Chapter 8. How Do You Manage Orders with Order Management Software?

Welcome to Chapter 8 of our order management guide. This Chapter will cover the most crucial features you should expect from a reputable Order Management System (OMS).

What Are the Functions of an OMS? 20 Must-haves

OMS functionality can vary significantly depending on the provider, so it is wise to ensure that they have absolutely everything you need before selecting one. Think of these 20 functions as your checklist for a good OMS. Without these functions, you may need more than one solution for order management, which can be costly, risk information loss, and prevent you from utilizing crucial time-saving features.

1. Order Entry

At the bare minimum, your OMS should enable you to input orders into the system. This should include details like:

• Products ordered.
• Customer details.
• Quantities.
• Any special instructions.

Furthermore, your OMS should be able to do this for all your sales channels, whether online or offline, not just your online marketplaces and websites but also brick-and-mortar stores. All orders, whatever their origin, should be found in one place so you don’t have to hop between marketplace dashboards to update order information, and your inventory doesn’t get out of sync.

2. Inventory Management

Another vital feature you should expect from a good OMS is inventory management. When an order is placed, it should be reflected in your inventory so you can keep track of it. Some of the most crucial inventory management features your OMS should offer include:

• Real-time inventory tracking—You should be able to see how every order impacts your inventory, so you always know how much inventory you have on hand.
• Updating quantities—As orders are received and fulfilled, know exactly how much you have, where it is, and what stage of the process it is.
• Low stock level alerts—Get notifications whenever inventory levels are low so you can reorder.
• Differentiate between physical and sellable inventory—Physical inventory is what you have in stock, and sellable inventory is what you can sell. Differentiating the two can help you manage your inventory better.
• Pending order reserve—Reserve inventory for an order that hasn’t been paid for yet.

3. Order Processing

An OMS must be able to follow the entire order process, from the moment an order is made to its completion and every status change along the way. You should also receive status updates on orders so you know where they are in the fulfillment process and don’t lose track of them. If customers call you asking where their order is, you should be able to find it immediately. Furthermore, you should be instantly notified when a problem arises.

4. Order Fulfillment

Order fulfillment is a broad term that includes tasks such as picking, packing, and shipping orders. A more advanced OMS can offer custom packing slips and sorting activities to help make order fulfillment even more efficient.

5. Payment Processing

Your OMS should integrate with payment gateways to securely process and confirm order payments. Having multiple payment methods makes it easier for customers. You are also less likely to lose a customer because you don’t have their preferred payment method.

6. Shipping and Logistics

Your OMS should at least enable you to calculate shipping rates, generate shipping labels, and track orders. Even better, your OMS can include custom logic to help you choose the best shipping for your needs.

7. Returns and Refunds

The bigger your business, the more returns and refunds you might receive. It’s a part of doing business; you need to accommodate it and make it easy to handle. Not only should your OMS be able to issue and process customer refunds, but it should also be able to issue RMAs and update inventory levels to reflect the returned stock, and it should all be trackable.

8. Reporting and Analytics

Reports and analytics are essential for growing your business as they show you where you could be doing better, how you can grow, develop an acceptable level of service, and inform your decision-making and business strategy.

9. Integration with Other Systems

An OMS should oversee your operations and sales channels over multiple platforms and tools. It should be where you plug everything in for a top-down view.

10. Scalability

As your business expands and order volume increases, your OMS must be capable of handling the changing workload without denting its performance and reliability. Your company may experience seasonal periods or hold sales where orders increase.

11. Customer Communication and Management

Customers may contact your business for various reasons, and you must be able to respond to them. Your OMS must be able to handle this kind of communication.

12. Customization and Configuration

A top-shelf OMS needs to offer customization and configuration options to tailor it to work how you need it to.

13. Automations and Workflow Rules

Your OMS should automate repetitive tasks to save time and reduce manual work. Automations can include order tagging, routing, fulfillment prioritization, or fraud flagging.

14. Backorder and Preorder Management

Your OMS should be able to manage backorders and preorders automatically. When an item is out of stock, it should create a backorder and fulfill it once inventory becomes available, while also communicating status updates to customers.

15. Multi-Warehouse and Distributed Order Management

If your business fulfills from multiple warehouses, stores, or 3PL locations, your OMS should intelligently route orders to the optimal fulfillment location.

16. Forecasting and Demand Planning

Using sales and seasonal data, your OMS should forecast future demand and generate purchase recommendations.

17. Fraud Detection and Security Controls

Your OMS should include fraud-prevention features to protect your business and your customers.

18. User Permissions and Role Management

As your team grows, it’s important to manage who has access to what. Your OMS should allow you to assign user roles, define permissions, and log user actions to maintain security and accountability.

19. API and Developer Tools

A robust OMS should provide a comprehensive API for businesses that want more flexibility.

20. Mobile Access and Remote Management

Your OMS should give you visibility and control wherever you are. Mobile access allows you to view order statuses, approve payments, and track shipments on the go—helping you stay connected to your operations at all times.

Key Points From Chapter 8

You now know precisely what features to look for when searching for an OMS.

• There are a variety of features you should expect a robust OMS to offer. Without the features we have listed in this Chapter, you will need more than one solution, which is not ideal.
• At the very least, you should be able to enter, process, and track orders. However, a more advanced OMS can offer you much more.
• Reporting and analytics can reveal a lot about how your company works and help you make better decisions.
• Scalability, integrations, and customization are some of the more advanced features offered by an OMS, which are very helpful to have.
• Descartes Sellercloud comes with various tools and software to manage a business’s orders.

In the next chapter, we cover everything you need to know about shipping.