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Oct 7, 2022

A Complete Buying Guide of Order Management System in 2024

Order management is key to organizing the supply chain workflow as it ensures your day-to-day retail operations run smoothly. Without proper management, you may struggle or fail to fill orders correctly. This is where an effective order management system comes in handy.

If your retail business is crumbling due to order mismanagement, investing in an OMS (order management system) is a good decision on your behalf. However, there is a thing or two that you must keep in mind while making such a choice.

Buying an order management system is a big investment. Not just in terms of money but because the success of your retail business will depend on it. So if you haven’t given some thought to it, you should.

We have covered all the necessary information that you need to buy the best order management system. After reading this article, you’ll be able to pick the best OMS software for your business needs. Now let’s start with the basics before we move on to discuss the key features of an OMS.

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What is an order management system?

In simple words, an order management system is a digital way to manage your orders. The system lets you manage and monitor the whole order lifecycle to provide a better overview. It can be an offline system, a cloud OMS, or a distributed order management system.

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How Order Management System Works

As highlighted, ordering management software digitalizes the order fulfillment workflow. The basic purpose is to organize received orders and facilitate their fulfillment. In doing so, it divides the order lifecycle into clear and manageable tasks.

Order Management System Works

Furthermore, an order management system tracks and process information including:

  • Order entry
  • Inventory management
  • Order fulfillment, and
  • After-sales service

So, retailers can get insightful information about their business and customer behavior. They can analyze the information to further optimize the order fulfillment process.

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Who Needs an Order Management System?

An OMS (order management system) is the ideal software for distributors, retailers, and eCommerce stores. The system helps businesses receive and manage orders from multiple sales channels and marketplaces.

Here’s how an order management system helps brick-and-mortar stores and online sellers.

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Assists Managers in Order Management

An OMS assists order management specialists in monitoring and order processing. The system lets managers receive and handle new orders with respect to customer needs and stock availability. They can perform multi-location inventory transfers, select the right or nearest warehouse, and do multichannel order routing using an OMS.

What’s more intriguing is that the order management system allows order managers to set automated fulfillment rules i.e which courier is assigned to orders based on different attributes like city, payment method etc. They can also split orders in case two or more items are available in different warehouses. Thus, the OMS allows them to keep an eye on all aspects of order processing from order placements and receiving to fulfillment.

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Helps Warehouse Managers in Picking and Packing

An effective OMS ensures you get to track stock levels accurately. Warehouse managers can track order receiving, inventory and the items tied to orders. Thus, it optimizes warehouse performance by improving order accuracy. The order management system automates the picking and packing process so orders are filled quickly and shipped efficiently.

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Aids Logistics Managers in Shipping and Delivery

An OMS aids logistics managers to ship and deliver orders in as little time as possible. The order management system sends information directly to the warehouse. The automatic labeling and invoicing processes improve efficiency.

With the best order management system, you can book orders through multiple couriers. Moreover, logistic managers can select the best couriers that are suitable for each location. This further reduces the order fulfillment cost and delivery time.

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Allows Growth Managers and CEOs to Make Informed Decisions

Order management systems empower growth managers by providing data insights. Not only do they get to track orders, but can also point out slip-ups throughout the supply chain. An OMS allows managers and CEOs to analyze the entire lifecycle of orders in real time. The best OMS software uses business intelligence (BI) technology to provide you with detailed reporting.

You can find the gaps and slipups present in your order management system. More importantly, you get insights on hot-selling products, inventory levels, and 3PL logistics partners. Thus, an OMS helps pick the right delivery services which cost less and deliver orders quickly.

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What types of systems for order management are available in the market? 

Right now, there are different types of methods used by retailers for order management. We have briefly discussed the most popular ones below for your information.

Manual Order Management

Manual management is the elementary way of recording order details. Retailers manage and record orders either in ledgers, spreadsheets or in Microsoft Excel. This is a time-taking process that involves labor and effort to keep track of all the transactions. The margin of error in manual order management is also very high.

Therefore, it is not recommended unless you are a small business. Even then, if you deal with a large number of products, you need to find a better way to manage your orders.

Ecommerce Platforms

Online retailers use eCommerce platforms to sell products and manage the order fulfillment process. They typically use Woocommerce, Magento, Shopify, Salesforce Commerce Cloud, or Bigcommerce as platforms. These platforms record order details which are then utilized by customer service or sales teams to fulfill orders. Order management system for Shopify and the Magento order management system are the two most popular among eCommerce retailers.

An eCommerce order management is suitable for online sellers and young brands. However, it comes with limitations and is only scalable to a limit. Also, you may face difficulties if you are a multichannel business or sell online as well as offline.

