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SkuNexus eCommerce Fulfillment, eCommerce Guide, eCommerce Strategy, Order Management

Optimize the Order Management Process and Learn How to Find the Best Order Management System (OMS) for Your Business

1. What is Order Management?

Order management is a critical business process that involves managing and tracking the purchase, sale, and delivery of goods and services. It involves managing the entire supply chain process, from the initial order to the final delivery, and is also responsible for ensuring that the customer receives what they ordered in a timely and efficient manner.  

The order management process begins when a customer places an order, and is a vital part of any business that offers goods or services to customers. It is responsible for managing customer orders, tracking available inventory and stock levels, generating purchase orders, managing payment processes, and ensuring customer satisfaction. It is also responsible for managing customer returns workflows, tracking every order through the supply chain, and managing any disputes related to orders. 

OMS systems can range from simple software applications to enterprise-level platforms. Regardless of the complexity, these systems are all designed on some level to help businesses manage their order-processing activities more efficiently and accurately. They can also be used to track orders and provide customers with real-time updates. 

At its core, order management is about providing customers with a great experience, ensuring that orders are fulfilled quickly and accurately, and keeping customers informed throughout the entire process. It is also about providing customers with timely and accurate information about their orders, such as delivery times and tracking numbers.  

Order management is essential for any business that wants to provide customers with a great experience. By properly managing orders and tracking orders through the supply chain, businesses can ensure that customers get the products or services they ordered in a timely manner.

2. What are the Benefits of Order Management and Order Management Systems?

An Efficient Order Management Process Lets You Do More with Less

By automating the order process, an order management system (OMS) can reduce the amount of time and effort required for manual order entry, order tracking, and order fulfillment. 

The OMS also provides better visibility into the order process, allowing for greater accuracy and timeliness of order processing. This in turn can lead to shorter lead times and improved customer satisfaction. Additionally, an OMS can also help streamline the payment process, reducing the risk of payment fraud and reducing the amount of time required to process payments.  

Other benefits of an OMS include improved inventory management and reduced operational costs. By leveraging the power of automation, an OMS can help businesses become more efficient and improve their bottom line.

Providing an Improved Customer Experience Helps Grow Your Business

By streamlining the ordering process and making it easier for customers to track the status of their orders, customers can get their products faster and with less frustration.  

Additionally, the system can provide customers with the ability to make changes to their orders, allowing them to customize their purchases to their exact needs. It can also provide customers with better insight into their order history, allowing them to easily reorder items they've purchased in the past. This can save customers time when they are looking for something they've already purchased. 

In addition, an order management system can make communication between the customer and the company much easier. Customers can receive notifications when their orders are shipped and updates when there are delays, which helps the customer feel informed and in control of their purchase.

Reduced Inventory Costs Free Up Capital to Use Elsewhere

An order management system reduces inventory costs by streamlining the process from ordering to delivering. With the system in place, businesses have the ability to monitor and manage orders efficiently. Orders can be tracked in real-time, allowing for quick adjustments to inventory levels to meet customer demand. This helps reduce excess inventory as well as the costs associated with storing and managing it. 

An OMS also provides better visibility into customer orders, allowing businesses to better target their promotions and discounts, thus reducing the cost of acquiring new customers.  

Additionally, the system can provide insights into customer shopping behavior, giving merchants the ability to better understand their preferences and adjust their inventory accordingly. All these factors combined lead to reduced inventory costs.

There is No Downside to Increased Profitability

An order management system can increase profitability by streamlining operations, reducing errors, and increasing customer satisfaction. It can automate processes such as order processing, inventory management, and customer service. By doing so, it eliminates the need for manual data entry, which can reduce errors and create efficiency. This can lead to a reduction in labor costs and fewer mislabeled orders.  

Order management software solutions also provide real-time visibility into the status of orders, which can help identify any potential issues quickly and reduce the time it takes to fulfill orders. This can lead to improved customer satisfaction, better customer retention, and higher sales volume. 

