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OMS Software Guide: Streamlining Order Management in 2021

Furqan Munir

Furqan Munir

August 11
  •  
11 minute read
OMS Software Guide

Great e-commerce experiences don’t end when customers place their orders. Today’s customers expect smooth and speedy deliveries. Companies that meet these expectations can turn one-time buyers into repeat customers.

According to Narvar research, 72% of shoppers say on-time delivery is the main reason they’ll shop with a retailer repeatedly. Further research shows that 38% of shoppers will never shop with a company again if they have a poor delivery experience.

Order management systems (OMS) are the technical tools e-commerce merchants use to facilitate order fulfillment. With the right OMS, you can manage orders efficiently and speed up the delivery process to create a seamless customer experience. This guide will discuss how an OMS can achieve these objectives.

Here is what we will cover in this extensive piece for companies looking to streamline order fulfillment across all channels:

  • Understanding OMS Software
  • Features and Benefits of OMS Software
  • OMS Software Considerations and Use Cases
  • OMS Software Options

 

Understanding OMS Software

What is OMS software?

An order management system (OMS) is a software solution that lets retailers manage the order fulfillment process. The software captures orders and provides a centralized interface to view and manage those orders. In addition, it connects to other systems to sync inventory and push order details across your e-commerce ecosystem.

How OMS software works

The first function of OMS software is to keep an accurate record of inventory throughout your supply chain. This includes inventory held at physical stores, warehouses, and any third-party suppliers. The system syncs this information across all your sales channels to ensure inventory levels are accurate at all times.

The following job of the OMS is to facilitate order fulfillment. The exact process varies depending on the specific software and business but generally follows a variation of the steps below.

oms-diagram

  1. A customer places an order through one of your sales channels. The OMS adds their information to a customer profile. (This enables you to track customers’ order history and shipping and payment preferences.)
  2. Once the payment is processed, the OMS uses real-time data to update inventory levels across all platforms. It then generates a receipt and sends it to the customer. Simultaneously, the system updates your accounting system with details from the sale.
  3. Next, the OMS uses the order details to route the order to the appropriate warehouse. It does so by analyzing the available stock and delivery destination. At the warehouse, the order is picked, packed, and double-checked for accuracy.
  4. If an item is out of stock, the OMS communicates with suppliers to send additional inventory to the warehouse. If there is a delay in the shipment, the customer receives an automated notification informing them of the delay.
  5. After the order is packed, it is shipped to the customer via a third-party delivery system. The OMS software sends a confirmation email to the customer with the tracking information.
  6. Once the order arrives, the OMS sends a follow-up email ensuring the order was accurate and to the customer’s satisfaction. This message also includes steps to contact customer service if there is an issue.
  7. If customers decide they want to return an order, the OMS software quickly processes a refund request. It then passes the information to the appropriate party to start the return process.

 

OMS Software Features

Order tracking and management

OMS software gives companies a user interface to track and manage their orders. The system assigns each order a status based on its position in the fulfillment process. Here are some common statuses in OMS systems:

  • Created
  • Processing
  • Ready for pickup
  • Shipped
  • Complete 

Business users can filter orders by various criteria, like order status, purchase date, payment method, and shipping method. You can add shipping details, including tracking information and shipping provider. You can also cancel orders from the OMS interface and export all your orders into a CSV file.

Inventory management

OMS software has inventory management functionality. You can use this to view and update stock for your products. When the system receives an order, it updates your inventory records in real-time. 

The inventory management interface has a search function that lets you search for items using its SKU, product ID, or item name. You can update inventory in bulk by uploading a CSV file or using an API.

Warehouse management

OMS software offers support for warehouse management. It can be through a connection to an external warehouse management system (WMS) or built-in functionality. With the latter, you can create instances for multiple warehouses and specify which sales channels they will serve.

With a real-time connection to your warehouses, you receive notifications when products run low. It reduces stockouts as you can quickly issue purchase orders to restock your products.

APIs

OMS software uses application programming interfaces (APIs) to create a real-time connection with other parts of your system. They also connect to third-party logistics (3PL) services and external vendors to ensure efficiency for all logistics processes.

You can use APIs to fetch order details, add shipment details, cancel orders, and initiate checkouts. You can execute all these functions (excluding checkout) in bulk. The APIs also let you create recurring purchases for customers for a scheduled period.

Checkout functionality

More robust software like fabric OMS comes with checkout functionality. It lets merchants collect payments without needing to set up a different solution for payment processing. 

