order management process:
- Inventory availability: As the customer browses through products, the system checks and confirms whether said products are in stock.
- Ordering: The customer places an order through websites, apps, actual stores, or any other point of sale.
- Verification: The OMS confirms that the order has been placed, and collects key information such as name, shipping address, contact details, and discount codes.
- Promising: The system matches the product with its inventory ID after payment has been secured. This
- Fulfillment: The product is located, packed, and shipped from a distribution channel. This can happen at a large warehouse, a storefront, or even through online downloads.
- Delivery: Finally, the product is arrives at the doorstep of your customer’s doorstep. In the case of in-store purchases or pickup-from-store purchases, this step is taken care of by the customer themselves.
An order management system will allow you to track, maintain records, and keep a close eye on every single process of every single order.
Why Is an Order Management System Important?
Back in 2017, SPS Commerce Inc. released a report called ‘Retail Insight: Moving Beyond Omnichannel’. Across a sample size of 500 major logistics, supply, and retail firms, the report drew three key conclusions:
- 26% of firms were unclear about their next steps during the ordering process
- 29% had insufficient budgets
- 29% were let down by outdated OMS
The pattern was clear – with no real-time understanding of their logistics and supply, companies were facing bottlenecks that prevented them from scaling their growth, automating their processes, and saving considerable amounts of money in the process.
Since then, order management systems have played a major role in redefining the way companies handle this – especially in an increasingly digitized economy.
Here are some of the ways they’ve become indispensable in recent years:
1. Handling modern business complexities
For the most part, the average business in 2021 isn’t a one-firm-army – it’s a highly complex, interwoven fabric of parts supplies, packaging services, transport providers, and many other entities working together. This makes it much harder to keep track of an order and its status.
Instead of expensive, time-consuming manual drudgery, it’s much more profitable and easier to use an OMS to control costs, increase order volume, and successfully scale your business – even if you have a large number of moving parts to worry about.
2. Staying on top of your inventory
One of the most common mistakes made by businesses is understocking or overstocking their products. By overstocking, you’ll waste money on unused products that may not even sell, and by understocking, you’ll jeopardize customer opinion by forcing them to receive multiple packages at irregular time frames or find out-of-stock goods elsewhere.
An OMS guards against this by giving you a 360-degree understanding of your inventory levels, how fast certain stock flies off the shelves and even helps you foresee seasonal changes in order volume.
3. Cutting down on order fulfillment errors
At least on paper, the early days of running a business don’t seem too intimidating – with only a few orders per day, you have the time and headspace to double-check everything.
Things get a bit hairy once your business starts to scale up, however. If you’re accepting orders around the clock, catering to the shipping needs of an international customer base, all while juggling multiple providers and shipping contacts, errors aren’t just possible – they’re a guaranteed eventuality.
An order management system allows you to instantly pinpoint the cause of the error – not only speeding up your troubleshooting process but also allowing you to give real-time updates to customers.
4. Enabling data-driven decision making
Consider holding a meeting with your organization to review data points from all over your ordering process. Instead of cohesive, useful points, you’ll be struggling to make sense of fragmented. Oftentimes, non-compatible data sets from your accounting team to your shipping partners.
An OMS allows you to easily see everything you need from a single portal. This can allow you to make a variety of intelligent business decisions; from which product categories to expand in the future to which shipping solutions can give you the best results.
Furthermore, these can not only have a great impact on your profit margins – it’ll also help your core team speak the same language and work as a cohesive unit.
How to Streamline Order Management with a 3PL
One of the best ways to set up an order management system for your company is to work with a third-party logistics provider. These nifty companies help you outsource the headache of inventory management, warehousing, and order fulfillment; thus giving your business the room to focus on marketing, product development, or anything you see fit.
With the right partner, such as the dedicated and experienced team at Print Bind Ship, you can easily:
- Gain key insights into logistics management and make important connections
- Understand international shipping regulations at no risk to your operations
- Save time and money by outsourcing troubleshooting and analysis
- Removing business bottlenecks and opening up your sales volume to boost scalability
Interested? Here’s a simple primer that explains how to get started with 3PLs for your order management needs:
1. Integrate your store
First, you’ll have to link up your store and product information to the 3PL’s portal. Many have single-click compatibility with several e-commerce solutions, from Shopify to Magento, Squarespace, and more.
2. Send and store your products
Once your store is connected, you’ll need to find out where to store your inventory. Once shipped, the 3PL will ensure that all your products are properly categorized, stored, and accounted for.
3.Receive an order
Even receiving and handling an order placement is laughably easy. Once your store is linked, your customers’ orders will automatically be assigned to an OMS. Next, this will automatically compare shipping rates and assign them to the most ideal warehouse location, depending on remaining stock and the shipping address; a feature known as distributed order management (or DOM).
4. Let your 3PL handle the rest
Sit back and relax!
Not only will your 3PL handle, pack, and ship the order, they’ll also generally allow both you and the customer to view the order status at any time through order tracking numbers.
For any e-commerce business, the value and efficiency an OMS brings can’t be understated. From understanding every angle of your shipping operations to discovering hidden problems, it’s an absolute necessity and we’re excited to see where the technology takes us next.
We hope that this article has helped you understand the benefits of an OMS – both for your customers and for your organization’s future prospects.If you’re looking for an excellent 3PL solution to manage your ordering responsibilities, contact us for a free consultation – let’s take your business operations to the next level.