Additionally, having a better understanding of customer demand can help businesses adjust their inventory levels and inventory management strategies to meet customer demand. This can lead to higher profits from reduced inventory costs and better inventory management.

Efficient Operations Lead to Improved Scalability

An order management system can significantly improve the scalability of a business. By automating the order processing process, companies can reduce the amount of time and resources required to manage orders. This frees up employees to focus on other areas of the business, such as marketing, customer service, and product development.  

With an order management system, businesses can also quickly and easily increase their order volume without having to manually manage each order. This saves time and money that would otherwise be spent on manual order processing, allowing businesses to scale up quickly and efficiently.  

In addition, an order management system can provide detailed analysis of orders and customer data, allowing companies to make better business decisions and optimize their operations. By leveraging the power of an order management system, businesses can quickly and efficiently scale their operations and increase their profitability.

3. What are the Challenges Associated with the Order Management Process? 

Accurate Inventory Tracking Requires the Best Order Management

Accurate inventory tracking presents a challenge within the area of order management because it involves ensuring that the right products are available for customer orders. This requires a company to accurately track the inventory levels for each of its products, which can be difficult and time-consuming. Additionally, the company must also ensure that its inventory levels are up to date in order to avoid overstocking or running out of a product. This can be difficult as inventory levels can change quickly due to customer demand, fluctuations in supply, and other factors.

Streamlining the Order Fulfillment Process is No Simple Task

Fulfilling orders quickly presents a challenge because it requires efficient coordination between suppliers, warehouses, employees, and customers. This demands the use of automated systems and processes throughout the warehouse/fulfillment center to manage a large volume of orders while providing customers with accurate and timely delivery.

The Necessary Evil of Managing Returns and Refunds

Managing returns and refunds can be very complex. It requires a great deal of coordination between customer service, finance, inventory, and shipping teams. Additionally, it involves dealing with customer complaints and ensuring that all of the relevant information is tracked correctly. This can be a time-consuming and costly process.

Not All OMS Software is Created Equal When It Comes to Integrations

Integrating with third-party software requires a large amount of time to configure the software and ensure that it is compatible with the existing systems. Additionally, the integration process can be unpredictable and resource-intensive, as it often involves setting up and managing various APIs, data feeds, and authentication protocols. This can be a difficult and lengthy process for businesses, as they need to ensure that the data is synced properly and that the systems are freely communicating. There can also be compatibility issues between different third-party software that can cause errors and delays, making it difficult to maintain a high level of customer service and satisfaction.

Insecure Customer Data Can Lead to Disaster

Ensuring the security of customer data is a major challenge when it comes to order management. Order management systems contain sensitive customer data like credit card information, shipping and billing addresses, and other personal information. If this data were to be compromised, it could lead to major financial losses for customers, as well as legal and reputational damage for the company. Therefore, it is important for order management systems to be properly secured, using encryption, firewalls, and other security measures. Additionally, companies must regularly review and audit their security protocols to ensure that their systems remain secure and resilient against attacks.

4. What are the different types of order management systems?

Multi-Channel Order Management System (OMS)

A Multi-Channel Order Management System (OMS) is a technology platform that helps organizations manage orders placed through multiple sales channels. It is designed to streamline operations by providing a centralized platform for managing customer orders, inventory, payments, and fulfillment. The system also helps retailers track and analyze customer data to better understand customer trends and optimize their sales and marketing strategies. A multi-channel OMS can also be used to manage customer service inquiries, shipping, and returns, and to create automated marketing campaigns. The system integrates with other business systems, such as e-commerce platforms, payment gateways, and accounting software, to provide a comprehensive view of customer orders, inventory, and sales data. This enables businesses to make informed decisions and manage their operations more efficiently.

