What is an Order Management System?

Back when dinosaurs roamed the Earth – well, not quite that far back – systems that managed direct orders from consumers came from catalogs. So Catalog Management Systems were born.

But as eCommerce blossomed, some companies diversified into bricks and clicks, and shopping venues like Amazon and eBay emerged. Suddenly orders were coming from a variety of sources – so these systems became Order Management Systems.

All of these ways to sell are now referred to as “channels” – so now a system needs to be omnichannel to handle this variety of orders.

So in today’s world, an Order Management System needs to be able to process orders from a wide variety of sources/channels – and much more.

From the name, you might imagine that an order management system helps to organize and streamline the order fulfillment process. That’s partly true, but a good order management system goes far deeper than that.

An order management system, or OMS, is a single system that manages all aspects of an omnichannel business, such as order processing, call center management (for phone orders), customer service/CRM, forecasting and purchasing, inventory management, warehouse management, marketing, and accounting. A fully integrated OMS makes your business run smoothly and efficiently by automating every step possible.

Not all data and processes needed to run an omnichannel business can be “inside” the company’s walls. In today’s world, an OMS must be fully integrated with a wide variety of external process, such as eCommerce websites, shopping channels, shippers, payment processors, marketing services, and fraud prevention.

As you can see, an OMS does far more than just order management. It’s a well-rounded business management tool that helps to keep all of your important data and processes in one unified system.

Now, let’s take a look at how it works.

What Does an Order Management System Do?

The order management system, step-by-step

You are likely well-acquainted with the many moving parts that make up the process of selling to a customer. Let’s take a look at a typical customer transaction, and what processes an order management system helps you control.

1. The customer shops
Whether it’s at an online store, in person, or through a catalog, the customer browses what you have to offer. Even before a sale takes place, your OMS is working by displaying correct inventory to the customer, and ensuring your inventory numbers are updated and correct.

In some eCommerce cases, the OMS can notify you when a customer places an item in a shopping cart. This can have a great benefit to your business – if a customer ultimately does not make a purchase, you might be able to pinpoint why, or send them an incentive to come back and complete their order.

2. The order is processed
When your customer places an order online, in person, or on the phone, your inventory numbers are updated. If it’s applicable, your OMS begins the tracking process, generating a unique tracking number for your customer that’s linked to their order in your system. Your order management system updates your projected sales information with this order.

3. The customer pays for the order
Your customer pays for their items, and your order management system updates your accounting system and generates an invoice or receipt for the customer. Payment information is verified within your OMS.

4. The shipping process begins
If your customer is shopping online or via catalog, they have the option to get their order delivered or picked up in-store. In this case, your OMS will send the customer’s delivery information to your preferred shipping outlet. The order tracking process is updated within the OMS, all the way up to successful delivery.

There are many processes involved in just a single customer transaction – and managing all of these processes is not an easy thing to do. A good order management system streamlines all of these processes and more, and keeps them centralized in one location.

An order management system includes all modules needed to run the internal operations of a business.

In businesses that don’t have a unified order management system, they may have to contend with separate tools for customer service, accounting, POS, and warehouse management. With a unified OMS, you can manage customer information and interactions, access your accounting data, customize your retail POS, and update your warehouse inventory – all from one system.

An order management system makes your business run more smoothly in all aspects due to up-to-the-minute information on orders, inventory levels, and sales forecasts. All this data in one centralized location means your business can make decisions and adjustments more quickly than ever before. With this instant data, you can design effective marketing campaigns, replenish your inventory in an informed way, and remove purchasing guesswork.

A good order management system is adaptable to your business. Every business in every industry has its own unique needs, and business is changing at an increasingly rapid pace. If your OMS can’t adapt to your needs, you’ll become less and less efficient, and miss opportunities.

A unified, omnichannel business management system

Omni-channel Business Management (OCBM) Software from Circle Commerce

An order management system saves time and reduces errors

With a unified order management system, you no longer have to take orders with one system, create shipping labels with another system, and coordinate between your warehouse and shipping departments.

What can this mean for your business? A centralized order management system means less time spent organizing different departments and designing complicated processes to have them work together well. An OMS also means reduced errors in accounting, shipping, delivery, and inventory processing, because there are fewer steps needed to have all of these components working together.

With this unified system, omnichannel merchants get a one-stop solution for making all the moving parts of their business – like retail POS, call centers, and warehouses – work together seamlessly. This means greater accuracy and turnaround time for your business.

A single order management system eliminates the need for several different systems, meaning your business can focus on satisfying customers and moving forward on your path to success.

Along with the benefits of reduced time and errors, making the switch to an order management system means money saved for your business. By investing in an OMS, you don’t have to spend money on separate accounting, inventory management, customer service, shipping, and marketing software. Instead, an OMS gives you all of these components in one program.

You can also save money thanks to the real-time data provided by your OMS. For example, if your inventory data shows that a certain product is not selling well, or being returned more than any other, you can drill down and figure out why. You may decide to retire that product, or make improvements to improve sales. Your OMS offers a wealth of interconnected data that you can use to increase the financial health of your business, and make educated and informed decisions to improve your bottom line.

An order management system also removes one component of eCommerce that is often costly – finding the best shipping rates. Outbound shipping is a major cost for many omnichannel merchants, and keeping track of the best rates is critical. However, with a unified OMS, you can compare shipping rates across national and regional carriers, and choose the one that best fits your needs and budget. This can mean a significant cost savings to your business, which you may then be able to pass on to your customers.

An order management system saves money

An OMS can integrate with existing systems

Many businesses hesitate to make the switch to a unified order management system because they already have other systems in place, such as eCommerce providers, email marketing systems, and accounting software. They worry that an OMS won’t interact well with an existing system, or they don’t see the value in replacing something that they’ve been using for several years.

The good news is that an OMS can integrate with existing systems, seamlessly incorporating them into the unified system. You can interact with an existing program within your OMS, making everything work together. Integrating an existing system into your OMS means you reduce the steps needed to complete a task – there is no longer a need to manually carry over data and information from one system to another.

These days, many omnichannel merchants are particularly interested in integrating their operations with online channels such as Amazon, eBay, Sears, and Rakuten. Selling products through these channels is a great way to extend market reach, but only if it works well.

A good order management system has the capability to fully integrate into these channels. When bringing your existing shopping channel into your order management system, you’ll be able to list products, update inventory, display your desired level of inventory, and receive orders – all from within the OMS that’s handling all of your other processes anyway. This makes your channel selling endeavors all the more powerful, and much easier to manage.

You may be pleasantly surprised at how many existing programs and systems can be integrated into your OMS, too. A good order management system is adaptable, so you can incorporate it into your existing business without disrupting your daily processes. In fact, investing in an adaptable, well-rounded, and fully-supportable order management system can help you set yourself apart from your competitors.

Are you interested in finding out how to get started with an order management system? Let us show you how easy it can be to incorporate an OMS into your business – get in touch today.

How Can We Help You?

Call 800-554-2472 or launch a chat to discuss your unique business requirements. For a whimsical look at order management, click here.