Shopify Ecosystem

What Is An Order Management System? What Are The Definition & Benefits?

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When you start an online business, the number of orders placed by customers in the beginning is low. Over time, orders gradually increase, and at some point your business will have 100’s of orders in a single day.

When the orders are low, it is easy to manage them without a streamlined process, but with an increased number of orders, you must have a set system in place to handle everything on time. An order management system comes in handy here as it is a crucial part of running any goods-based business.

Keep reading to know more about what exactly an order management system is and why it should be incorporated into your business right from the start.

What Is an Order Management System?

Before jumping right into it, let’s take a look at order management.

Order management is the entire process through which the products that a customer requested reach the end point from the storage, the starting point. In a sentence, it looks simple, but the order management process is fairly complex and involves several complicated steps such as inventory, sales, packaging, and other related tasks of logistics.

The process involves contributions from several other departments like accounting, customer service, warehousing, and more. From the moment the order is placed to the moment it reaches the customer, many detailed tasks come together to make that happen.

In the case of a business that gets several orders in a day from different channels like social media, websites, retail stores, etc., it can be hard to manage the entire delivery process in a simple processing document. You need to have an order management system.

An order management system (OMS) is software or a platform that makes order processing smoother and easier. It gathers all orders in one place for hassle-free delivery and fulfillment. An OMS also helps in the management of related tasks like tracking sales and inventory, handling return orders across different channels, and more.

Have a look at a few features an OMS should have and the things that an OMS must do.

Features and Functionalities of an OMS

The size and complexity of the OMS that different businesses require depend on the type of organization. Large businesses with more orders will need to have a more comprehensive system for order management, while some other companies might do fine with only basic features. In general, there are a few properties of an order management system that you should look for in the software.

Tracking All the Orders

This is the central feature that all order management systems have – tracking the orders placed via different channels. A good order management system should not only be able to handle orders placed on the e-commerce store, but it should also be able to track orders on channels like the website, over the phone, social media, and more.

Tracking orders placed across different platforms for the e-commerce business and accumulating them in one place should be made easy by using the order management system. The process should be made error-free and efficient.

By using the OMS, the staff should be equipped to track where the orders are and where they are, make modifications as required, and more such tasks.

Inventory Management and Monitoring

Inventory is another huge part of the OMS. There is no order if there is no inventory. You have to manage inventory so that the right amount of stock is always available in your backend.

If the stock in the backend is less than the purchases made through different channels, you will have to turn customers away and cancel orders. This can lead to customer dissatisfaction.

In case of excessive inventory, if the orders don’t match up, you will have to face the issue of wasted stock. The space in the warehouse will be wasted, and all the money you spent on getting the inventory and storing it will be wasted too.

A successful ordering process needs to forecast the inventory requirements correctly. Improper forecasting can significantly impact the sales and ordering process. You might end up facing a huge loss.

An OMS should be able to record inventory and show you the level of stock at the back-end in real-time. As the level of inventory changes when a purchase is made, the OMS should update the system and show the staff where the stock is at right now. This will help you stay ahead of inventory and manage it aptly without serious loss.

Order Fulfillment

Another point that the OMS should help you with is order fulfillment. Tracking the order and the inventory is essential, and so is the order fulfillment.

Order fulfillment involves several tasks like printing the shipping labels automatically, locating the correct warehouse, and sending and allocating the inventory in the correct one too, and more such tasks that lead to the order being delivered to the customer.

By streamlining this process, the order will be completed efficiently and reach the customer in due time.

Benefits of an Order Management System

The order management system is not a choice for most big businesses. It is a necessity. Even with a large staff, it is difficult to manage an influx of a huge number of orders manually. A computerized system will keep everything lean and running smoothly by completing tasks automatically and updating the system with the required information so the processes keep running.

Here are all the top advantages of having an order management system do the work for you.

Automation of Tasks

We are living in the world of automation. We are fast moving towards having everything automated in our lives. This is because automation eases things and harbors efficiency.

If menial and repetitive tasks are done by an automatic system, it will not only spare time for the workers to focus on real activities but also increases productivity. Automation of the order process via the OMS leads to minimal errors in the ordering process, speeds up the process, saves the expense of hiring manual labor, and several more advantages.

Full-Time Access to Information

An online order management system means that it is available for consulting and changes at all times. You can check up on sales and inventory or do other business-related tasks from anywhere in the world. You can be sitting at home and managing orders from there. You have access to order information at all times.

Availability of Real-Time Information

Since the order management system shows information in real-time, it saves the company a lot of effort. You can check up on the updated information and handle any possible issues immediately. If you see low orders, you can at once take action to increase marketing efforts or promote your products.

Real-time information lets you handle real-time issues before they get out of hand.

Centralization of the Ordering Process

An order management system gives you a centralized view of all the business happenings. You can see the order rate, when the most orders are placed, the inventory level, and more such information related to orders and purchases. All the necessary information related to fulfilling an order is found in one platform which reduces errors while completing orders and increases customer satisfaction, loyalty, retention, and more.

Key Takeaways

With the latest advancements in technology and e-commerce businesses popping up everywhere, people are demanding speedy and error-free service because they have more options today.

To keep up and fulfill orders correctly, you need to invest in an order management system that will centralize all your order-related tasks. It will help you track purchases, sales orders, and inventory and monitor the situation 24/7. This will lead to high productivity and efficiency, which will, in turn, increase the number of orders and sales.

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