Order Management Software

Order Management Software can be used to track orders, manage inventory, process payments, and generate reports. It can automate many of the manual processes required to keep order processing running smoothly, and is similar to an OMS in that both are used to manage orders and process payments. However, an OMS typically provides more functionality beyond just order management, such as inventory management, analytics, and customer service. An OMS may also provide more advanced features such as automated order routing and customer segmentation.

Customer Relationship Management (CRM)

A Customer Relationship Management (CRM) system is a platform that helps organizations manage customer interactions and data. The system stores customer information such as contact information, purchase history, and preferences. It also helps automate communication with customers (emails, social media posts, etc.). CRM systems provide analytics and insights into customer behavior, allowing companies to tailor marketing and sales activities to specific customers. The system can also be used to track customer support tickets, providing a better customer service experience. Finally, CRM systems can be integrated with other software, such as accounting, to better manage and automate business processes.

Enterprise Resource Planning (ERP)

An Enterprise Resource Planning (ERP) System is a centralized software system designed to streamline and optimize business processes. It allows organizations to store and share information from multiple departments and functions, including finance, operations, sales, marketing, and human resources. ERP systems are designed to improve visibility, accuracy, and efficiency, and to enhance collaboration between departments. They use integrated modules to automate data collection and reporting, provide cross-functional data analysis, and enable users to access the system from anywhere. ERP systems are typically deployed on-premise, but can also be accessed via cloud-based applications. By integrating data across the organization, ERP systems can provide valuable insights into operations, allowing businesses to manage their resources more efficiently and effectively.

Point of Sale (POS)

A Point of Sale (POS) System is a computerized system used in retail stores to process transactions and collect payments from customers. It is typically composed of a computer, a cash register, a barcode scanner, and a receipt printer. The system also keeps track of inventory and sales, creates customer profiles, and processes employee payroll. It provides detailed reports on sales and customer data, which can be used to better understand customer shopping behaviors and trends. Overall, a POS system makes transactions faster and more efficient, allowing businesses to better serve their customers.

5. How Do I Determine Which Type of Order Management System is Right for My Business?

First Things, First: Assess Your Needs

Assessing your business’s specific needs is a crucial first step to figuring out which direction to head. Having an understanding of the size and complexity of orders received, as well as the types of products offered, will help in determining the features and capabilities of the system needed to process orders efficiently. The number of orders received, as well as the channels for accepting orders, (online, in-store, over the phone, etc.), will also influence the type of order management system that is needed.

Read Up on Order Management FAQs

This can give you insight into the features and benefits of the system, as well as any common issues and questions that may arise. It can help you get a better understanding of the system before making a final decision, and aid in identifying any potential pitfalls or problems. Additionally, it can provide a better understanding of potential technical or operational limitations, as well as any additional services that may be needed for successful implementation.

Save Time By Doing Some Homework on Order Management Solutions

A number of steps can be helpful here. Researching the different types of streamlined order management systems available is one. It is also helpful to read reviews from other businesses to find out which ones are most effective and user-friendly. Then, compare the features and functionality of different systems to determine which ones might best meet your business’s specific needs.

Demo Systems to Find the Best OMS for Your Business

An OMS demo usually consists of a presentation of the software’s features and functions, a demonstration of how it works, and an explanation of the software’s overall value and benefits. The demo may include examples of how the software can be used, along with a discussion of the software’s capabilities and how it can help the enterprise achieve its goals. Software firms love to show you what their systems can do — they will give you a thorough tour through the software and address any questions may have. Any company unwilling to do so is not one you want to consider.

6. What are the Steps Involved in Order Processing and Fulfillment?

Order Collection (aka Order Capture)

Order collection/order capture is the first step in a typical order management process. The process begins when an order is placed on any order creation platform — websites, apps, phone orders, email, direct mail, etc. This step is essential as it ensures that customer orders are properly documented and tracked so they can be fulfilled in a timely and accurate manner. Order capture is also important for customer service, as it allows customer service representatives to quickly lookup order information and address any customer inquiries.