Multichannel Order Management

This is exactly like it sounds. Multichannel order management involves more than one store and sales channel. A multichannel order management allows you to manage your orders from different online channels and offline channels separately.

You can manage all sales channels and fulfill orders received through these different platforms. However, the issue with multichannel order management is that you cannot access real-time inventory data. Since your stock is not synchronized across all channels, you may face difficulties in processing large orders.

Omnichannel Order Management

It’s what we call a modern solution to modern retail problems. An omnichannel order management is the ideal solution for next-generation retailers. This is a system that provides all the necessary information from all sales channels on one dashboard. Not only this, but you can also stay updated about the stock while keeping track of your inventory levels.

Omnichannel order management enables you to fulfill orders coming from in-store customers and online buyers. You can simultaneously manage multiple marketplaces including platforms like Amazon as well as social media. The Omnichannel order fulfillment process is the same as a distributed order management system (DOM) in which orders are managed from all channels in one place.

ERPs

Enterprise resource planning (ERP) software is the right solution for large enterprises. This is for organizations that need a complete retail management system for their operations. This is a digital solution that unifies most if not all of your business operations and departments.

Enterprise resource planning

Key Takeaways

There are multiple methods for order management which you can employ for your business. The best OMS is one that can help you:
  • Get orders out quickly and more accurately
  • Connect all sales channels on a centralized platform
  • Streamline and organize warehouse operations
  • Access customized reporting on stock and customers
  • Avoid stock outs by keeping sales channels updated
  • Make data-driven decisions

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5 Steps to Choosing the Right Order Management System

We hope you are now aware of the perks of having an OMS. However, choosing the right order management system can be hectic for many. If you are new to this, follow the below steps to make an informed decision.

1. Identify Issues and Define Your Goals and Objectives

Your first step should be understanding your order management needs before you start searching for an OMS. To put the best foot forward, we recommend you hold a meeting involving all stakeholders. An ideal way is to consult and get advice from your:

  • Managers
  • Team members
  • Distributors
  • Suppliers
  • Customers (if possible)

This way you can get a better idea of your current order management issues. You’ll know what issues you have to address and what features you’ll need in your OMS.

2. Create Your Proposal

Once you have defined what your organization needs, it’s time to create a draft. It is better to organize your needs and thoughts in a document. This way you can identify the requirements and key features that an OMS must offer. You should consider your:

  • Your Order volumes
  • Sales channels
  • Number of SKUs

Also, when you show your requirements to OMS vendors, share your future plans. This way you’ll be able to make an informed decision for your retail business. Moreover, it’ll help the OMS vendor understand your requirements and limitations. Moreover, you should also share information about:

  • Any existing software you use
  • Details on team training
  • A timeline for the system's installation

3. Research and Contact Solution Providers

After defining your needs and organizing your requirements, it’s time to reach out to vendors. We recommend you search online instead of start calling OMS providers. Explore the best order management systems available and evaluate their features. Read online reviews and get as much information as you can about them.

Your next step should be marketplace evaluation to see what type of OMS your competitors are using. This will help you shortlist your options for the right OMS software.

4. Compare Your Options and evaluate them

It’s time to contact the shortlisted order management system providers. It’s better if you send them your requirements and ask them to submit quotations. Compare their offerings with each other and see whether they meet your order management requirements. You can use the following checklist to find the best possible OMS option.

  • Do they offer real-time inventory updates?
  • Do they support multiple warehouse locations?
  • Do they handle multichannel orders?
  • Do they offer automation to eliminate manual processes like creating purchase orders?
  • Do they offer BI reporting and forecasting?
  • Do they offer access to public APIs?
  • Do they support third-party integrations for 3PL, warehouse management, and accounting?
  • Do they offer 24/7 customer support and continually add new features?

5. Start Working with the Best Order Management System

The last step is all about getting onboard with your order management system. A good vendor will always assist you throughout the process from installation to training. They’ll enlighten you and your team about the features and functionalities of their system. It’s always in your interest to put your money on the latest technology that meets your requirements.

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Essential Features That Every OMS Software Must Have

Each OMS (order management system) is unique in its own way. However, there are some basic features that every software must offer to retail users. We have enlisted below some must-have qualities for a good OMS.

Keeping Track of All Orders

At heart, the most fundamental purpose of an OMS (order management system) is to track and monitor orders. It is supposed to make life easier for both the retail business and its customers. That’s because, with time, it becomes difficult for businesses to manage orders.

The best OMS is one that keeps track of all orders from multiple sales channels. So every order management system must be able to work across different stores and marketplaces. It should work to unify sales from offline and online channels to improve the efficiency and productivity of the business.

