Is your business growing so fast that you can’t keep up? Are you spending too much time on tasks like tracking inventory and making sure orders are shipped correctly?
If you’re nodding along, an order management system (OMS) is the time-saving, error-reducing solution you need.
Read on to uncover the game-changing benefits of an OMS and how it can revolutionize your workflow. If you’re here for our recommendations of the best OMS out there, skip to the last section.
Understanding the order management system
An OMS is a central hub for all customer orders, regardless of where they originate. This means if a customer buys from your online store, physical retail location, or a third-party marketplace like Amazon, the OMS shows all those orders in one place. Having a complete picture of these sales makes it easier to track the status of each order, manage inventory, and ensure smooth fulfillment for every customer.
An OMS is also a powerful tool for managing and allocating your inventory. It tells you what you have in stock, where it’s located, and when to order more. This ensures you always have the right products available to meet customer demand.
Key benefits of an order management system
An OMS offers a multitude of benefits to improve a business’s bottom line and customer satisfaction:
Optimize inventory expenses
An OMS helps businesses maintain optimal stock levels by providing data for demand forecasting and real-time inventory visibility. With this information, businesses can make better decisions about when and what to reorder, reducing holding costs associated with excess inventory while minimizing the risk of stockouts.
Enhance order fulfillment efficiency and accuracy
Manual order processing is prone to errors, leading to delays, incorrect shipments, or dissatisfied customers. An OMS automates many tasks in this process, such as order entry, picking, packing, and shipping label generation. Orders are more likely to be fulfilled accurately and quickly, shortening lead times and increasing efficiency.
Manage multiple sales channels in a centralized database
Managing orders from different channels can be a logistical nightmare for businesses. You might run out of stock at a retail store and then be unable to fill an order placed online that same day. This leads to a disappointed customer and an urgent need to reorder that product. An OMS integrates with various platforms to consolidate order data and prevent blind spots.
Efficient and well-organized warehouse operations
An OMS can optimize warehouse operations by providing pick lists, packing instructions, and shipping labels to guide warehouse staff through the fulfillment process. For example, an OMS can generate pick lists that optimize the picker’s route through the warehouse, minimizing picking time and maximizing productivity.
Calculating the value of an order management system
Calculating the return on investment (ROI) of an OMS is key to understanding how much money you’ll save or make by using it compared to the cost.
Here’s a simple way to calculate the financial impact of this type of system.
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Calculate savings
- Time: Estimate how many hours the OMS will save your team each week and multiply that by their hourly wage.
- Errors: Calculate the cost of each order error (reshipping, refunds, missed items) and estimate the number of errors the OMS will prevent.
- Inventory: Calculate how much you spend storing excess inventory and lose due to stockouts.
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Estimate increased sales
- Consider how faster, more accurate orders and happier customers could increase sales. This is harder to pinpoint, but review the impact of past improvements to gain some insights.
- If you save money, consider how you’d spend those savings. Would it be on marketing campaigns or new packaging designs? How would these changes affect your bottom line?
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Add it up
- Add up all your estimated savings and potential increased sales.
- Subtract the annual cost of the OMS (software, setup, training, and any other costs).
The result of all these variables is your net ROI. If it’s positive, the OMS is paying for itself and then some.
Example calculation
Let’s say your OMS costs $10,000 per year.
You estimate it will save $5,000 in labor, $2,500 in error costs, and $1,000 in inventory costs. You also predict a 5% sales increase, which adds $8,000 in revenue. Your total gain is $16,500.
After subtracting the $10,000 cost, your ROI is $6,500. This means an OMS is a profitable investment for your business.
Order management system versus warehouse management system
While both OMS and warehouse management systems (WMS) are essential for efficient supply chain management, they cater to different needs within the order fulfillment process.
Here are the main differences:
- OMS: The OMS is like a project manager, but the project is tracking the status of every active order. It oversees everything related to the customer’s order journey, from the moment they click “Buy” to when their package arrives. This includes processing orders, tracking shipments, managing returns, and communicating with customers. It’s all about accessing the information needed to create a smooth and satisfying customer experience.