Confirmation/Verification of the Order

This helps to ensure accuracy and prevent errors by letting the customer verify the details of the order, such as quantity, item description, shipping address, and payment method. It also provides the customer with a confirmation that the order has been received and is being processed.

Payment Processing

After confirming and verifying the order, the payment has to be processed. This can be done by taking payment through credit/debit card, PayPal, or another payment method. Payment processing ensures that customers can securely pay for their orders, helps to create trust, and protects the customer by ensuring that payments are secure and authorized.

Order Routing

Integrated order management software will communicate with an IMS (Inventory Management System) and all sales channels. This free data flow sends real-time inventory information out so sales channels reflect actual inventory levels (eliminating stock-outs/backorders), and pulls sales orders in. As orders come in, the system will allocate available inventory and automatically determine where they should be routed for fulfillment.

For larger businesses with multiple fulfillment channels (warehouses, 3PLs, dropshipping, in-store), distributed order management (DOM) uses a rule-based system to enable advanced order routing for more complex fulfillment scenarios. Any information may be used in order routing: proximity to customer, VIP customer, type of product, shipping method, et al. These can all be factored into rules the system gives to provide extreme control while maintaining near-total automation.

Picking and Packing

Picking and packing are essential steps in order processing and fulfillment. Picking involves selecting the items from the warehouse inventory that have been requested in an order. Packing involves placing them in the appropriate packaging for shipping. These steps help to ensure accuracy, customer satisfaction, and timely delivery of orders. Quality control checks are also often performed during this stage of order management to ensure the highest quality products are delivered to the customer.

Shipping

Properly-executed shipping ensures that the customer receives their order quickly and without any damage. The shipping process includes packaging and labeling the order correctly, selecting the right shipping carrier and method, and tracking the shipment until it reaches the customer. By taking the time to plan and conduct a well-thought-out shipping strategy, merchants can provide customers with a positive experience and improve their entire order management cycle.

Returns and Exchanges

Returns and exchanges are (30-40% of the time) the final stage of the entire fulfillment process, and it is important for businesses to have a clear and comprehensive policy for how to handle them. This should include details such as who pays for return shipping, when a refund will be issued, and what qualifies for an exchange. By having a well-defined process, businesses can ensure a smooth customer experience while minimizing the financial impact of R&E.

7. How do You Measure the Success of an Order Management System?

Once a customer completes a purchase, their order comes alive, and it must be monitored every step of the way. From routing through fulfillment, shipping, and delivery (and, yes, returns), all of the processes involved demand visibility, transparency, and control. 

Order management KPIs (Key Performance Indicators) provide brands with powerful tools to measure how well they are executing those operations, and the importance of this data cannot be overstated. The cumulative work and investment that goes into converting a shopper can go to waste if poor order management results in delays, errors, and/or returns. Here are 5 examples of modern order management KPIs.

Cost per Order

Definition: Cost of warehouse labor, shipping charges and all other expenses required to deliver the order to a customer.

— This is a fundamental metric at the heart of any eCommerce merchant’s business, yet it is also one with a myriad of opportunities for improvement. Mapping out workflows and eliminating manual processes wherever possible is an excellent first step toward lowering the highest cost for any business – labor. Implementing automation via management software will accelerate processes, reduce errors, and increase productivity at every stage of the life cycle of a new order.

Order Picking Accuracy

Definition: Percentage of orders picked error-free.

— Few things disappoint a shopper more than receiving the wrong item - it will be returned at your expense and the customer may never return to your store. Fortunately, the total, or near-total, elimination of picking errors is a viable goal for eCommerce merchants of all sizes. Tightly-controlled receiving and putaway operations can ensure items are in the right place, and rigorous barcode scanning and automated picklists help provide the framework to achieve as close to 100% picking accuracy as possible. 

Internal Order Cycle Time

Definition: Average length of time between order placed and shipped.

