What Is an Order Management System?
An Order Management System is a computer software program that allows businesses to manage their orders and inventory. Web Order management systems help ensure more accurate inventory management, automatically entering new inventory into the system, tracking sales through different selling platforms, such as eBay and Amazon, and alerting you, the business owner, when your stock of a particular item drops low enough for a re-order.
An web order management system can also automate the order-to-cash process, beginning with the customer order through payment reconciliation, fulfillment, and shipment. Web Order management software can work for both B2B and B2C businesses of any size.
Order management software is also shareable, from the customer service team to the accounting team, the warehouse staff, and you, the business owner. The best kinds of inventory management systems also have an order management app, allowing you to manage your stock on the go and spot-check your business in real-time.
Effective web order management improves the business workflow and increases the likelihood of repeat customers.
Functions of an Order Management System
Most web order management software programs follow a 6-step system, relying on automation to help employees accurately process and fulfill customer orders. When used properly, order management software produces a seamless flow from entering invoices through after sales follow-up. The smoother the software runs, the faster you can fulfill orders, and the less likely your customer receives the wrong item or experiences the frustration of backorders.
1. The order is placed
Your customer places an order through your third-party sales site, your own website, or over the phone with a live representative. Online, your customers will enter their details on a standardized form, with an option to have a securely saved preferred payment method.
To improve the sales process, make all fields of your online form mandatory so that you have all the necessary contact information for the customer up-front. This creates a customer profile and allows your order management system to track their purchase history, the volume of orders, and payment and delivery preferences. It also gives you their phone number and email address, should you need to follow up with service recovery.
The payment is processed, and then the order is sent to the warehouse once your software system approves the charges.
2. Warehouse processing
Once the order arrives at the warehouse, it’s checked by the intake team and the item or items are “picked” from the stock. Having a SKU and barcode for every item increases the accuracy of fulfillment and makes it easier for pickers to simply scan the item and add it to the order.
If there isn’t enough of the item(s) in stock to fulfill an order, then a purchase order is automatically placed through the order management software. You and the warehouse manager will receive an alert that there may be a delay in fulfillment. Your customer may receive an automatic notification of the delay, and the customer service team can follow up with your customer.
3. Reconciling the order
Next, the order is sent to the accounting department or preferably it should sync automatically with your cloud accounting software, where it’s recorded in your A/R ledger. The sale is logged and a receipt sent to your client. Automating your sales ledgers makes it easier for auditing, inventory reconciliation, and end-of-year taxes.
4. Shipping the order
Once the order is picked from the warehouse, your packing team will double-check for accuracy, again using the barcodes and SKU. Then, the order is packed carefully and shipped via a third-party delivery system. Your customer will receive a notice through the order management system that their order has shipped, along with a tracking number and estimated delivery time. As a store owner, you can also track the progress of shipped orders, which can be helpful if there are special needs orders, such as re-deliveries, VIP orders, or unusually large ones.
5. Post-sales follow-up
Once the order arrives, the software should generate an automatic email to follow up, asking how they liked the items and ensuring that they received everything accurately. This email should include detailed instructions on how to reach customer service if there are any issues, taking the frustration out of guessing how to obtain a refund if needed.
Your customer service team oversees this process, thanking the customer for their business or working with them for a refund or replacement.
6. Special order oversight
Another aspect of good OMS is the ability to flag a special order. This may be a return replacement or it could be a VIP order that includes a free thank-you gift or special coupon. When these orders are placed through the system, the software can flag them with a code, allowing you or your customer retention team to personally monitor the order for accuracy.
Benefits of using an Order Management System
There are several benefits of using an OMS, most notably improved customer service through increased accuracy.
1. Efficient automation
OMS rely on automation, from operating the storefront through delivery. Using software for order processing saves on man-hours, reducing your labor costs. This frees your team up to focus on greater customer satisfaction and growing your business. The best order management software programs also have increased data security, increasingly important in today’s online world.
2. 24-hour access
You can track your business anytime, anywhere from your phone, laptop, or PC. Plus, customers have the opportunity to buy anything you sell, anytime, and from anywhere. You’ll receive greater data control and more efficient order processing, while your customers can quickly get what they need.
3. Improved business growth
Automation of the cash-to-order system leads to standardization of the order process across many different sales channels. You’ll have more time to collect and analyze customer data, helping you tweak your online store for selection and develop greater customer relationships. You’ll be able to forecast sales with more accuracy.
4. Accurate inventory management
Automation inventory management reduces “user error” from manually inputting items online from a spreadsheet and makes it easier to determine what you need to order and when. You’ll reduce over-selling and over-ordering.
5. Centralized data
Your order management dashboard should combine accounting, inventory, and customer information. Combining all these systems makes it easier for a quick overview and allows the OMS to track your business and sales. You’ll be able to find what you need in one central place, and your team can, too, improving their efficiency.
6. Real-time information
With up-to-date information at your fingertips, you can address any issues that arise fast – before they impact customer service or interrupt the sales cycle. Being proactive about any customer service issues or product delays helps you grow your business.