Blog > Order Management Systems (OMS) 101
Companies have managed orders in a number of ways over time, ranging from pen and paper to spreadsheets, by phone and by fax. Cost to serve customers this way is high, as is the risk of manual entry errors such as those around pricing that cause companies to lose money. Since the advent of digitized and integrated order management systems (OMS), all that has changed.
As recently as a few years ago, an average foodservice sales call was 28 minutes, of which 80% was gathering the order rather than promoting sales. Our recent article that explores how to improve sales as a DSR states that order management systems “will open nearly 80% of the time you would have normally been asking for an order and you avoid key challenges of order management.” Read more about the challenges of order management here.
Here we’re going to look at what an OMS does, how it works, and why it’s important as well as some key criteria to help you assess suppliers.
What is an order management system (OMS) and how does it work?
An order management system (OMS) automates, consolidates and manages the lifecycle of an order from creation through inventory management, fulfilment, delivery, and after sales such as payment and returns. Using a single centralized portal, orders are placed and managed from any sales channel including websites, call centres, mobile, social media, and bricks and mortar locations. OMS provide real-time insight into stock availability as well as inventory and delivery status.
OMS automates fulfilment. Firstly, an OMS provides visibility into available inventory. A customer account is created or updated and an order is placed through an automated form which is validated and released. The order is then picked, packed and shipped and the customer advised of status. Payment data is shared with financial systems. Rules are set by the OMS for processing returns, fulfilling exchange requests, and crediting the customer account.
Software Advice shares:
OMS software gives […] a bird’s eye view of open orders, available inventory, payment and delivery status and more. Managers can use this information to identify potential problems and optimize processes to keep purchasing and fulfillment running smoothly.
OMS capabilities typically include product item information (descriptions, images, attributes, locations, quantities); inventory levels, sources and routing; vendor purchasing and receiving data; marketing (promotions, pricing), customer and prospect data including profiles, contact and order histories; order entry and processing including picking, packing, shipping; order tracking; financial processing and payments; and returns and refunds.
Orders can be placed anytime and anywhere on any device. OMS typically have workflow capabilities to manage capture, validation, fraud checks, payment authorization, sourcing, backorders, pick/pack/ship, and related communications to customers.
A good OMS will have reporting and forecasting capabilities, screens and views customized by user type (such as External Sales, Internal Sales/Customer Service, Company) and will be integrated with accounting functions.
Why are order management systems (OMS) important and why get one?
OMS systems have a number of benefits:
- Cost control and revenue generation: through automating manual processes and reducing errors. Increased order flexibility and efficiency means improved customer experience and satisfaction, stronger customer relationships and enhanced cash flow
- Higher profits: from bigger orders, more often as sales teams can focus on tailored service, product advice and upselling rather than order taking. Line item penetration can be increased such as with critical items notifications. Margin maintenance ensures products are sold at a profit
- Fewer problems: such as stockouts and backorders, as inventory levels are monitored and orders fulfilled quickly from the closest appropriate source
- Visibility and control: A single solution common database that is channel agnostic means salespeople and customers see things the same way, in real time, such as price changes. Customer experience is improved as touchpoints and communications are seamlessly integrated and because everyone in the organisation and the customer can access and track order status. All parts of the supply chain are visible so problems can be better anticipated
- Labour saving: to acquire 500 new customers a company would need to hire 5 salespeople, versus using a software solution
- Sales team empowerment, confidence and effectiveness: foodservice can be complex and inaccurate order guides and pricing can reduce sales team confidence. OMS improves data integrity, a centralized set of information for sales teams and removes non-value adding tasks
- Real time inventory: being able to see what’s in stock, in transit and in demand reduces the need to maintain excessive ‘safety’ stock
- Reduced lost opportunities: a consolidated view means less likelihood of missing a sale, because inventory is in multiple locations
- Better planning: OMS dashboards can surface sales patterns, track KPIs and forecast sales and inventory levels.
Considerations when assessing potential OMS providers
Here are some things to look out for when comparing providers for your OMS tool:
- How much experience they have in OMS and in the industry? Ignition by TELUS Consumer Goods has four decades, for instance.
- Does the tool have omnichannel, order-from-anywhere fulfil-from-anywhere capabilities?
- Is the tool operating system, device and form factor agnostic?
- Is it scalable and configurable as the business grows?
- Does it have automated workflow processes?
- Can it review and manage pricing by customer and item?
- Can it review margin maintenance indicators to ensure profitable sale per item?
- Does it assist with call scheduling? Including which calls not to make or when not to make them.
- Does it manage order guide sequencing?
- Can it accept and process payments?
- Is it integrated with finance and accounting functions, CRM, supply chain and POS systems?
- Can it generate sales and advertising, such as by highlighting items that need to move or are nearing the end of their life?
- Does it deliver fulfilment reporting and insights, and KPI tracking? Does it have dashboard capability?
- Is the user interface easy to use, clear and concise?
- Does it provide detailed customer information and order history?
- How customizable is it for various internal and external/customer user groups?
- How well does it monitor and predict inventory levels?
- What value adds does it have, such as social media integration to increase messaging frequency?
To grow your business you need to be able to accept orders from anywhere, any time, on any device in as efficient a way as possible. An OMS automates the entire order management process and helps create more sales and profit through providing visibility throughout the supply chain, better customer service, reduced errors and problems, and sales teams focused on upselling.
To learn more about OMS systems, view the Order Management System solution page.
Or to evaluate if our supply chain management system is the right fit for your operation, request a demo with an OMS expert.
