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Complete guide to order management systems: types, benefits and examples, selection tips

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What is order management?

Order management simply refers to the way businesses handle customer orders from start to finish. It includes all aspects, from the customer’s order to the delivery of the products. Efficient order management plays an important role in ensuring smooth operations and customer satisfaction. It therefore involves checking order details, adjusting inventory levels, organizing the shipment of ordered items, and responding to returns and complaints when they arise.

What is an Order Management System (OMS)?

An Order Management System (OMS) is a software tool designed to streamline and optimize order processing. In other words, it acts as an operational assistant, guiding you through every step of the order management process.

Some of the key tasks that can be automated with an OMS include:

Order Processing: Quickly capturing and confirming orders without the need for tedious manual data entry.
Inventory Management: Monitoring stock levels in real-time and automatically reordering when inventory is low.
Shipping Coordination: Planning delivery routes and tracking shipments, ensuring customers are informed about the estimated arrival time of their orders.
Customer Communication: Keeping customers updated about the status of their orders at every stage, enhancing their experience.
Reporting and Analytics: Gaining insights into sales trends and order patterns to support decision-making.

An OMS helps businesses minimize errors, save time, and improve customer satisfaction.

Types of order management systems

Order Management Systems (OMS) are crucial for efficient order processing. Below are the most common types of OMS, along with their key features and benefits:

Manual order management

In manual order management, orders are processed without automated systems, often using spreadsheets or paper documents.

Features:

Handwritten Order Entry;
No Automation;
High Susceptibility to Errors.

Advantages:

Low Initial Investments: No need for expensive Order Management System software or tools.
Ease of Use: No complex training is required; intuitive for small teams.
Full Transparency: Every step of the process is traceable, simplifying error identification.

Standalone order management software

Standalone Order Management System (OMS) solutions are specifically designed to automate and optimize the entire order process.

Features:

Automated Order Processing;
Real-Time Inventory Monitoring;
Integration with Shipping Providers.

Advantages:

Reduced Processing Times: Faster order fulfillment thanks to automated workflows.
Increased Customer Satisfaction: Quick and accurate order handling enhances the customer experience.
Optimized Inventory Management: Improved stock control minimizes overstocking and shortages.

ERP software

Enterprise Resource Planning (ERP) systems integrate various business areas, including Order Management Systems (OMS), into a centralized solution.

Features:

Comprehensive Data Integration;
Centralized Management Functions;
Advanced Analytics and Reporting.

Advantages:

Holistic Overview: Offers a centralized view of all business processes, enhancing decision-making capabilities.
Cost Reduction: Improves efficiency, reducing operational costs across multiple departments.
Flexibility and Scalability: Adapts to growing business needs and evolving organizational structures.

E-Commerce platforms

Many e-commerce platforms offer built-in features for order management, specifically designed to meet the needs of online retailers.

Features:

Integrated Order Management Tools;
Payment Provider Integration;
Automated Inventory Updates.

Advantages:

Multiple Payment Options: Supports various payment methods to increase conversion rates and customer satisfaction.
Easy Integration with Third-Party Tools: Offers flexibility to add functionalities like marketing and analytics tools for enhanced business operations.
Fast Market Launch: Accelerates the setup of an online store, enabling businesses to quickly enter the market.

These diverse types of Order Management Systems (OMS) allow businesses the flexibility to choose solutions that best suit their unique needs. They help improve operational efficiency and customer satisfaction while streamlining order processes.

Example of an Order Management System

The most common example is Shopify, designed for online shop owners. It is highly user-friendly and allows managing orders, inventory, and customer data. Another example is the SAP Commerce Cloud, intended for larger enterprises and offering more features for integrating existing systems.

Key benefits of an OMS

Order Management Systems (OMS) offer various of benefits that ensure companies utilize their processes efficiently and provide customers with satisfactory services. The main benefits of an OMS are listed below.

Efficiency. Automating order processes reduces errors and saves time during processing, enabling faster workflows within companies, which ultimately leads to better resource utilization.
Improved Inventory Management. Using an Order Management System (OMS), businesses can accurately track inventory, preventing overselling or stock shortages. This significantly simplifies management and gives customers confidence in the consistent availability of products.
Enhanced Customer Satisfaction. A clear view of order status and delivery enables a company to respond promptly to customer inquiries. This clarity in communication helps businesses gain more customer trust and maintain loyalty.
Data Analysis. Most Order Management Systems (OMS) come with analytical tools that provide comprehensive insights into sales figures and customer behavior. This data is used to make better decisions regarding future strategies.
Integration with Other Systems. An OMS integrates well with other software, such as CRM and accounting systems. It improves overall workflows and ensures proper information flow within the company.

