In the world of e-commerce, expectations around order fulfillment are rising. According to a recent survey by Digital Commerce 360, 68% of consumers said that fast shipping would lead them to place an order online. Meanwhile, 36% of online shoppers said that they were placing their orders for same-day delivery. In a separate survey, 88% of consumers said that they were willing to pay more at checkout so they could enjoy same-day delivery services.
The race to speed up the order fulfillment process has presented mid-market and enterprise companies with unique challenges and opportunities. The demand for quicker and faster deliveries is increasing, and retailers need to meet these rising expectations by getting the right products, to the right customers, at the right time. Doing so can have a major impact on brand loyalty with shoppers.
Enter order management system (OMS) software, which is composed of technical tools and software for order management and fulfillment. By evaluating OMS software vendors and choosing the right solution, businesses can manage orders more efficiently and speed up the delivery process to create expedited and seamless customer experiences.
This guide will discuss how a modern, scalable OMS solution can achieve these objectives. Here is what we will cover in this article:
The order management system (OMS) is a software solution that lets retailers manage the order fulfillment process. Developed and sold by OMS providers, it is software for order management that 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 an e-commerce ecosystem.
Facilitating order fulfillment is the primary function of OMS systems. To accomplish that, one of the most important functions is keeping real-time and accurate records of inventory throughout the entire supply chain. Without precise syncing of information across all sales channels, retailers can frequently run into out-out-stock situations, leading to suboptimal shopping experiences for customers.
The order fulfillment process can vary, but it generally follows a variation of the steps below:
1. A customer places an order through a sales channel. The OMS adds their information to a customer profile. (This enables retailers to track customer 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 the 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 a notification informing them of the delay.
5. After the order is packed, it is shipped to the customer via third-party shipping software. 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.
The order fulfillment process can be complex, especially if a business is large or sells through multiple sales channels. Before choosing OMS software vendors, businesses must consider their specific requirements and how they will use the platform.
One common use case is for companies that have outgrown their monolithic OMS platforms. Because these software OMS solutions are built into legacy e-commerce platforms, they generally don’t have the same robust feature sets that you will find with standalone OMS software. Furthermore, an OMS with the necessary APIs would allow businesses to switch to a microservices-based architecture, where different applications are seamlessly connected via APIs to create a modern, modular tech stack.
Another common use case for an OMS is omnichannel retailers that require fulfillment orchestration across multiple sales channels. Using order fulfillment logic (OFL), orders can be routed to the best locations to improve speed and efficiency, so orders are shipped to customers in the fastest way possible.
One other use case is for companies that use an ERP system to help with the order fulfillment function. Enterprise resource planning (ERP) software can be used to manage accounting, procurement, project management, risk management and compliance, and supply chain operations. But it is not a substitute for a standalone OMS. Having a dedicated OMS can help businesses tackle some of the most difficult challenges with order management, with the added benefit of integrating together with other e-commerce applications through the use of APIs.
Every e-commerce operation needs to know what products they have in stock at any given time, which is why inventory visibility is key. OMS systems can display inventory availability to give retailers a global overview of on-shelf, in-transit, and on-order inventory in real-time and across the supply chain (i.e., distribution centers, stores, and suppliers).
A distributed order management (DOM) system is order management software that utilizes order fulfillment logic (OFL), or logic-based rules, to determine which fulfillment location is the optimal choice for fulfilling an order for a customer. An OMS that’s built with DOM capabilities can display inventory by geographic proximity, availability at nearby stores, or network-specific availability by channel.
Additionally, available-to-promise (ATP) inventory is known as the projected amount of inventory a business has in stock that’s ready to sell and is not allocated for existing customer orders. An inventory availability storefront API can be used to show the exact amount of ATP inventory that’s available for customers to buy.
Exporting inventory data is key to maintaining inventory synchronization between systems. A bulk inventory export function that allows retailers to schedule recurring exports to destination systems can be a great way to minimize tedious manual processes.
Inventory controls, on the other hand, provide the checks and balances to manage inventory. Beyond being able to categorize and organize inventory, a modern OMS can help businesses create custom attributes, create and control inventory networks, set safety stock levels and low stock levels, and configure custom inventory position tags, such as on-hand, backorder available, and reserved.
Businesses never want to run out of stock because it equates to lost sales. But when it inevitably happens, backorders allow customers to place an order for a product that is temporarily out of stock. OMS solutions that provide backorder capabilities can allow retailers to still capture sales and retain customers that would normally abandon their transactions.