— By eliminating shipping time from the equation, this KPI provides a focused look at your fulfillment processes. Any increases here demand a review of picking and packing and may suggest increased automation is needed. 

Order Fulfillment Cycle Time

Definition: Internal order cycle time combined with shipping duration.

— Customers now (should) receive detailed shipping and delivery information once their order has been processed and fulfilled, and speed is a priority - they want their items as quickly as possible. Optimized workflows throughout picking and packing can both reduce processing time and provide a competitive advantage. If your fulfillment operations are efficient, and this KPI is high, you may have an issue with the shipping carrier(s).

Return Rate

Definition: Percentage of delivered items being returned.

— Returns cost money. They mean refunds, time and labor (and shipping) devoted to reverse logistics, and potentially dissatisfied customers. In addition to issues of product quality, return rates can be impacted by inaccurate picking and items damaged during fulfillment/shipping. Identifying where the problems lie is vital for any business experiencing elevated rates of return.

8. What are the Best Practices for Successful eCommerce order management?

Advanced Order Management Demands Clear Processes

Advanced order management demands clear processes because it involves a variety of tasks, from taking orders and tracking inventory to managing returns and customer service. Without clarity, orders can become backlogged or lost and inventory can become inaccurate. Clear processes help ensure that orders are managed efficiently and accurately, and that the customer service team can provide timely help and support. Additionally, clear processes can help reduce costs associated with order management, such as labor and storage, by streamlining processes and eliminating redundancies.

Keep Your Inventory Levels in Check with Effective Monitoring

An effective inventory monitoring system is necessary for businesses to ensure that stock levels are always adequate to meet customer demand. Keeping inventory levels in check ensures that products are available when needed, without being overstocked or understocked. Additionally, with proper monitoring, inventory costs can be managed more efficiently. Furthermore, effective inventory monitoring helps businesses to identify their best-selling items, enabling them to optimize their inventory levels. In the end, effective monitoring of inventory levels can result in improved customer satisfaction and increased profits.

Quality Customer Service is an Investment You Can't Afford to Ignore

Customer service can make or break a customer's experience, and ultimately determine the success of the business. By investing in quality customer service, you can create a loyal customer base and build trust in your brand. Quality customer service ensures customers are well taken care of, and that they feel valued. It also helps to create a positive and lasting impression of your business. Quality customer service reduces customer queries and complaints, and can even lead to repeat business. Investing in quality customer service is something that no business can afford to ignore.

Streamline Order Processing With Automation

Automation can help streamline operations, reduce costs, and improve customer service. It reduces the manual effort required to process orders, freeing up staff to focus on more valuable tasks. Automation also ensures orders are processed accurately and quickly, leading to improved customer satisfaction. Automation can provide detailed reports that give businesses insights into ordering trends, helping them make better decisions. Finally, automation can help businesses scale faster, streamlining the order process and eliminating manual steps.

Transform Your Business with the Power of Data Analytics

Data analytics is a key best practice for successful order management. By analyzing customer data, businesses can better understand their needs and preferences, sales trends, and market opportunities. This data helps to identify areas of improvement, inform product development, and optimize order fulfillment processes. Additionally, data analytics can help to identify and analyze potential customer segments, allowing businesses to develop tailored marketing strategies and better meet customer expectations. With the right data analytics in place, businesses can gain a competitive edge in order management and ensure customer satisfaction.

