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Why Retailers Need Order Management Systems

 

In an increasingly competitive eCommerce environment, order management is fast becoming the biggest differentiator between businesses. The retailers with the edge are using an order management system (OMS) to maximise customer fulfilment and loyalty, while also increasing efficiency, consistency and reducing costs.

Below we explore what an OMS is and how it works. Then we will discuss the main benefits and how to choose the best one for your business.

What is an OMS?

The primary purpose of an OMS is to manage the lifecycle of customer orders. An OMS handles the order process from the point of capture to completion, including delivery and return of items.

An OMS performs three main functions, as follows:

 

Order lifecycle management

This involves controlling how and when an order is created, and what stages it needs to pass through before it can be fulfilled or shipped. Rules for when and how an order can be amended, cancelled or returned are also handled at this point.

Inventory management

Importantly, an OMS holds stock levels for all fulfilment points (i.e. multiple stores or warehouses). This ensures that the products on a website match the true stock status of the product. It also feeds back the status of the order from the fulfilment point. An example of this is the OMS communicating to your eCommerce store, telling it when the warehouse has shipped the order.

Fulfillment management

This involves using automated rules and functions to route the order to the best location or locations (for multi-warehousing) for shipment.

How does an OMS work?

An OMS uses a complex set of algorithms to automate a significant part of the order process. To further explain how it works, let’s look at a typical four-step customer transaction with a retailer.

The customer shops

As the customer browses, the OMS provides an accurate and updated inventory in real-time, ensuring that available items match stock lists.

The order is processed

After the customer has completed their purchase, inventory numbers are updated. At this point, the OMS uses its algorithms to route the order to the best centre for fulfilment. If the customer chooses the ‘click and collect’ option, then the order is sent to the customer’s desired location to be set aside for pickup.

However, if the customer chooses delivery, the OMS analyses the items required to fulfil the order and determines the best warehouse and shipping location to efficiently carry out this process. The only manual effort required is packing the items and sticking the customer’s delivery details to the package.

The order is shipped

The customer’s order is now ready for delivery. Based on order size, delivery location and method, the OMS will link up with the courier, tracking the item until it reaches the customer.

The order is returned

This customer has decided to return an item from their order. Returns are often a problem for customers and retailers because overly complex and expensive return policies discourage repeat purchasing. Slow process speed and poor integration also reduce efficiency and profits.

However, with the benefit of an OMS, customers can return items in-store or via post and be refunded, regardless of the channel they purchased from. The retailer’s inventory is then updated accordingly so the item can be ready for immediate resale.

The highest performing retailers are switching to order management systems to streamline their fulfilment needs and enhance customer experience.

For more information on how you can achieve fulfilment success for your business, and with over 250 certified team members, eWave is the world’s most accredited Magento 2 partner.

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Carmel Zein
Brand Marketing Manager

Mar 03, 2017