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A guide to order management systems

Capturing, tracking, and fulfilling orders across multiple e-commerce channels can be tedious. But an order management system (OMS) can help alleviate manual processes for your sales journey.

What is an OMS?

An OMS is a computer software system that automates tracking the number of sales, orders, stock, and fulfilment. Some of these solutions can also help brands monitor people, processes, and partnerships. Handling all the functions involved with managing customer orders enables your team and customers to track the process and analyse its efficiency from start to finish.

The importance of your business adding an OMS enables you to prepare for the increase in sales as your business expands. By automating the tedious, manual steps throughout the order management process, your team can save time and money, while efficiently allocating resources.

No matter how big your business is, you need to be able to meet customers’ expectations as they’ll be ordering products through several different digital channels. Also, they’ll want an option for in-store pickup or delivery, and the ability to return or exchange your product at a designated location.

As shipping fulfillment times become faster, adding order management to your process will be necessary. Without this process in place, orders within your platform could:

  • Get missed.
  • Be inaccurate or wrong.
  • Go unfulfilled.
  • Take longer to ship than initially determined.

If a customer experiences any of the situations mentioned above again and again—or even just one time—that customer might cultivate a negative perception of your business’s operations, making it easier for competitors to offer a better experience.

In short, adding an OMS to your process helps:

  • Align sales agents and online platforms.
  • Track success with analytics.
  • Manage complex shipping schedules.
  • Coordinate stock with available orders across multiple channels.
  • Ensure order fulfillment when using third-party logistics.
  • Eliminate human error with manual entries, as well as inefficiencies and inconsistent resource allocation.

The features of an OMS

Implementing an order management system that complements its current infrastructure is vital to capitalise on the digitization of sales and its subsequent acceleration. Order management functionality can be the deciding factor in your business’s success. An OMS offers support within five areas in the order management process:

  1. Accounting integration
    Comprising of all the financial data allocated from your OMS to teams like accounting, purchase ledger, and sales ledger, helping your team to streamline your financial data, and eliminating the need to reenter or transfer manually.
  2. Customer database
    All of your customers’ contact information and activity that helps service representatives recognise all your most profitable users.
  3. Stock management
    Providing a consolidated view of your stock to manage and track stock stock levels, as well as algorithms that route orders to the next suitable warehouse and the best shipping options. These algorithms will be used through the entire stock management process stages: picking, packing, shipping, and tracking.
  4. Sales channel
    Your OMS will receive and consolidate order information through all points of sale, including online, in-store, and customer service orders. This could also include support orders from global regions with multiple currencies.
  5. Sales support
    Product information is updated in real time, supporting your omnichannel customer returns and exchanges.

By using an OMS platform to help in those areas of business, your company can:

  • Fulfil customer needs across multiple channels for a seamless e-commerce experience, eliminating your team’s time on fulfilling orders and training teammates. It also gives a high-level overview of orders, cutting down on mistakes and human errors, and putting all the real-time data you’ll need in a single location.
  • Eliminate manual processes.
  • Report and forecast stock needs to avoid over-ordering or overselling. During unexpected demand fluctuations, you’ll be able to connect to your stock channels to enact a merchant-fulfilled strategy.
  • Integrate across company systems like ERP, including warehouses, customer service teams, and accounting.
  • Take orders from multiple countries in multiple currency types. As the world becomes globalised, your team needs to be prepared so you’re able to grow in new markets with ease.

Some tasks that an OMS can handle are:

  • Optimising and automating order fulfilment.
  • Mitigating process disruptions.
  • Managing the order lifecycle.
  • Responses to ever-changing business models.

The benefits of an OMS

No matter the size of your company, implementing an order management system can improve your business operations from the top down. Here’s just a few of the several benefits to adding an OMS to your business.

  • Automation. An order management system relies on automation, from operating your storefront to delivering your product. This lets you save on manual labour, helping reduce labour costs. As fulfilment windows are becoming shorter, an OMS chooses the warehouse or fulfilment location, dictates the order of fulfilment, and sends a fulfilment request to the warehouse so the staff can prepare for the order.