9. With What Other Types of Enterprise Software Systems Does an OMS integrate and Communicate?

Enterprise Resource Planning (ERP) Systems

An Order Management System (OMS) integrates and communicates with an Enterprise Resource Planning (ERP) system by providing a centralized platform for data sharing across multiple departments. The OMS communicates with the ERP to receive customer data, inventory levels, pricing information, and other relevant information. The OMS then passes this data to the ERP which is used to generate the necessary documents and process payments. The integration between the two systems allows for streamlined and efficient order processing, resulting in improved customer service and satisfaction.

eCommerce Platforms

When integrated with an eCommerce platform, the order management system can automate the entire ordering process, from taking the order to processing payment to fulfilling the order. The system communicates with the eCommerce platform’s API, automatically importing customer and order data, such as inventory levels, payment methods, and shipping information. This integration makes it easy for merchants to keep track of their orders, manage inventory, process payments, and provide customers with accurate order information. Additionally, the integration allows for a streamlined, automated checkout process, reducing manual entry and ensuring customers receive their orders quickly and accurately.

Customer Relationship Management (CRM) Systems

An order management system integrates and communicates with a customer relationship management (CRM) system to streamline customer service and improve customer retention. This integration allows the order management system to access customer data stored in the CRM, such as contact information, order history, and customer preferences. This data can then be used to optimize customer service, e.g. enabling automated order status notifications or personalized offers. The order management system can also update the CRM with data such as order status and customer feedback. This can then be used to gain insights into customer behavior and preferences, allowing companies to improve customer service and tailor marketing campaigns. In addition, the order management system can be used to track customer orders, providing a comprehensive view of customer interactions with the company. This integration between the two systems can help businesses better understand their customers and create a more personalized and effective customer experience.

Inventory Management Systems (IMS)

An order management system (OMS) integrates and communicates with an inventory management system (IMS) to ensure that products are available and ready to be shipped to customers. The OMS communicates with the IMS to update the inventory levels and alert when stock is low. The IMS also informs the OMS of any new products being added to the inventory, so that the OMS can accurately reflect the current stock levels. When orders are placed, the IMS checks to make sure there is enough inventory to fulfill the requested order. The OMS communicates with the IMS to update the inventory levels and alert when stock is low. The integration of these two systems allows for a streamlined and efficient process of order fulfillment.

Warehouse Management Systems (WMS)

An Order Management System (OMS) integrates and communicates with a Warehouse Management System (WMS) in order to manage and track orders from customers. The OMS will provide the WMS with customer orders and the WMS will then provide the OMS with information on the status of the order. This communication is necessary for the OMS to keep the customer informed of the order’s progress. The OMS and WMS will communicate when orders are placed, when stock is allocated to fulfill an order, when orders are picked and packed, and when they shipped. This type of communication ensures that orders are fulfilled smoothly and customers are kept up to date on the progress of their orders.

Shipping/Logistics Software Systems

An order management system integrates and communicates with a shipping/logistics company's software system by providing the shipping company with information about orders (customer addresses, order details, shipment tracking, etc.). This information is shared between the two systems in real-time, allowing the shipping company to easily manage delivery and ensure the timely delivery of products. The order management system also provides the shipping company with detailed information about the orders and shipments, such as the weight, size, and dimensions of the items, which helps the shipping company choose the most efficient and cost-effective delivery options. By providing automated tracking of orders and shipments, it allows customers to quickly and easily keep track of their orders. In addition, the order management system can integrate with other software systems, such as accounting and customer service systems, to provide a streamlined order process.

Coordinate, route, and control all incoming orders from any channel with SkuNexus

As any online retailer will undoubtedly attest, there is nothing simple about eCommerce order management. In the best of scenarios, it presents a myriad of challenges. If executed poorly, it can bring that merchant’s business to a standstill. 

At SkuNexus, Order Management Software design is a core element of what we do. We help companies streamline operations, automate processes, and improve efficiency throughout their entire eCommerce backend. If you are part of a growing business that is facing challenges on any level in this area, you have come to the right place.

Every system you use - eCommerce platforms, marketplaces, 3PLs, and dropshippers - can be connected to SkuNexus. Our order management software easily tracks incoming orders, and the powerful automation tools built into the system can route orders to warehouses or physical stores for fulfillment, or flag them for further review.

If you would like to learn more about how our order management solutions can transform your entire business, please contact us to schedule a personalized demo.

 

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