- WMS: The WMS is like the operations manager of your warehouse. It focuses on optimizing and recording physical processes within the warehouse, such as receiving inventory, organizing it on shelves (putaway), picking items for orders, packing them up, and shipping them out. It keeps your warehouse running like a well-oiled machine.
How to choose the right order management system for your business
Choosing a suitable OMS is a critical decision that can significantly impact your business’s efficiency and growth. But there’s no use paying for a solution with features you don’t expect to use.
Here’s what to consider when choosing a system:
Order processing
Evaluate the OMS’s ability to handle your order volume and complexity. Consider features like order routing, splitting, merging, and customization options.
Integrations
Ensure the OMS integrates seamlessly with your existing systems, such as your eCommerce platforms, accounting software, and shipping carriers. This ensures data flows smoothly between systems, reducing manual data entry and minimizing errors.
Analytics and reports
Look for an OMS that provides robust reporting and analytics capabilities. These allow you to track key performance indicators (KPIs) and gain insights into your order fulfillment process to identify bottlenecks, optimize operations, and make data-driven decisions.
Types of order management systems
There are two main types of OMS:
1. Individual systems
These are standalone order management solutions for small to medium-sized businesses. They offer essential order management features at a more affordable price point than big enterprise systems.
2. Enterprise systems
These are comprehensive OMS platforms with advanced features and scalability, suitable for large businesses with complex order fulfillment needs.
Cloud-based versus on-premises solutions
You can deploy both individual and enterprise systems in two ways: cloud-based or on-premises. The former would be hosted on the provider’s servers and accessed online, offering flexibility, scalability, and automatic updates. On-premises software is installed and maintained on a company’s infrastructure, offering more customization and control but requiring more upkeep by the user.
Which type you choose depends on how much customization and scalability you need. Some systems also require additional IT resources to maintain operationality, so factor these into your decision.
6 best order management system tools
The best OMS for your business will depend on your specific needs and budget. But here are some popular options:
1. Fishbowl
Fishbowl stands out as the best comprehensive and user-friendly solution for businesses seeking a robust inventory and order management platform. With its intuitive interface and powerful features, Fishbowl offers unparalleled visibility into your entire supply chain. It allows you to track inventory levels in real time, automate order processing, and manage shipments seamlessly.
Additionally, Fishbowl’s cloud-based WMS capabilities ensure that you can optimize your warehouse operations, from receiving and putaway to picking and packing.
2. Salesforce Commerce Cloud
Salesforce offers an eCommerce-focused OMS that provides tools for marketing, merchandising, promotions, and branding. Salesforce Commerce Cloud boasts stellar customer support but has a steeper learning curve and limited customization options compared to other systems on this list, including Fishbowl.
3. Linnworks
This cloud-based, scalable order processing system simplifies order management with automation features and boasts numerous integrations and reporting capabilities. However, be prepared for a challenging learning curve.
4. QuickBooks Commerce
This is a familiar and affordable choice for QuickBooks users, as this OMS integrates seamlessly with existing QuickBooks accounting software and offers a shallow learning curve. However, it lacks eCommerce-specific features, and advanced functionalities may require a higher-priced plan.
5. Shopify Plus
For people with Shopify stores, this popular OMS seamlessly integrates with existing accounts to provide advanced features and analytics capabilities. But the user-friendly platform comes at a cost, with a higher price point and additional per-transaction fees than other software.
6. Zoho Inventory
This order-tracking system simplifies tracking and managing orders from multiple platforms. It features customizable alerts to prevent low-stock issues. However, its reporting and analytics capabilities are limited.
While all these options are competent, Fishbowl stands out due to its unique blend of scalability, user-friendly design, and ease of deployment. You can implement Fishbowl, get all team members up to speed quickly, integrate with all of your eCommerce accounts, and earn a solid ROI from day one. It’s an excellent choice for businesses seeking a powerful, intuitive, and efficient way to manage their orders and optimize their supply chain.
Go from chaos to control with Fishbowl
With Fishbowl, you gain the power to optimize inventory, streamline order fulfillment, and simplify warehouse operations. Don’t let the chaos of order management hold your business back — experience the transformative power of the best OMS out there. Contact us today to learn how our platform can revolutionize your order management.