Important order management functions for business

A good Order Management System (OMS) offers many features to help a business streamline its processes for optimal order fulfillment and customer service. The key features that a modern order management system should include are:

Automatization

Routine tasks should be automated, as they burden employees and reduce error rates. This way, you can save time by automatically reporting orders and their processing. This allows the company to focus more on important projects.

Order orchestration

With an intelligent Order Management System (OMS), you can centrally manage all orders across various channels. Whether purchases are made online, over the phone, or in-store, a well-designed OMS captures all orders in one place and processes them efficiently. This allows you to monitor ongoing activities at any time and respond quickly.

Bundling and creating kits

This approach allows a company to better bundle its products and create kits. This benefits customers by offering attractive packages with multiple items at a special price. At the same time, the company optimizes its inventory and boosts sales figures.

Advanced real-time reporting

Real-time reports help businesses gain a better overview of sales data and inventory levels. Dashboards and analytics support managers in making faster and better decisions, identifying current trends, and predicting potential bottlenecks so they can act proactively.

Seamless API integrations

OMS solutions are flexible enough to integrate seamlessly with other systems, such as CRM, accounting software, or even inventory management systems. This ensures smooth information flow and efficient collaboration between departments, providing a clear overview of all business processes.

This allows companies to optimize their workflows, improve customer satisfaction, and ultimately drive business growth.

Step-by-step process of OMS operation

A powerful Order Management System (OMS) optimizes the entire journey of a product—from «added to cart» to «delivered» and beyond. In this article, I will provide a detailed overview of how an OMS works and how it creates real value for both businesses and customers. Let’s dive into the exciting world of Order Management Systems together.

Step 1. Adding an item to the cart of an online store

Imagine you are looking for a specific product for your business. After finding it, you add it to the shopping cart of the online store. The Order Management System (OMS) captures this process in real time and automatically checks the product's availability in the warehouse. This ensures that you always receive up-to-date information about inventory levels.

In this way, the risk of oversupply is minimized, and you receive exactly the products you need. Furthermore, the OMS allows you to introduce changes to your shopping cart without losing any data. This flexibility is crucial for B2B customers, who often have individual requirements. By efficiently managing orders, the OMS helps optimize the entire purchasing process and supports your business operations.

Step 2. Order processing

When the customer proceeds to checkout and completes the purchase, the Order Management System (OMS) initiates the order processing. This marks the beginning of an exciting process that includes secure payment encryption and verification of the order’s accuracy. After the payment is made, the customer receives an order confirmation email containing all details, including the delivery time. This transparency is truly remarkable and helps build customer trust.

Step 3. Order fulfillment

And now comes the best part: the execution phase. The Order Management System (OMS) automatically generates picking lists, which warehouse workers use to collect the items ordered by customers. This truly revolutionizes the picking process by suggesting the most efficient routes within the warehouse to locate and assemble the products as quickly as possible. This saves time and significantly optimizes the picking process.

Step 4. Warehouse management

The Order Management System (OMS) is the absolute centerpiece of warehouse management. It provides real-time visibility of your inventory at any given moment. As soon as an order is placed, the inventory levels are automatically updated. Additionally, the system sends alerts when restocking is needed. It also precisely indicates where each product is located in your warehouse, allowing you to further enhance efficiency. With a well-organized warehouse management system, you can locate and ship any product in no time.

Step 5. Order delivery

Once the items are picked and packed, the order is ready for shipment. The Order Management System (OMS) automatically determines the optimal shipping options based on costs and delivery times, selects the appropriate carrier, and sends tracking information to the customer. This allows the customer to monitor their shipment's progress in real-time, ensuring they are always well-informed. Such proactive communication is a game-changer, as it reduces uncertainty and significantly enhances the shopping experience.

Step 6. After-sales customer support

Delivery alone is not enough. The customer support features of an Order Management System (OMS) are a true game-changer, simplifying customer inquiries, returns, and feedback processes. A well-designed OMS empowers customer service teams to respond to queries instantly and resolve issues efficiently. This not only results in satisfied customers but also fosters loyalty and builds trust in the brand.

Best of all, all these benefits are made possible by an integrated and structured process that maximizes efficiency in order fulfillment while delivering an exceptional shopping experience. Every step is carefully designed to ensure transparency, operational efficiency, and customer satisfaction—key factors that drive overall business success.

What to look for when choosing an order management service provider

When selecting a service provider for order management, there are several aspects to consider.