    Because you’re able to shorten the fulfilment time, you’ll be able to re-allocate resources used to focus on more intricate parts of your business that help growth and customer satisfaction. It’ll also increase data security, a significant component in today’s increasingly digitised world.
  • Less human error. As one of the top sources of fulfilment mistakes for warehouses, human errors can cause significant problems. No matter the size of the error. By implementing an accurate order management system, tasks are handled automatically. An OMS can perform multichannel stock control and warehouse optimisation by sending alerts on everything from stock levels to possible liquidation needs. This helps prevent shipping delays, marketplace fees, and dissatisfied customers.
  • Real-time reporting. Processing orders takes time. While updating your system, new information is constantly coming through. And when you are manually adding these items in by hand, you may not always have the most up-to-date information at hand. An OMS can provide real-time data for orders, stock, and customer information. This type of data is a great companion to your website analytics, ensuring your marketing strategies are successful in procuring customers long term.
  • Prevents stockouts by forecasting stock. If your business doesn’t have access to forecasting software and stock levels, you won’t be able to track when to stock your warehouse. This leads to two big problems: overstocking and stockouts—meaning you either have large quantities of unsold stock sitting in a warehouse or not enough stock to fulfil demands. Adding an OMS tackles both problems.

    You can better forecast top- and high-selling seasons, popular products, and buying trends. You’ll be able to pinpoint precisely how much warehouse space you’ll need for your products, always having the right amount of stock at any given time.
  • Single source of truth. Your OMS dashboard will have all the information you need to track your business and sales. Combining accounting, stock, and customer information, you’ll be able to build new strategies efficiently.
  • Ease of scale and multichannel opportunities. As your business continues to grow, having an order management system that can grow alongside your company is crucial. In becoming a multichannel operation, you’ll need to track orders as their fulfilment becomes complicated—customer traffic flows through multiple channels. You’ll need to follow orders through a range of marketplaces and websites. An OMS can centralise those orders, track its data, update stock, and order routing.

The OMS step-by-step process

Most order management systems follow a six-step process to help accurately and quickly process and fulfil customer orders. This process thrives on ensuring you’re meeting all of your customer’s needs while offering customers a ubiquitous yet personal user experience. The six steps are:

  1. Discovery
    The first step of your order management process comes from the customer. Whether through your online shop, a third-party website, or over the phone, the customer will place your product in an online basket and immediately adjust your current stock. The system can also alert you if the item is simply in the basket or if it the customer abandoned it.
  2. Order placement
    After your customer decides to purchase the product, the OMS communicates with your accounting or financial team to verify credit card payment information and process the order. Once the order is approved, it’ll be routed to fulfillment.

    Wholesale or business-to-business sellers can choose an invoice model, opting to receive a quote first for bulk purchases. Then, they’re sent an invoice to be paid by a specific deadline.
  3. Order fulfilment
    Once the order arrives at the warehouse, your OMS will choose its closest or most accessible option in proximity to the order destination, then calculate shipping costs and quickest carriers. An OMS might be able to help print shipping labels, delivery notes, and receipts.
  4. Warehouse management
    Having a SKU and barcode for every item will be crucial in this step. If a product has both, it increases the fulfilment accuracy and makes it easier for your warehouse to scan your product and add it to the order. There are four methods to picking items from your warehouse:

    Single order. Items from a single order are picked and delivered to the packing station.

    Batch picking. A picker is assigned a certain number of orders in a single round to pull and bring back to the packing station.

    Zone picking. Each picker gets a designated warehouse zone, and the items in those zones are added to an order as they pass through each.

    Wave picking. All zones are picked simultaneously and brought to a single spot for consolidation.

    If an item is out of stock, your OMS can communicate with your suppliers and suppliers to send a replenished supply to the warehouse in advance. Creating a reorder point keeps your stock consistently stocked. It’ll automatically place a new purchase order when it hits the low threshold while also alerting warehouse managers of the possible delay in fulfilment.

    The order is also sent to your accounting department or alerts your accounting software to the new purchase. A solid financial management solution makes it easy for monthly and end-of-year auditing, taxes, and more.

  5. Shipping
    Once the order has been selected from the products in your warehouse, your packing team will retrieve the items from your warehouse and scan them for stock purposes. Next, they’ll pick, pack, and ship your product from the details your OMS provided. Three things to consider in your packing efforts are:

    Order accuracy. Ensure each item is in its correct order.

    Box size. Plan to incorporate dimensions into your prices. Having three to five standard box sizes helps keep costs down without overcomplicating your process.

    The proper packaging. Some packing material may have better protection for your product but might cost more. Choose the right kind that is both cost-effective and ensures a safe journey.

