What is an OMS? What Does it Do?
An Order Management System or an OMS is a software designed to help brands manage their orders to streamline their supply chain operations.Â
An OMS is mostly hosted online and offers automations that help simplify tasks such as instant communication among customers, brands and their suppliers while also offering order customization options.
Think of it as a supply chain management tool where all orders are managed. Whenever a customer places an order, it’s reflected in the online software that sends a notification out to customers, the brand, the supplier or the FC that is handling fulfillment.
Although that’s the basic idea of an order management system, most OMS come with functionalities that allow brands, customers and all authorized parties in the supply chain to make changes to their orders.
Furthermore, since all orders come through it, an OMS can serve as an important database that can be analyzed to have verifiable datasets. Best used when integrated or embedded in an ERP, an OMS can help with demand consolidation and forecasting as well.
Functions of an OMS
1. Order Routing
An order management system takes responsibility for routing orders across a single channel connecting all relevant parties involved in order fulfillment.
Getting a customer their ordered items as quickly as possible is something an OMS decides after considering factors such as geography and inventory availability.
If a company targets markets across various geographical regions and has several fulfillment centers connected on a single OMS, the software will decide which FC gets the responsibility based on proximity as well as availability.
Proximity will always be prioritized so long as inventory is available in the nearest fulfillment center. Another factor is that order management systems can be configured to factor in cut-off times.
Cut-off times refer to the window of time brands have to punch in their orders before the shipment departs from the warehouse for the day. To prioritize customer satisfaction with same-day deliveries, it’s imperative brands configure appropriate cut-off times.Â
2. Order Splitting
Depending upon inventory availability, an OMS may even be configured to decide whether to split orders.
Whenever an OMS encounters a situation in which an FC has some, but not all, items listed in order, it can decide whether to hold the entire shipment or to split the order in two, i.e., send whatever is available now on the first shipment and what arrives later on the next one.
The choice is for the brand to make. Whether you want to prioritize shipping cost reduction or customer satisfaction with perfect order fulfillment is a decision that should be made after considering your particular situation.Â
3. Order Cleaning
Order cleaning is another important feature offered in an OMS that proves why digital automation is far superior to manual order management.
It refers to the process of verifying the details of the order before routing the order through the supply chain for fulfillment. Order cleaning systems in an OMS are responsible for checking addresses against available FCs, items against inventories, and other important information.
Daily, companies encounter situations when orders are placed with faulty information or mismanagement of orders causes misplacement, i.e., an order meant for the NYC fulfillment center is sent to the NJ fulfillment center.
Another type of faulty order is when an order is assigned to a warehouse that doesn’t have the items set up as available SKUs.
It’s sometimes difficult for warehouse personnel to sort through faulty orders and apart from confusion, it also results in the loss of efficiency and productivity.
4. Order Queuing
Order queuing is an important element of an OMS that offers customers and brands to make required changes before finalizing an order.
The way it’s done is that when a customer places an order, the OMS creates a buffer, i.e., creates a window of time, before forwarding the order details for cleaning and routing.
This allows customers to verify the items they are ordering and provides companies a chance to make necessary changes or add important instructions before the order goes through.
Order queuing also makes it easy for stores and their buyers to cancel their orders without wasting the time and effort made by the supply chain.
While order queuing is essential for brands to configure, it’s important to understand that SLAs (Service Level Agreements) usually dictate cut-off times that you need to be mindful of.
For example, if your cut-off time is 2 PM and you configure your OMS to have a buffer of 2 hours, your actual cut-off time will become 12 PM as it’ll be the deadline for your orders to come through to the warehouse.
5. Demand Consolidation
Brands and eCommerce companies that are running their marketing and sales campaigns on multiple platforms and channels require demand consolidation, a feature offered by state of the art order management systems.
By collecting information on all orders made through all stores, online platforms or even call centers, an OMS can provide you with a clear view of your inventory and sales statistics. This helps get analytical reports that are used to make important business decisions.
Not only does this provide insight into consumer behavior but it also sheds light on the KPIs that help optimize order fulfillment.Â
Important Things to Consider When Implementing an OMS
Although there are several options in the market, it’s important to note the following key points before you get into the implementation process of an OMS:
1. Ensure Infrastructural Foundations Before Automation
One of the most common misconceptions startups have about automations is that starting off with the best technology is the ideal option.
While it’s true that a good tech stack can help a business grow, it’s not until a specific stage of stability and familiarity that a business is able to implement an automated system.
Regardless of the avenue or aspect of your supply chain operations that you’re looking to automate, you need to make sure that the manual handling of the process is reliable.
An example of this could be a business that is thinking of starting off with an OMS without having the right order management process in place with their FCs. Your OMS will inevitably prove worthless in crucial areas if there’s no foundational process to automate with it.
2. Have a Customization Window
It’s important for brands to consider having a buffer or a customization window in between order placement and fulfillment processes.
Order cancellations and order changes can make things very complicated for warehouses and FCs managing them.
Wrong orders or customizations that are made without buffers tend to reach warehouses where their fulfillment process begins, wasting the efforts of the warehouse and the order managers before they realize the orders have been reversed or changed.
Implementing an OMS is your key to having a customization window to avoid the trouble of having to contact your warehouse to make any changes.Â
3. Ensure Features and Functionality
The market is saturated and competition is tough in the software industry, which is why companies tend to advertise a lot. Sometimes this can result in interested companies being misled to believe a certain product is able to perform functions that they require when it actually does not.