Experience and expertise: The partner must have extensive experience in your industry. And if you are also involved in e-commerce or B2B sales, specialized knowledge can even be crucial—and this is precisely what your partner should bring.
Flexibility and adaptability: Choose a provider that offers the customized OMS and can adapt to the specific needs of your business. Flexibility is a must if you need to respond to current market conditions.
Integration with Existing Systems: The provider must seamlessly integrate with your existing systems, such as your ERP, CRM, or other software packages. This ensures optimized efficiency and a smooth flow of information, helping to elevate your business to the next level.
Real-Time Reporting and Analytics: A robust Order Management System (OMS) should provide comprehensive reporting and analytics features to support decision-making. With real-time data, you can identify emerging trends and quickly adapt to change—an invaluable advantage in a dynamic business environment.
Customer Support and Training: An excellent OMS comes with diverse customer support and training options to ensure your team becomes proficient users. Outstanding customer service is the key to transforming your team members into enthusiastic advocates for the system.

Challenges of order management systems

An Order Management System (OMS) offers a wide range of benefits that every business should utilize. However, like any new system, there are also some challenges to overcome. With the right strategy and a bit of dedication, these can be easily managed.

Data Integration

Even though managing different platforms can sometimes be tricky, don’t worry. This challenge can also be addressed effectively.

Solution: Choose a provider that offers top-notch API integrations. This ensures that all your platforms work together seamlessly and smoothly. As a result, you can establish and maintain a consistent and conflict-free data foundation.

Scalability

Most businesses grow quickly, and an Order Management System should easily keep up with this growth.

Solution: Choose a system that is scalable in terms of its OMS capabilities and can swiftly adapt to increasing demands. This ensures that you can either utilize more features or handle a higher volume of transactions seamlessly, preparing your business for the future.

User Acceptance

When introducing new systems, employees may initially resist change if they are accustomed to current workflows. But don’t worry, this is perfectly normal and can be easily overcome.

Solution: Turn your team into fans. Through comprehensive training and early involvement in the implementation process, you can clearly communicate the benefits of the system and increase acceptance.

Real-Time Tracking and Transparency

Customers love having the ability to track their orders in real-time.

Solution: An effective Order Management System (OMS) should provide real-time tracking capabilities that proactively update customers on the status and progress of their orders. This feature can be a true game-changer. It helps reduce the volume of customer inquiries, enhances the overall customer experience, and significantly contributes to improved customer satisfaction.

Error-Prone

Manual data entry and processing are error-prone, which means there is significant room for optimization. This can negatively impact the customer experience.

Solution: Automating order processes in an OMS can significantly reduce the error rate. Be sure to look for a system that automates many of the steps in the order process.

Companies that address these challenges and find the right solutions can implement an incredibly effective Order Management System, boosting efficiency and improving customer satisfaction.

Conclusion

In today’s world, where customer expectations are continuously rising, order management has become the backbone of a successful business. It is no longer just about processing orders, but about creating a seamless and enjoyable customer experience while optimizing internal processes. In this guide, we have explored the various types of Order Management Systems – from manual methods, which rely on a hands-on approach, to the efficiency of data flow in ERP solutions, and the user-friendliness of e-commerce platforms.

Each system offers unique benefits tailored to meet the needs of different businesses. Whether it’s a small startup aiming to establish itself or an established company looking to enhance its operational efficiency, there is an Order Management System designed to help you achieve your goals.

Although choosing the right Order Management System (OMS) can be challenging, it is undoubtedly a crucial step toward improving operational efficiency and customer satisfaction. By leveraging the insights and tips provided in this guide, you can make an informed decision. With the appropriate OMS, you can optimize your processes and enhance your customers’ experience, ensuring new opportunities for future success.

FAQ

What is order management in the supply chain?

Order management in the supply chain encompasses the management and fulfillment of customer orders. It coordinates all activities, from order placement to delivery, ensuring that products reach customers accurately and on time. An effective Order Management System enhances supply chain efficiency and boosts customer satisfaction.

When should an e-commerce company get an order management system?

An e-commerce business should implement an Order Management System when experiencing significant growth in order volume. If manual order processing becomes inefficient or errors occur frequently, it’s time to adopt an OMS. Additionally, implementing such a system is essential when the company plans to expand into new sales channels.

What is the difference between OMS and CRM?

The main difference between an Order Management System (OMS) and a Customer Relationship Management (CRM) system lies in their focus. While an OMS focuses on managing and processing orders, a CRM aims to maintain and enhance customer relationships and interactions. Both systems are important but fulfill different functions within a company.

What is the difference between OMS and DOM systems?

An Order Management System (OMS) manages orders within a company, while a Distributed Order Management (DOM) system optimizes order processing across multiple sales channels and locations. DOM systems prioritize and distribute orders efficiently to the best fulfillment centers based on various criteria. This makes DOM particularly advantageous for companies with complex logistics requirements.

What is the difference between OMS and ERP systems?

The difference between an Order Management System (OMS) and an Enterprise Resource Planning (ERP) system lies in the scope of their functions. An OMS focuses specifically on order processing, while an ERP provides a comprehensive solution for various business processes, including finance and inventory management. Therefore, an OMS is ideal for optimizing orders, while an ERP serves as a holistic enterprise solution.

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