What Is Order Management System and Why It is Important?

This article will discuss what is Order Management System and why it is important for your business. 

You may have an e-commerce website, a mobile app, a physical store, or all three (and more), chances are, you’re missing out on quite a bit of revenue if you aren’t using an OMS yet.

Even if you have 0 experience around OMS, we’ve compiled this article ensuring you’ll learn its use for your business in the next few minutes. Most OMS do not require advanced technical skills or experience either. You can integrate one in minutes, without third-party help. 

Let’s boost your revenue then. 

What is an Order Management System?

Order Management System is a system of managing the entire lifecycle of an order. Right from an order being placed by a customer,to it being delivered. It allows you to generate and use a tracking number but that is just one of its many features. 

Any OMS has two primary purposes:

Transparency: so the involved parties (sellers & buyers) can monitor the status of the order. 

Order Management: Managing the order lifecycle so problems can be avoided or cleared on or before time.

OMS has multiple functions which lead to it offering you multiple benefits. Let’s start with the former and then we’ll move to the benefits of Order Management System in this piece. 

What are the primary functions of an Order Management System?

A streamlined OMS has a few steps that are followed almost for every order, these include:

1. Order verification and acceptance: As soon as an order arrives, inventory is verified. If the item is stocked, the order is accepted by the responsible team-member. This includes verifying the delivery address, name, e-mail, and other details. All this can be done either via software, or manual methods. 
2. Inventory management: The OMS may update your inventory automatically upon order acceptance. You have real-time data of your stock.
3. Processing the order: the order is then processed by the OMS. This includes verifying payments or future payment terms, printing labels, packaging the order, and so on. 
4. Dispatch: Finally, the product is dispatched. This may involve connecting with shipping partners, assigning delivery agents, prioritizing or de-prioritizing orders and so on. 
5. Transparency: The OMS is also used to send automated (or manual) e-mails about the order’s stage or issues (if any) with the customers, shipping partners, and everyone else involved. 

Basically, there’s no absolute set of rules that an OMS follows. The overview is that it helps with your shipping process through whatever features are available on your specific OMS. 

8 reasons why an Order Management System is important?

We just discussed what an OMS does for you. But what benefits do you get due to the OMS doing those things for you? Well, here are just some of the reasons why an Order Management System is important for any business:

1. Streamlined order processing: Processing an order has multiple stages. It may also involve multiple people and departments. The OMS ensures each involved person or department knows the exact status of the order and works towards fulfilling it. There’s less miscommunication and a smoother processing of the order. Without the OMS, chances of miscommunication, wrong orders being shipped, or just delayed shipments increase.
2. Automated low/high stock management: The OMS isn’t limited to keeping track of your inventory. You can also automate some OMS to automatically place buy orders for low-stock items or stop buying for overstocked items. It basically ensures you don’t suffer inventory-related issues. This helps reduce labor costs and almost guarantees proper stock even if no one’s paying attention to it.
3. 24X7 access: Order Management Systems are generally cloud-based software. Hence, regardless of the time of day, order stage, or availability of personnel, you have 24X7 access to the order data. 
4. Centralized Management: You can connect multiple platforms/tools that you use for order fulfillment to your OMS, Accounting systems, shopping carts, marketplaces, etc. can be managed from a centralized location which reduces the need to login separately and individually to these other tools. 
5. Prevent inventory spoilage: With an OMS, your orders are fulfilled faster hence chances of your inventory going bad is reduced extensively. Without the OMS, you may have to cancel orders due to low-inventory which would kill customer confidence, or your inventory may get spoiled because you have too much of it.
6. Labels, billing, return, and other technicalities: A good OMS also helps you generate labels, manage billing/payments, and even manage returns. You do not have to manually verify return eligibility or enter label data.  
7. Customer satisfaction: The OMS isn’t only for the seller. You can use it to notify the customer about the order and let them track it in real-time. This increases customer satisfaction which may increase customer retention. 
8. Detailed reports and analysis: For any business to succeed, detailed reporting is a must. A good OMS helps you easily track and filter your orders, cost, revenue, failures, and everything else. This helps you work on the failing aspects and improve it. 

In other words, the OMS ensures lesser errors and faster order fulfillment. This means you can take in more orders which in turn means more revenue for you. Hence, the primary, central, and most important benefit of using an Order Management System is that it increases revenue for you.

How to choose the right Order Management System?

Choosing the right Order Management System may be complex, especially if this is your first time. Well, here are some things to look for when picking your OMS so you get the return on your investment:

• Look for the primary features: Your OMS must have order tracking capabilities, inventory management, third-party integrations, the capability to print labels, send automated e-mails, detailed reporting, etc. These are the basic features anyone uses an OMS for. 
• Budget & hidden costs: Of course look at your budget but more importantly, check for hidden costs. Are all the features included in your plan or would you be asked to pay extra? Is there a refund policy? 
• Scalability: Any OMS will have a few limitations, specifically the number of orders, warehouses, and users. You must pick something that satisfies your current needs while providing you with upgrade opportunities when you need them in the future. It may be in the form of add-ons, upgrading to an entirely different package, or any other model. 
• Omnichannel support: Your OMS should be capable of supporting Omnichannel orders. It simply means the capability to accept orders on a website, physical store, mobile app, or multiple other platforms. It also helps detect and assign delivery/fulfillment to the nearest warehouse you’ve got which saves time and money for both parties.
• User-Interface: Try to get an OMS that has a free plan or a trial period to test out the UI. If it’s too complex for you or your team to understand, you probably should look elsewhere.
• Security: Simply ensure that your OMS offers enough password security, data security, and legal compliance. Talking with a sales rep or checking reviews are good ideas for this information. 

Conclusion

Your concept of what an Order Management System is and why it’s important is probably better by now, isn’t it?

If I’ve to sum up OMS, I”ll say it’s a 24X7 assistant who ensures my orders get delivered correctly, on time, with transparency while also keeping track of inventory and other issues. 

Note that there isn’t any absolute best Order Management System out there. They all have their pros and cons. Your choice will depend on your budget and requirements. However, the benefits of the Order Management System are more or less identical for most providers. Of course, some OMS may offer more benefits. I’ll urge you to try one for yourselves, most offer a free plan. That’s the best way to look into the benefits of OMS on your own.