The software supports multiple payment methods and gateways, including Stripe, Authorize.net, Paypal, and Affirm. Plus, customers can split payments across multiple payment methods.

Integrations

OMS software can integrate with other parts of your e-commerce system, such as inventory management systems, accounting systems, and customer relationship management (CRM) systems. These connections can be pre-configured into the platform or custom-built using APIs.

Workflows

OMS software features workflows that companies can use to automate parts of the fulfillment process. For example, an OMS can automatically send a shipping confirmation email once tracking details are added to the system. Or the system can reconcile inventory for any canceled orders.

 

OMS Software Benefits

Seamless omnichannel fulfillment

With OMS software, retailers can sell on multiple channels more efficiently by centralizing orders across channels. Doing so ensures orders are routed properly and that all inventory levels are updated in real-time.

Without a centralized OMS, companies have two options for multi channel fulfillment. First, they can use a disparate set of siloed systems. Or, they can try to compile orders from every channel into a spreadsheet. However, both of these methods are ineffective and not scalable.

More automation

OMS software streamlines order fulfillment by automating different processes. The system can capture order and payment details, update inventory levels, and send notifications for low stock levels. Automating these processes lowers labor costs and frees your team to focus on creating a great customer experience. 

Reduced errors in order processing

OMS software improves collaboration between different departments. With a centralized system, many of the manual steps needed for groups to work together are no longer required. 

By eliminating manual tasks, OMS software reduces the number of errors in the order management process. Instead of an employee recording orders, the OMS can capture and distribute order details with 100% accuracy.

Improved customer experience

OMS software helps retailers provide a better customer experience across all channels. Customers enjoy fewer errors and more transparency in the purchasing process. With robust tracking, it is easy to see the status of an order from start to finish. The streamlined fulfillment process also leads to faster deliveries.

Better inventory management

Connecting order and inventory in the same system improves inventory management. It helps prevent you from selling products that are not available. Better forecasting can also avoid overstocking products, reducing the waste of warehouse space.

 

OMS Software Use Cases and Considerations

The order fulfillment process can be complex, especially if your business is large or sells through multiple channels. Before choosing an OMS solution, carefully consider your business’ specific requirements and how you will use the platform. Below, we will outline common use cases and considerations for OMS software.

OMS use cases

Omnichannel sellers looking to scale order fulfillment

Companies that want to scale orders across multiple channels need a flexible OMS. Without one, they are stuck with inefficient manual processes. An OMS that can connect to different sales channels provides a more intuitive interface for managing orders. 

Enterprises looking to go beyond their ERP system

ERP systems can provide organizations extensive functionality, but they are not suited for omnichannel order management. Companies with an ERP may need a standalone OMS solution to round out any missing features. These systems work well together as the APIs from a modern OMS create a smooth ERP integration.

Companies that have outgrown their platform-native OMS

As a company expands, it may outgrow the order management functionality built-in to its e-commerce platform. Adopting a standalone OMS solution can provide more features, including multi channel fulfillment and a suite of APIs.

A dedicated OMS is also an important part of switching to a microservices architecture. With this approach to e-commerce technology, all backend commerce functionality is broken down into individual components. 

Instead of a single e-commerce platform that builds the frontend, processes orders, and manages product information, a separate application performs each of these. This requires an OMS with the necessary APIs to connect with the other parts of the system.

OMS software considerations

Integration with internal systems

When researching OMS software, it’s important to consider how the system will impact other components of your tech stack. If the OMS replaces another system one-to-one, you must know how you will transfer data and processes between the two systems.

No matter what system the OMS replaces, it will need to integrate with other tools such as your ERP, WMS, CRM, and accounting systems. Some software comes with pre-built connections for popular third-party services. Although that is useful, it is more important that the OMS has an API. With an API, you can build a custom connection to other systems.

Supply chain complexity

The complexity of your supply chain plays a big part in determining what features you should look for in an OMS. If you have multiple warehouses, you need a way to integrate the different systems seamlessly. 

You also need an efficient way to route orders to the best warehouse for speedy delivery. If you have brick-and-mortar locations, you may offer in-store pickups. That requires an OMS that allows pickup as a fulfillment method.

Multichannel order processing

It is also important to consider the sales you use to collect orders. Each channel requires its own processes and connects with your backend system differently. If omnichannel selling is an integral part of your business, you can benefit from an OMS with a headless design. It will give you stronger APIs to connect your different channels.