For instance, some popular OMS in the market don’t offer brands the ability to handle units of measure such as pallets and cases.
From a startup’s perspective, all OMS may seem similar in terms of their features and functionality. However, what you require or how you want it may not be something catered to by the software that you’re considering to buy.
It’s important that a company identifies its needs and requirements before investing in an OMS because this isn’t a decision you can take back without repercussions. Although a vital supply chain management tool for a startup, an OMS is a long-term investment that should be analyzed thoroughly.
4. Fulfillment Centers Offer Dedicated OMS
Some fulfillment centers also offer their own dedicated OMS. An example of this is Happy Returns. This reverse logistics and returns management system provides companies with an OMS that is connected to their FCs across the map.
Although this works well for companies that rely on a single FC that takes responsibility for all their orders, it’s not a viable option for brands that work with multiple companies.
This is why it helps to have ownership of your OMS, as it allows you to integrate several FCs into your system. If you’re looking to find a middle ground, you can have a modern OMS or an ERP that is customizable enough to integrate the OMS of your FC into your system.
This way, both you and your FC will be able to work with your own software systems while sharing data and communications without compromising productivity and efficiency.Â
5. OMS Isn’t an ERP
An OMS isn’t an ERP, although it can be a part of one. It’s better to look for reliable ERPs for startups rather than a standalone OMS for several reasons.
Not only can an embedded or integrated OMS make coordination between various organizational departments easier, but it also simplifies data analysis for demand forecasting and consolidation.
By integrating an OMS into an ERP later on, or setting up an ERP from the get-go, startups can reduce the chances of creating data silos.
Best OMS for Startups
Now that we understand what an OMS is and isn’t, let’s take a look at the top options in the market that you should consider:
1. Shopify OMS
Shopify OMS is one of the easiest and most widely used order management systems simply because it comes integrated with the eCommerce store that the platform allows you to host.
Although it doesn’t provide all the cutting-edge functionality that other standalone OMS in the market can offer, it gets its stellar reputation because of its simplistic and integrated nature and its seamless order splitting.
Without even the need to set it up, Shopify OMS can synchronize your inventory, customer and order details while showing the merchant and the customer necessary information like print carrier labels and dispatch documentation.
Starting off with Shopify, many store owners seldom feel the need to evolve until a later stage in their business development lifecycle.
It’s when you need features like demand consolidation and order queuing that you feel Shopify’s OMS might be lacking. Â
2. Zoho
Zoho is one of the best CRMs in the market that also offers other features of a full-fledged ERP required by businesses. Many of these related to order management are offered in the Zoho Inventory module of the software.
The grouping of inventory management and order management in a single module allows Zoho to synchronize your inventory stock with your orders in order to stay ahead of out-of-stock situations.
By allowing several integrations with different platforms like Amazon and Shopify, Zoho can synchronize your orders and consolidate demand.
This, along with real-time order tracking features, helps keep things simple from a company’s perspective.
Confirming packaging, shipment, and fulfillment statuses on one tab and reconciling accounts on another tab makes a lot of important and difficult tasks a lot easier.
Since the software does most of the automated calculations for you, the only thing left to do is look at analytical reports to make business decisions.
3. OrderHive (Cin7)
OrderHive, now a part of Cin7, is a comprehensive order management system that provides almost all the latest features and functionalities expected of the software.
Integrations that synchronize order and customer details over the cloud as well as for offline use along with automations for 3PL, dropshipping and FBA make OrderHive appealing for startups to medium-sized businesses.
Other features that OrderHive offers include real-time shipment tracking as well as bulk action on orders. Whether you want to edit, remove, clone, export or import, ship or even print the details of multiple orders, you’ll have the capability to do so. Â
Additionally, the software also allows you to create protocols to follow whenever it encounters out-of-stock situations. This means you can automatically dispatch POs for inventory to automate your cycles.
With smart routing options and order cleaning functionalities, you can save time and resources. OrderHive also offers businesses the option to set up barcode systems to work with FCs and warehouses seamlessly.
Coupled with OrderHive’s multi-currency support, payment management processes and financial reconciliations in the OMS can be done in a matter of minutes.
4. Linnworks
Linnworks is a great OMS for startups that provides consolidated order and inventory management modules that help streamline order fulfillment from placement to delivery.
This OMS offers multichannel order management that connects brands and orders with the right 3PL and suppliers in order to maintain inventory stocks while prioritizing timely shipping.
Not only can you assign shipping carriers for individual orders, but you can also set protocols for order cleaning and sorting to automate your tasks.
Other features of the OMS include order packaging, robust shipping management, post-purchase customer experience and most helpful of all, analytics and reporting.
Ideal for startups and small-scale businesses that are witnessing growth in order numbers and geographical reach, Linnworks can help make several order management related tasks simpler.
Deciding on an OMS?
It’s important that you consider your current business needs and strategically prioritize your requirements as you grow to save time and resources.
You don’t need an OMS until you have a high volume of orders to manage or you are getting orders from multiple channels that need consolidation.Â
Since an OMS isn’t all you need to manage your supply chain operations, you should consider the modules of or an entire ERP that you’ll require. Â
If you need assistance or consultation regarding the decision you should make, feel free to contact experts at Izba to make things simpler and easier!
