What is order management?

Order management involves the tracking of orders from inception to fulfillment and managing the people, processes and data connected to the order as it moves through its lifecycle.

The basic steps include:

  • Inventory availability. Customer or sales team verifies inventory is available as they review various products or services.
  • Order. Customer places the order across a range of possible channels — web, mobile, call center, store, marketplaces and others.
  • Verification. A sales team member or an automated system verifies with the customer that the order is placed and collects or records the pertinent data for the order — name, address, telephone contact, email, promotional codes and other data.
  • Inventory promising. System or team member matches the product or service to fulfill the order.
  • Fulfillment. The product or team is dispatched through a distribution channel such as ship-from-warehouse or distribution center, ship-from-store, pickup-in-store, online download or a sales person simply hands over the item. Fulfillment is verified as well — customer sign-off for the completion of a service.
  • Service: Making an appointment, scheduling installation or delivery services, or even exchanging or returning a product.¹ This may be the first step in a new business process but can also be associated with order management.

Order management can quickly become complex, particularly when large volumes or multiple sales and distribution channels are considered. Trends commonly associated with order management that add to this complexity are:

  • Multichannel. Multiple physical stores or locations, online or digital channels, and call centers to conduct business and manage orders. Transactions and customer interactions are discrete to each channel.
  • Omnichannel. The ability for customers to seamlessly navigate across channels to conduct business and the ability for organizations to adjust processes to address customer expectations as they do so. For example, a customer buys on the web, changes the order through a call center and picks up the order in a physical store.

Computerized order management systems (OMSs) have evolved to handle this growing complexity and help process orders more efficiently and profitably.

What is an order management system?

An order management system (OMS) is a digital way to manage the lifecycle of an order.² It tracks all the information and processes, including order entry, inventory management, fulfillment and after-sales service. An OMS offers visibility to both the business and the buyer. Organizations can have near real-time insight into inventories and customers can check when an order will arrive.

At the heart of an OMS is the distributed order management (DOM) capability, software that enables an OMS to intelligently route orders to the optimum destinations or resources for fulfillment. DOM is critical to managing the business processes associated with an order and helps deliver a seamless customer experience across channels.

A pioneer in DOM technology, Sterling Commerce® was purchased by IBM in 2010 to enable the integration of key business processes across channels, including order management and fulfillment.³ Building on these capabilities and incorporating its own innovations, IBM has created order management systems that can orchestrate orders with a global view of inventory and the ability to deliver after-sales service. These systems help fulfill a complete order promise: available-to-promise, available-to-deliver and available-to-service — and support an order-from-anywhere, fulfill-from-anywhere, and return-to-anywhere omnichannel model.

Why order management is important

According to IDC, “order management systems can be looked at in a bicycle analogy of the chain that drives the supply chain forward as it intersects with every other system to complete a successful order.” As the hub gear of the supply chain, order management and OMSs present critical opportunities to reduce costs and generate revenue.

From an operational perspective, OMSs can help control costs by automating manual processes and reducing errors. As IDC indicates, order management touches virtually every other system and process in the supply chain, both inside and outside of an enterprise. Most companies no longer contain order management within their organization. They involve multiple partners such as parts and components suppliers, assembly and packaging services or distribution centers, making it easy to lose visibility and control of an order. This results in costly manual processes to complete and deliver the order without errors. 

Externally, order management and OMSs have a direct impact on how a customer perceives a business or brand. In an omnichannel environment, customers expect a seamless experience. A customer may order online, but have questions and complete the order through a call center. As the order is being fulfilled, the customer expects to see updates like emails along the way. If there is a problem, they may wish to return it through a physical channel such as a store. Each point in the journey presents an opportunity to provide a great customer experience and boost retention and revenue. The omnichannel journey also presents opportunities to make up-sell and cross-sell recommendations and grow revenue.

See why IDC named IBM a leader

Enterprise retailers

Worldwide Distributed Order Orchestration for Enterprise Retailers

IDC MarketScape: 2018 Vendor Assessment

Midmarket retailers

Worldwide Distributed Order Orchestration for Midmarket Retailers

IDC MarketScape: 2018 Vendor Assessment

Key features of effective order management

Effective order management can be assessed by looking at these key capabilities:

  • Visibility. View the entire supply chain and isolate events to anticipate problems and develop more efficient processes.
  • Intelligence. Tune order management processes to an organization’s business rules and performance goals.
  • Flexibility. Break orders or events into unique work items that can be intelligently channeled to the appropriate systems or resources.
  • Real-time inventory. Provides a single view of inventory, showing what’s in stock, in transit and current demand levels — reducing the need to expedite shipments or maintain excessive safety stock.
  • Delivery and service scheduling. Establish a centralized, consolidated view, match delivery commitments to inventory, resources and skills, and allow service requests to be addressed more efficiently. 
  • Customer engagement technologies. Give customer-facing personnel and management a view of the customer, back-end inventory and resources — associates can execute transactions more efficiently with higher accuracy, and boost revenue by recommending complimentary products and services.
  • Fulfillment optimization. Analyze data and recommend options that consider market shifts and business objectives such as how and where customers want orders shipped, time-to-delivery and cost.

Source

¹ “What are the basic steps for order management," Revathi Karthik, Quora, 27 Sep 2017

² “What is an OMS and why do I need one," George Kokoris, Supply Chain 24/7, 28 Jun 2018

³ "IBM completes acquisition of Sterling Commerce," IBM press release, 27 Aug 2010