David Bickerstaff 03 December 2020 4 min read

Key Benefits of an Order Management System

You’ve probably heard the term “Order Management System” before – it’s become a bit of an eCommerce buzz-phrase lately, but the concept is nothing new. In fact, you've actually been doing order management for years, but perhaps you've just been doing it (or part of it) manually.

With the continuing rise of eCommerce and other digital channels over and above traditional ones, now is the time to start investigating how an eCommerce order management system will support your business going forward.


In their July 2020 article ‘Get Supply Chain Right’, Forrester states

“From automotive spare parts to high fashion, e-commerce has revolutionized the way companies buy and sell, but it has also created a huge headache for companies that want to fulfil orders…”. Forrester later goes on to say that companies lag in effective customer service technologies, with over 40% of all incoming Customer Service calls being for Order Placement (44%) and Order Inquiry (41%).



So what IS order management in the context of an Order Management System (OMS)? It’s essentially the digitised, automated process of enabling and then tracking a sales order, including its associated inventory, fulfilment, and payment.


An OMS may in fact encompass multiple tools such as an ERP, eCommerce platform, and automation software. The key is to ensure that they all work together seamlessly to form one cohesive system, streamlining the entire order-to-cash process.



What does an Order Management System do?

It’s not just about accepting an order and collecting the payment. The lifecycle of a sales order - commonly known as the “order-to-cash” process - is comprehensive, and a truly effective OMS will do the following:

  1. Access inventory data in order to display products/product catalogues online
  2. Take the order (via eCommerce platform or automated order processing application such as Lucy)
  3. Process the payment (by merchant gateway at point of sale or invoice on account for B2B)
  4. Update inventory levels to reflect committed and/or shipped stock
  5. Track the order - for both the customer and your customer service team
  6. Facilitate returns and credits/refunds
  7. Display invoices and outstanding balances, and accept payments against them
  8. Expose elements of the above to your customers based on their roles



What are the benefits of an Order Management System?

With the power of an automated process from beginning to end, it’s not hard to see the value of a good OMS. And a key element of it is your eCommerce platform - especially for B2B where the platform needs to provide more than just an online ordering capability.

Streamlining the order-to-cash cycle and allowing your business to scale are the key benefits an Order Management System will bring. In particular:


1. Improved Inventory management and visibility

By displaying stock availability on your eCommerce platform, you can reduce costly backorders. If the customer can see that a product is out of stock, they may choose an alternative, or ask to be notified when it becomes available again. By displaying stock by warehouse or store location, your customers can see where to quickly access the products they’re after. 


Once an order is placed, your inventory levels are updated to reflect it, allowing you real-time planning and procurement opportunities.



2. Error reduction through automation

An integrated order management system eliminates manual processes such as data entry. And with that comes greatly improved accuracy. Mistakes are costly, resulting in credits and returns. Reducing errors throughout the process via order management and automation will increase revenue.



3. Cost savings throughout the supply chain

Eliminate hours of expensive manual labour on mundane tasks like data entry. Take the order via the eCommerce platform, or have an automated solution (such as Lucy) do it for you, while you deploy your Customer Service staff where they can better add value and help grow the business.

When order processing and fulfilment is faster, so is payment – the order-to-cash cycle is shortened by effective order management, improving your business’s liquid assets.

Offering payment options at the point of sale removes friction from later stages of the order cycle (e.g chasing payment, reminder notices).



4. Improved Customer Experience

The customer enjoys faster delivery, they receive order updates throughout the process, and they have 24/7 access to order tracking functions. Not to mention the ability to request quotes or process returns and refunds online if needed.


Customer satisfaction levels get a boost as there are far fewer errors, both in the delivery of the customer's order and in the charges on their invoice. 



In summary

The key to an effective Order Management strategy is to be able to manage ALL orders - regardless of the channel via which they've come. Whether on the phone, online, via EDI, email or other processes, a true Order Management System allows you visibility into ALL transactions in the order-to-cash process.

An effective Order Management System will empower your customers with the ability to transact, including placing orders, paying invoices, processing returns, and requesting quotes - all online. Such a system enables your customer to have a 360-degree view of every one of their interactions and transactions with you.

With tangible cost-to-serve and customer experience improvements for your business, now is the time to reap the benefits of an Order Management System. Empower your business to take control of the order-to-cash process from beginning to end, driving key efficiencies and growing your revenue.