    Tracking. Your OMS can also send the customer a notification that their product has shipped and estimated arrival times. You and the customer are able to track the product from its initial shipment in your warehouse to its destination.
  6. Post-sales follow up

    After the product has left your warehouse and the designated time after the shipment’s arrival, the OMS should automatically send an email to the customer asking to rate the product and ensure everything in their order was received. This follow-up should also entail detailed instructions on contacting customer service.

    If you have an unsatisfied customer, an efficient return and refund policy and instructions should be easy to find and follow. An OMS can quickly process a refund request and communicate with the accounting team to process the refund. Your OMS can also connect to your returns provider to ensure all your data is accurate and updated.

There are also instances where your OMS can flag special orders—whether they are return replacements, thank you gifts, or VIP orders. When these orders are processed through the system, your OMS can flag them with a unique code, allowing your customer retention team to track for accuracy personally.

Challenges of order management systems

If your business isn’t large enough or doesn’t have enough orders to support implementing an OMS, adding this type of platform could be too time-consuming or expensive. Before you add this system to your process, learning about the possible obstacles ahead could be beneficial for your team and the business. Some challenges that might occur within the order management process are:

  • Complications in implementation. Adding a new system to your process—on top of the legacy solutions you’ve already implemented—can feel complicated and overwhelming.
  • Price Ranging from hundreds to thousands of pounds, there are plenty of order management systems to choose from—and expensive doesn’t always mean best. If your business can’t afford a comprehensive ERP system, focus on adding a more robust operations system.
  • Making the right choice. There are so many order management systems available that it can be challenging to decide which will work with all of your needs. By going through your checklist and placing your must-have items in a hierarchy with your nice-to-have items, you’ll be able to see which OMS would be the best fit for your business.

Deciding on an OMS suitable for your business takes time and buy-in from many of your teammates. In order to make sure you choose an OMS that works for everyone, you’ll need to ask questions to find what works best for your team.

Considerations for choosing an OMS for your business

Every order management system is different, so you’ll need to figure those needs first and tailor your OMS to fit as such.

First, identify your goals and objectives. The first stage is to understand the who, what, and why of your OMS. You’ll need to hold a meeting with stakeholders, ranging from team members, to suppliers, to customers, and determine which features are necessities and which are a nice-to-have item. In these conversations, be sure to discuss the future of your business and viable solutions’ scalability. You want to choose an OMS that can grow alongside your business.

Next, create a request for proposal. You’ll need to draft and submit a request for proposal (RFP) to order management solution suppliers to help finalise your decision. With this RFP, you’ve ensured you and your supplier will be on the same page when it comes to the technical requirements and limitations of your solution, and how you’d want it to function. Make sure to provide suppliers with the following so they can craft the best proposal for your organisation:

  • Volume of orders
  • Number of SKUs
  • Existing software of hardware
  • Details on your training and enablement process
  • Your implementation transition timeline

Finally, evaluate and compare. You may have several suppliers on your list with various proposals. You’ll need to decide if your OMS is a single software solution or several tools and processes. You’ll also need an OMS that connects e-commerce with customer support so they’re able to access your automated customer service. You’ll want to curate a unified digital experience on a premium platform using the latest technology. Some questions you can ask yourself in making your decision are if each system:

  • Eliminates manual processes through automated workflows?
  • Supports multiple warehouse locations?
  • Provides real-time stock updates?
  • Adds new feature functionality?
  • Provides reporting and forecasting to better identify problems and anticipate change?
  • Manages sales across multiple channels, currencies, and geographies?

Getting the most out of your newest software is the ultimate goal for you and your team. While you might not find a single order management solution that fits every bullet point of your criteria, you’ll learn what you need for the lifespan of your business. Deciding on the best OMS solution for your team will help take your order fulfillment and business operations to the next level.

Choosing Dynamics 365 as your next OMS

For any expanding business, implementing an OMS that seamlessly integrates with your current processes is the next step for building and retaining your customer base.

Allowing customers to see your stock in real time and the ability to safely and securely order through a secure payment process are the most crucial elements of your e-commerce. A fast and reliable order management system that allows businesses to sell on multiple channels, as well as generates automatic sales orders, should be a part of any marketing and sales strategy. The right order management system can help you achieve a cohesive ordering and purchasing experience by proactively orchestrating your order fulfillment efforts and optimising order flows.

A solution like Dynamics 365 Intelligent Order Management will help you scale your operations with ease while gaining real-time insights that help manage every aspect of your order lifecycles. By providing greater flexibility, transparency, and on-time delivery with your next order management system, your business can ensure a positive customer experience every time.