Preorder capabilities are important software OMS features too. Allowing a customer to preorder a product can help with demand forecasting and inventory planning for an upcoming product launch. If you think about examples like Apple’s iPhone or a hit video game, preorders are great tools for building anticipation for product releases.
OMS software gives companies a user interface to track and manage their orders. In modern retail, where companies are increasingly moving toward an omnichannel sales strategy, order visibility across all channels is critical for success.
Managing orders is equally important. For example, retailers need to be able to calculate and display the expected dates of customer shipments. It should also be simple and fast to upload orders in bulk (using a CSV file) so businesses don’t need to manually enter them.
Organizing orders using custom attributes such as less-than-truckload (LTL), gift wrap, and more can trigger downstream value-added services. Modern OMS software should also allow customer service representatives (CSRs) to make changes to orders on behalf of customers as well.
Reverse logistics in retail are a major pain point for most businesses to handle. However, an OMS solution can help simplify processes so that returns and refunds are processed as efficiently as possible.
For example, businesses can begin offering “instant” or “immediate” refunds which can increase customer satisfaction by allowing an easy return and automated refund process. However, setting business rules for accepting and processing returns and refunds is important for the economics of reverse logistics to work. Any software for order management should provide an easy way to set returns policies for customers to adhere to.
For an omnichannel retailer, an OMS with DOM capabilities is critical for managing complex business order fulfillment logic. Businesses today need to provide flexible fulfillment options to customers, which means that an OMS needs to support fulfillment methods for same-day delivery, buy-online-pickup-in-store (BOPIS), ship-from-store, ship-to-store, or direct-to-consumer (D2C), to name a few.
An OMS that offers the ability to stand up and update OFL is important for reducing delayed orders and reducing the cost of shipping products. A software feature like inventory segmentation configures tags to assign inventory to specific customer segments like subscribers, new customers, or VIPs. Also, being able to prioritize picking locations from the closest facility in stock or by rank can increase fulfillment speed and efficiency. And finally, an inventory reservation feature can help businesses track the virtual quantities of inventory for a specific demand.
The e-commerce technology stack includes tools and technologies that work together to optimize day-to-day tasks, including sales, marketing, customer service, order fulfillment and returns, payment processing, and other key areas. Therefore, it’s important for an OMS to seamlessly integrate into your warehouse management system (WMS), enterprise resource planning (ERP) system, customer relationship management (CRM) software, accounting system, and other parts of a modern technology stack. APIs can be used to build custom connections to other systems, such as a pricing engine, a product information manager, or a dropshipping platform.
Complex supply chains are becoming the norm in e-commerce. Between rising customer expectations for faster lead times, expanded products and services, and tailored experiences, mid-market and enterprise brands are being pushed to support more unique orders across the retail supply chain. This means that managing supply chains requires more collaboration with partners, improved inventory management with suppliers, and greater visibility and control of every part of the supply chain.
The good news is enterprise OMS providers have market-leading software that can tackle many of these issues. For example, today’s software OMS solutions can integrate with multiple warehouses, route orders to optimal warehouse locations for fast deliveries, allow retailers to offer in-store pickups at brick-and-mortar locations, and more.
It is also important to consider the sales channels a business uses and how OMS software can help manage order processing. Each channel requires its own processes and connects with backend systems differently. If omnichannel selling is an integral part of a business, retailers can benefit from an OMS with a headless design. It will give companies stronger APIs to connect different sales channels.
To optimize workflows and eliminate manual processes, businesses need to embrace automation. The workflows of OMS software can help automate order fulfillment processes to improve efficiency and minimize errors. From receiving, to processing, to picking, packing, and shipping, manual spreadsheets should become a thing of the past with modern OMS software.
Taking control over inventory management with an OMS is a key benefit of using the software. Businesses can know how much inventory they have or need at any given time and they can use the data to allocate inventory to optimal locations so that sales channels will always have access to stock.
This can drastically reduce the chances of running out of stock or selling stock that is unavailable. Furthermore, companies can use data to forecast demand, which limits the chances of overstocking products that take up valuable space in warehouses. A modern software OMS can help build customer trust by letting customers know on the product detail page (PDP) that an item is running low or if it’s out of stock.
Today, customers expect their online shopping experiences to be quick and flawless. From the moment an order is placed to when the product is received, OMS systems can streamline the order management process to improve the customer experience.