 

OMS Software Options

There are a variety of tools and methods organizations can use for order management. The most common options are:

  • Manual order management
  • Order management functionality built into an e-commerce platform
  • Standalone OMS software

Each approach offers a different level of functionality and drastically alters the order management process flow. Manual tools and e-commerce platforms are best suited for companies with simple fulfillment needs. 

Companies with complex logistics operations and a higher number of orders need the feature-rich capabilities of a standalone OMS. Below we will compare how each of these methods works.

Option 1: Manual order management

While not technically software, manual order management still exists. It is more common among smaller brands. It is also prevalent among companies that process multichannel orders. They have not adopted modern systems and are left performing manual processes.

Most of this is done through spreadsheets. Companies will compile orders from different channels into a spreadsheet. The spreadsheet then serves as the hub for visualizing all orders and pushing them through the fulfillment process.

This is not only labor-intensive, but it is also prone to human error. Staff can make mistakes when manually recording orders. Additionally, this approach is not scalable. Increases in your order volume will equal a proportional increase in the effort required to fulfill those orders.

To summarize, manual order management is not a viable option for most sellers. If you’re a mom-and-pop shop that receives a few orders a month, you can manage. However, if you’re a business that wants to scale and maximize efficiency, you need stronger order management technology.

Option 2: OMS inside an e-commerce platform

Most monolithic e-commerce platforms have an OMS built into the system. Shopify provides an example of a platform-native OMS. These systems are more efficient than manual order management. You can capture orders and manage them with a simple backend interface. You can also monitor and update your inventory.

Platform-native OMS software works best if you process all your orders through your D2C e-commerce site. The software is tightly coupled with your e-commerce system and is specifically designed to handle orders from a single website. 

Merchants can use applications and other extensions to integrate multichannel order management into their systems. That said, this does not provide the same functionality as an OMS designed for multi channel fulfillment.

Option 3: Standalone OMS

A standalone OMS exists as its own independent platform. It is often the choice for companies seeking a comprehensive tool for order management. The software typically follows a modular architecture, making it more compatible with other parts of your e-commerce system. It is designed for omnichannel fulfillment and usually has APIs to offer unlimited extensibility.

fabric OMS is an example of a standalone order management system. An intuitive dashboard lets you view inventory across all locations in a single place. You can seamlessly manage orders from multiple channels with real-time updates.

Business users can work more efficiently by automating repetitive tasks such as payment processing, refunds, and delivery. AI-powered insights allow for more data-driven decisions to increase orders and revenue.

OMS also comes with robust APIs that can improve the checkout experience. For example, a customer can use the POST /api-order/orders/shipments endpoint to select their shipping carrier at checkout. Here is a sample of the request:

{
 "orderId": "6379-6380-55110",
 "shipments": [
        {
          "shipmentRef": "ref-100",
          "shipmentCarrier": "Fedex",
          "shipmentCarrierUrl": "https://fedex.com",
          "trackingNumber": "2345367890876549",
          "lineItems": [
            {
              "lineItemId": 2,
              "quantity": 1
            }
          ],
          "shipmentStatus": "awaiting",
          "estimatedDeliveryDate": "2019-03-01",
          "shippedDate": "2020-04-05"
        }
      ]
}


Not all standalone OMS solutions offer the same functionality as fabric, however. Let’s compare some popular options to see what features are available with different systems:

 

Fabric OMS

Salesforce Order Management

Veeqo

Skubana

APIs

Yes

Yes

Yes

Yes (limited)

Checkout functionality

Yes

No

No

No

Workflows and automation

Yes

Yes

Yes

Yes

Returns

Yes

Yes

Yes

Yes

Warehouse management

Yes

No

Yes (requires separate platform)

No

 

Streamline Omnichannel Order Management with fabric OMS

Efficient order management is essential to creating a great customer experience. Companies can improve their order fulfillment process by using OMS software. The right system can help improve inventory management, eliminate errors, and deliver products faster.

fabric OMS was designed to give customers the post-purchase experience expected from world-class retailers. It provides a centralized hub for information by combining orders, inventory, and customer data in a single place. You can streamline the fulfillment process by automating tasks and reducing the errors caused by human input.

OMS integrates seamlessly with other parts of your e-commerce infrastructure, helping business users to collaborate more efficiently. You can automatically route orders to the best warehouse to ensure deliveries are as quick as possible. With a robust suite of e-commerce APIs, you can connect OMS to your 3PL or any other service or sales channel.


Furqan Munir

Furqan Munir

Head of product @ fabric. Previously @ EMAAR NEXT and Groupon.

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