What does is an Order Management System and what does it do?
An order management system, or OMS, is a computer software system used in multiple industries for order entry and processing. It is mostly used in the logistics, shipping and fulfillment industries by fulfillment warehouses and third party logistic companies, or 3PLs. The way an Order Management Solution usually works is by receiving orders from businesses, consumers, selling channels, shopping carts, or a mix of all the above, depending on the products. Offers and pricing can be done via catalogs, websites, or network advertisement. Order Management software is usually integrated with numerous modules including, but not limited to, product information such as descriptions, attributes (weight, height, length, width, etc.), locations and quantities, inventory available to ship, inventory sourcing, vendors, purchasing, receiving, marketing, customers and prospects, order entry, customer service (returns, exchanges and refunds), final processing, order processing, data analysis, data reporting, and financials. As you can see an OMS can get extremely large very quickly depending on which modules it is integrated with.
There are several business industries that use Order Management for different purposes:
- Telecommunications companies use OMS to keep track of customers, accounts, verify credit, deliver products, billing and more.
- Retail companies use Order Management Solutions to keep track of orders for customers, to track levels of stocks, to package orders, and to ship orders.
- Pharmaceutical and Healthcare companies use Order Management Systems for a variety of purposes similar to Retail uses.
- The Automobile Industry uses OMS to keep track of their parts, which are sourced from OEMs.
- Financial Institutions also use Order Management Software for multiple reasons.
Order Management requires multiple levels in a process to sequence tasks such as capture, validation, authorize payments, check fraud, source, manage backorders, pick and pack orders, ship packages, customer communications and other similar tasks. Order Management Solutions have to have workflow capabilities, which can manage these processes in an efficient and accurate way for them to truly provide value to their users.
Why is an Order Management System Important For Vendors And Warehouses?
An Order Management System is hugely important for third party logistics (3pls) and fulfillment companies since it is used to oversee an important step in the overall fulfillment workflow. An OMS that is both accurate and efficient can shave large amounts of waste and errors from the fulfillment process, which in the end provides a large return on investment for the end user. Warehouse employees that use powerful Order Management Software can process a larger amount of orders in shorter amount of time while still having the necessary quality control safeguards in place to prevent errors or mistakes. In return, customers receive their packages quicker, and the 3PLs enjoy massively less returns and refunds which saves everyone headaches and, more importantly, money.
There are many other reasons why an OMS is key for the success of third party logistics companies and fulfillment warehouses alike but to go over some of the major ones, they are:
- Order management software can be a very useful tool for any company to help it operate more efficiently, while decreasing the overall manpower required, while utilizing the most modern tools in operating management technology and software.
- An OMS is a start-to-finish software platform, which provides companies with a logistical solution that saves both time and resources and increases employee output.
- An Order management system can be tailored and fine-tuned to provide manufacturers and retailers with a solution that solves individual needs and achieves specific goals.
- Compared to how distribution centers used to operate, an order management solution is extremely more effective and exponentially less error prone.
One final point to touch on about the benefits of an OMS is that it provides full transparency for both the fulfillment organization and their end customer so that they have a full informed view of their inventories and orders as they are fulfilled and processed. This is key since errors can be spotted that much quicker and resolved at such a pace that even a few years ago was unheard of in the industry. By fully automating the order fulfillment and order processing system the effectiveness of each employee, and the overall company itself, is multiplied over time and management quickly sees the return on investment. By increasing their output a 3PL can service many more customers than they originally could in the same amount of time, increasing profits as their company continues to grow, while maintaining an acceptable level of quality control.
Problems with current Order Management Systems:
The current problem with OMSs is that they are great at solving part of the process but by themselves they cannot be the end-all solution for a third party logistic company that has to manage a warehouse and inventory for multiple different clients that have immediate needs in terms of order fulfillment while having to keep track of their inventory and make sure everything is accurate. An OMS integrated with a Warehouse Management System can create errors if the two do not have 100% synergy with one another. This leads to even more errors and problems than the Order Management System originally solved.
Another major problem with the current Order Management Systems is that they are not adapting to the growing amount of options and choices in the market place for both retailers and eCommerce businesses. It seems that every year the amount of selling channels or shopping carts available online seems to double or even triple and without being able to cater to all these new options an Order Management System quickly becomes obsolete which has started to become the case with the majority of OMS providers. The speed at which an Order Management System can integrate with the growing amount of choices available is key to its long-term survival.
Possible Solutions to the above problems:
The obvious solution to these problems for 3PLs and fulfillment companies is to have an Order Management System that is fully integrated with both an enterprise resource planning software and a warehouse management system that are all highly developed and technologically advanced. The OMS must also have omnichannel capabilities and be able to be continually advancing and updating its integration options so that it can keep up with the rate of growth in the selling channel and shopping cart industry. There are not many options in the market that currently provide both an OMS and a WMS (Warehouse Management System) as one software platform but some of the ones that do fail to have the synergy that is required for these mergers to work effectively for third party logistics. Shipedge is one of the only solutions that truly provide an omnichannel order management system that can funnel orders from almost any selling channel or shopping cart currently available into one software platform and provide the 3PL a robust warehouse management system as well, which absolutely benefits both the fulfillment provider and their customers.
The Future of Order Management Systems:
The future of OMS seems extremely bright and will only continue to get better as the amount of people going to the Internet for their needs continues to grow exponentially. The amount of business done through eCommerce is continuously growing, not only in the United States but also in the entire world. As the amount of players in the industry continues to grow and the amount of options continues to get larger the logistics and fulfillment industry will have to step up with the necessary software tools for 3PLs and fulfillment providers so that they can service this growing industry with the right tools at the speed which is expected and the accuracy that is hoped for. The omni-channel capabilities are key in the future of Order Management Solutions and those companies that realize this and pivot in time will be able to survive but those that continue to deny the growing evidence of the omni-channel revolution will not survive for long. Shipedge is leading the way in providing robust order management that has omni-channel capabilities while being an all-in-one software platform and including a warehouse management system that is quickly becoming the obvious choice for 3PLs and etailers alike. How big the industry and market is going to get is yet to be determined but one thing is for certain, the growth is nowhere near slowing down.
CHECK OUT SHIPEDGE’S OMS -> http://www.shipedge.com/ecommerce-oms-software/
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