For example, an OMS with DOM capabilities can help manage and track orders, find the optimal path to fulfill orders using OFL, and allow businesses to offer flexible options like buy-online-pickup-in-store (BOPIS), ship-from-store, and ship-to-store. The faster you can fulfill your orders, the happier your customers will be.
The costs of human errors can quickly spiral out of control—especially for e-commerce businesses that want to grow What’s more, companies often struggle to allocate resources to tasks and opportunities that present the best ROI.
But another key benefit of OMS management software is that many functions can be automated. A centralized system reduces the number of errors in the order management process, which can free up staff to focus on what they do best: sell products and create superior shopping experiences for customers.
Improved customer experience
According to the Baymard Institute, the average e-commerce cart abandonment rate is 69.99% for 2022. Two of the top reasons cited were the extra costs for shipping, taxes, and fees, and slow delivery times.
OMS management software helps retailers by streamlining order fulfillment so they can provide customers with faster, more flexible, and cheaper shipping and delivery. Furthermore, fewer errors and more transparency with order tracking can improve the overall purchasing process. By meeting the demands of customers, businesses can further strengthen brand loyalty, which can potentially lead to repeat business.
Here is a list of the top 5 cloud-native SaaS platforms for mid-market and enterprise brands available on the market today:
IBM Sterling order management software provides cross-channel order orchestration capabilities that enable the intelligent brokering of orders across many disparate systems, provides a global view of all inventory across the supply chain, and enables users to dynamically make changes to order processes.
IBM OMS consolidates orders across multiple channels to provide a single view of demand, inventory, and supply across global networks through supplier collaboration. Organizations can order and receive from any channel, get a committed fulfillment promise, and track the order status.
However, although IBM’s OMS system is one of the more common order management system examples in this list, most IBM Sterling customers are still on the on-premise model. The user controls on IBM Sterling OMS are complex and require coding to enable basic order and inventory management capabilities. Thus, IBM OMS is best for enterprises with access to plenty of technology budgets and large development teams.
Kibo order management software provides a modern order management platform with all the necessary capabilities to run a business—order management, inventory visibility, and fulfillment orchestration. However, Kibo OMS is yet to mature in its distributed order management (DOM) capabilities that enable merchants to aggregate the supply side and configure complex order fulfillment logic to match the demand from multiple channels to optimize for lower cost and maximum speed.
However, customer service issues and value for money are two important concerns that have been raised in the past. According to Capterra reviews, reporting capabilities are very manual, and it is not easy to pull together stats on any given metric. Lastly, Kibo grew through several acquisitions. Therefore, it may have its own share of challenges with integrations and customer support.
Manhattan OMS provides the ability to manage the life cycle of inbound and outbound customer transactions, regardless of channel. The software can initiate and manage the end-to-end life cycle of an order, and it provides a single source of truth for customer orders and orchestrates each step of the buyer journey.
Companies can get a real-time view of transactions and global inventory. By leveraging one system of customer orders across all channels, brands, and geographies, merchants can improve omnichannel capabilities and the customer experience.
However, although Manhattan OMS is one of the more popular order management system examples in this list, it does have some drawbacks. One major criticism is that it’s difficult to extend the functionality of the OMS with integrations. Furthermore, the software is not backed by a comprehensive commerce platform. Manhattan offers a feature-rich order management system that best fits enterprises with complex business needs, a big technology budget, and a large development team.
Fluent order management software offers advanced inventory and order management across digital channels and stores. Their OMS system is a cloud-native, multitenant platform with an API-first approach that lets you adapt business processes and decisions to manage fulfillment locations and networks of locations. The system offers all the fulfillment options customers expect but also keeps the processes that make your business unique.
That being said, Fluent Commerce is also not backed by a comprehensive commerce platform, similar to Manhattan OMS.
fabric OMS is a distributed order management (DOM) system that is purpose-built for mid-market and enterprise retail brands to help deliver superior fulfillment experiences to their customers. With new state-of-the-art, multitenant cloud architecture built on Amazon Web Services (AWS), fabric’s modular and scalable order orchestration software has become more powerful, flexible, and cost-effective than ever before.
fabric OMS is built to support modern distributed commerce models, including buy-online-pickup-in-store (BOPIS), ship-to-store (for store pick up or replenishment), and store fulfillment (as mini distribution centers) models. Not only does it provide enterprise-level inventory visibility with network aggregation, but teams can stand up and update order fulfillment logic without writing code, which reduces the strain on developer resources.
If you’re interested in learning more about fabric OMS or would like to schedule a demo of its latest features and functions, get in touch with us here.