Managing and Monitoring Inventory

Another essential feature of an OMS is inventory management as it can disturb the whole supply chain. Every order that you receive and fulfill affects the stock and changes inventory status. Improper inventory management can lead to:

  • Overselling
  • Overstocking
  • Inaccurate Forecasting

An OMS with an inventory management feature will help you keep an eye on your stock. It’ll provide you with real-time stats of your inventory so that you can make informed decisions.

Managing Your Own & 3PL Order Fulfillments

An effective order management system goes beyond managing and monitoring orders. The best OMS will simplify the logistics process to ensure a faster delivery to your customers. This includes sending orders to suitable warehouses, printing labels, and facilitating fulfillment. An OMS should keep your shipping department or 3PL providers in the loop.

Strengthening Reverse Logistics

If you are in the retail business, you know returns are inevitable. In fact, about 8.89% of orders that are placed in-store are returned by the customers. The return rate is surprisingly high when it comes to eCommerce where at least 30% of ordered products are returned. Managing return orders and handling buyers who want to send them back can be daunting.

Strengthening Reverse Logistics

The best OMS will provide you with the freedom and options to deal with returns. So when you are choosing an order management system, make sure it can handle reverse logistics. You should be able to fold reverse logistics into inventory management and create credit.

Providing Inventory and Marketing Insights

Data management is crucial for running a successful retail business. An OMS with reporting and analytics features will keep you informed in real-time. You’ll be able to create instant reports, get detailed insights, and can make decisions based on that information. With accurate sales figures, you can strengthen your order and inventory management.

Having clear data insights means you can understand your customers’ needs and information. You can then create effective marketing strategies for marketing as well.

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Factors to Consider While Evaluating Order Management Software

We have mentioned the selection steps and essential features that are must-haves for an OMS. But there are so many OMS software available in the market that their abundance makes retailers confused. They often get overwhelmed with the information and available options. So if you feel you are caught between a rock and a hard place, you are not alone.

However, there are some factors that can make the choice process easy for you. 

Ensure Your Business Demands Are Met

The sole purpose of getting an OMS for many retail businesses is to streamline their order management process. The best order management system is the one that not only meets the requirements but helps the company grow. There’s no benefit of getting an OMS software which cannot offer scalability.

So make sure the order management system you are buying meets your current and future business demands. It should meet your growing demands and you should be able to get essential features when you need them.

Check BOPIS and Curbside Pickup

BOPIS (buy online, pick up in-store) and curbside pickup is getting popular among today’s consumers. They don’t have the time to get inside the store and waste time finding the product and waiting in line for payment. This is where an omnichannel order management system comes to the rescue.

By implementing BOPIS and curbside pickup, you can engage a whole new audience and will have an edge over competitors. So don’t forget to look up this feature when you are evaluating different order management systems.

Go for Customized Business Rules

Businesses and retailers need an OMS that can assist them in managing their global supply chain. They need a system that offers a seamless experience throughout the order fulfillment process. But most importantly, they need an order management system that can optimize the process with respect to customers’’ location.

Not all rules and policies apply to all customers. So make sure you can amend and customize business rules within the order management system. This will help you set different order fulfillment rules for different locations according to different time zones.

Look for Flexibility

Another key deciding factor while evaluating order management systems is flexibility. This is a feature you need if you are running a multichannel business or selling both offline and online. The best OMS will expand as you grow to meet your order fulfillment needs.

Public APIs for Integrations

Businesses need integrations to connect different software and tools with one another. So make sure the OMS you are choosing is offering public APIs for integrations. Especially, if you are getting a standalone OMS, make certain that it can work with your inventory management system and accounting tools.

The best order management system is one that doesn’t ask you to modify your whole setup. Instead, it’ll fill right in without causing any glitches or downtime.

Actionable insights

Running a business is all about making informed decisions at the right time. This is exactly what you should be looking for in your OMS software. While comparing order management systems, confirm whether they provide reporting and forecasting. You should ensure that you’ll be getting actionable insights to better identify your business process.

You should be able to get:

  • Products and channels’ performance overview
  • Reports on customer demographics
  • A complete picture of business performance
  • Real-time overview of your profitability
  • Data-driven demand forecasting

Don’t Compromise on Customer Experience

Your customers might not be using the OMS but they’ll be affected by its functionalities. The right order management system will allow you to ease the process for buyers. The unavailability of features like payment integrations and location selection can greatly affect the user experience. So make sure the OMS software you are buying facilitates both your customers and the order management team.

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Why XStak’s Order Management System?

XStak’s order management system automates the whole process and makes tracking easy for you. Our XStak's Order & Inventory Managment System facilitates retailers to manage customer orders across multiple sales channels. Below are the key features which make our OMS the best order management system in the industry.

