Why an OMS is the Heart of Inventory Management in a Retail Operation

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Selling products online may seem straightforward, but effective order fulfilment is far more than just clicking a “Buy Now” button. It involves demonstrating to customers that they are valued by the company, and encouraging repeat business. However, managing online orders efficiently is also a significant cost centre that requires careful management  to avoid costly bottlenecks in the fulfilment process.

This is where an Order Management System (OMS) becomes indispensable in any online retail operation. But what exactly is an OMS, and how does it address critical challenges? Chris Timmer explores why OMS is pivotal for managing online sales operations…

What is an OMS?

An OMS tackles many various challenges for online sellers, focusing on the entire lifecycle of an order once a purchase has been made. It encompasses processing orders from the point of purchase to fulfilment, and handling  order modifications like changes in product specifications or delivery addresses. While consumers can often make these changes easily, with a few simple clicks on their smartphone, integrating them seamlessly into operations poses complexities that a robust OMS resolves.  By coordinating with other systems, an efficient OMS helps to ensure the best possible experience for the customer throughout the order lifecycle, thus bolstering brand loyalty.

OMS vs IMS vs WMS: Clarifying the Differences

While often discussed in the same breath, there are clear distinctions between an Order Management System (OMS), an Inventory Management System (IMS), and a Warehouse Management System (WMS). An OMS primarily manages orders post-purchase, while an IMS focuses on inventory levels, valuation, and financial tracking. A WMS, on the other hand, optimises warehouse operations behind the scenes for efficient product storage and fulfilment. These systems go hand in hand as part of a connected commerce ops platform, in order to provide comprehensive visibility and contract across ecommerce operations, enhancing overall efficiency and customer satisfaction.

Total Visibility and Greater Control

By bringing OMS, IMS, and WMS functionality together, retailers benefit from total visibility and greater control across their ecommerce ecosystem. With an OMS, retailers can take their business to a whole new level, far beyond the walls of the warehouse. The OMS will route orders to various fulfilment centres, saving time, costs whilst boosting efficiency.

Alternatively, retailers might be working with a drop shipper or have a third-party logistics (3PL) firm fulfilling orders. The OMS will look at the data and determine who has purchased the item, how fast they need it, and where it should be assigned for fulfilment. The OMS will then hand over to the WMS, which manages the item’s picking, packing, and shipping.

After outgrowing simpler solutions, retailers turn to technology to add accountability and tracking. As a result, by integrating OMS, IMS, and WMS systems, retailers can get their products out the door as accurately and efficiently as possible, while also analysing and optimising business processes.

Cost Savings and Growth

It is possible for businesses to reduce labour costs and customer dissatisfaction by automating order processing, reducing the need for manual intervention. The streamlined processes and increased accuracy not only save on operational costs but also enhance the customer experience, which can drive sales and increase revenue. Satisfied customers are more likely to return and recommend your business to others, leading to positive word-of-mouth and stronger customer relationships. Additionally, efficient order management lays a foundation for scalability, enabling businesses to expand without compromising service quality. The combination of these benefits contributes to a healthier bottom line and a stronger market position, contributing to long-term success in a competitive environment.

Scalable Solutions for Sustainable Growth

For businesses to remain competitive in the digital age, Order Management Systems (OMS) are no longer just a luxury, they’re a necessity. These systems provide a wide range of benefits, including enhanced efficiency, accuracy, improved customer satisfaction, scalability, flexibility, advanced analytics, seamless integration with other systems, and ultimately cost reduction and revenue growth.

Businesses that automate and optimise their order management processes not only position themselves to meet the dynamic market demands of today, but also lay a solid foundation for sustainable growth and success. And as the retail industry evolves, businesses need to be able to leverage the full potential of their operational capabilities, making an OMS a critical investment.