Offering End-to-End Order Management Process

XStak’s OMS offers end-to-end order management to its users with detailed data insights. It takes charge from the moment your customers place orders and provides insights until orders are shipped. The order management process steps include

  • Order placement
  • Order receiving
  • Products picking (assigning)
  • Products Packing
  • Order shipping
  • Order delivering

Process Automation of Online and Offline Operations

Automation is not the future but the necessity of today’s retail industry. XStak’s order management system automates your online and offline orders so that you can manage large volumes. What’s more intriguing is that you can also set automation rules to streamline your workflow.

XStak’s OMS enables you to pick the right warehouse and do multichannel order routing and multi-location inventory transfers. You can perform order splitting, partial fulfillment, labeling, invoicing, and more.

Plug-and-Play Integrations

We know that an order management system is an important piece of high-functioning machinery. And to perform well, it must have the ability to connect and integrate with other software and hardware. XStak’s OMS allows you to sync all your operations, inventory, and sales channels.

You can connect multiple marketplaces, apps, tools, and marketing channels through our plug-and-play integrations. You can integrate accounting software, payment methods, shipping providers, and 3PLs to smoothly run your business.

Providing Enterprise Class Implementation Services

Most OMS providers put retailers in the middle when it comes to implementing an order management system. They tend to provide guidelines or basic tutorials for installing and understanding the system. But XStak believes in offering edge-to-edge support services.

We provide a clear course of action to satisfy your order management needs. From OMS software installation to training your team, we offer complete guidance. So you don’t have to spend your valuable time on how the system works. The best part is that you’ll get 24/7 support from our order management experts.

Plan Your Inventory Smartly

It’s a good feeling to know that your inventory is selling quickly and orders are managed accurately. But you can have to make decisions to get things going. This cannot be done without taking a look at reports and analytics.

XStak’s OMS uses business intelligence (BI) to provide you with more accurate numbers. You can get in-detail insights on your orders and inventory along with data-driven forecasts. This means our order management system informs you when a product is oversold or overstocked. So you can meet your customers’ demands on time across multiple channels.

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Example of an Order Management System: Success Stories 

Here’s how XStak helped two leading brands handle their order management needs.

Bonanza

A renowned clothing brand, Bonanza, successfully turned its business around using XStak’s OMS during the pandemic. Through our XStak's Order & Inventory Managment System, the brand distributes its inventory across the country following customer behavior. XStak OMS helped them sync their multichannel (online and offline) inventory, multi courier bookings, and 3PLs.

EGO

A leading women’s clothing store, Ego was encountering backlogs and slow deliveries. XStak helped them solve the issue through multiple courier integration using our cloud-based order management system. Ego used XStak's Order & Inventory Managment System for:

  • Synching inventory and order
  • Multichannel Integration
  • Business Intelligence
  • Financial reconciliation

The brand saw a 37% reduction in delivery time and 43% order value growth. Their repeat purchases boosted by 40% and Ego saw a 101% increase in their annual GMV.

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FAQs About Order Management System

Why do we need order management?

Order management makes it easy for a business to manage and monitor orders. From receiving orders to delivery, and post-delivery services to reverse logistics, it manages everything. Order management ensures accurate inventory management and automatically enters new stock into the system. It helps you track sales through various sales channels to strengthen your order fulfillment.

Who uses an order management system?

Businesses and retailers use an order management system to manage and track orders accurately. Sellers who run multichannel businesses and sell products online and offline use them to track data in one place. An OMS can keep track of large orders and manage each one of them individually.

How are order management and customer service related?

Order management entails everything which is in relation to order from placement to confirmation and fulfillment to receiving. In a way, it defines the means by which customers and retailers or brands communicate. Order management takes care of how customers place orders and receive or return them.

What is order management in the supply chain?

In a supply chain, order management is involved in managing, referring, fulfilling, and tracking orders placed by customers. It acts as a bridge between your sales, inventory, and distribution channels.

What is the difference between EMS and OMS?

An EMS (Execution Management System) is software that provides traders with access to real-time market data. This tool is specifically designed for traders whereas an OMS (Order Management System) is for retailers. It facilitates them in managing inventory and tracking orders across the multiple channels they're selling through.

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Final Note

Order management is critical for the consistent growth of any business. By using the best order management system (OMS), you can reduce pressure on your system and avoid a backlog. Make sure your OMS can manage orders across multiple channels and provide useful data insights.

XStak’s OMS automates your order management process and offers omnichannel solutions to manage orders across different marketplaces. You get real-time data from all channels on one platform. The business intelligence (BI) technology assists you in making data-driven decisions for inventory and order management.

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