How does order management work?

Order management starts when a customer places an order and ends once they receive their package or service. It allows a business to coordinate the entire fulfillment process — from order collection, inventory and delivery visibility to service availability. The workflow involved can differ based on a company’s needs, but a typical order management process includes three steps:

Placement

The customer places the order through an automated form. A sales team member checks the details and confirms the order.

Fulfillment

A warehouse employee confirms shipping details, generates an invoice and fulfills the order — pick, pack and ship.

Inventory management

Inventory levels are monitored as they fluctuate with the demands of the business.

What is omnichannel order management?


What is an order management system?

An order management system (OMS) is a digital way to manage the lifecycle of an order.1 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.


Why order management is important

Order management touches virtually every system and process in the supply chain. 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. An OMS can help control costs and generate revenue by automating manual processes and reducing errors.

Externally, order management has 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 IBM is a leader

Forrester Total Economic Impact™ Study

Forrester examined the potential ROI enterprises may realize by deploying IBM Sterling Order Management.

IBM Sterling Order Management: The perfect order

Customers want more delivery options. Keep them happy without eroding profits. Learn how.

Key features of effective order management

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 channeled to the appropriate systems or resources.

Real-time inventory

Get a single view of inventory, see 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

Match delivery commitments to inventory, resources and skills; allow service requests to be addressed more efficiently.

Customer engagement technologies

Give customer-facing personnel a view of the customer, back-end inventory and resources so they can execute transactions more efficiently.

Fulfillment optimization

Analyze data and recommend options that consider how and where customers want orders shipped, time-to-delivery and cost.

Case studies

Eileen Fisher

Fashion retailer Eileen Fisher built a single pool of inventory across channels to improve trust in inventory data, execute more flexible fulfillment and cut customer acquisition costs.

Parker Hannifin Corporation

Manufacturing giant Parker Hannifin uses an order orchestration framework that helps deliver a unified buying experience and provides insight into inventory, order and customers.

Fossil Group, Inc.

Fashion designer Fossil uses IBM Sterling Order Management to enable centralized visibility and orchestration of its inventory across channels.

REI

Recreational equipment retailer REI has embraced an omnichannel strategy and opened up new opportunities to drive revenue and create customer loyalty.


Get answers to frequently asked questions about order management

What are the basic steps of the order management process?

  • Inventory availability. Customer or sales term 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.2 This may be the first step in a new business process but can also be associated with order management.

What trends associated with order management make the process more complex?

Order management can quickly become complex, particularly when large volumes or multiples sales and distribution channels are considered. These trends add to the complexity:

 

  • 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 distributed order management?

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 delivery a seamless customer experience across channels.

Which omnichannel capabilities could benefit my business?

Use the order management benefits calculator, which can provide an estimate of potential incremental gross margin benefits from implementing omnichannel capabilities like BOPIS, BORIS and ship-from-store.

What’s next for B2B fulfillment?

How can I speak to an expert?

Speak to an expert to learn how order management can help you cut costs and make money.

Solutions

IBM Sterling Order Management

Deliver a seamless omnichannel customer experience and optimize order fulfillment across locations in your supply chain.

IBM Sterling Inventory Visibility

Get up-to-the-minute inventory tracking and accurate available-to-promise data, even in businesses with high volumes and many SKUs.

IBM Sterling Store Engagement

Provide store associates with mobile tools that help engage customers and deliver a highly personalized, in-store buying experience.

 

IBM Sterling Call Center

Provide customer service representatives (CSRs) with the commerce information needed to promote a seamless omnichannel experience.

IBM Sterling Fulfillment Optimizer with Watson

Continuously improve omnichannel profitability, balance fulfillment capacity and reduce total cost-to-serve.

Sources

¹“What is an OMS and Why Do I Need One?” (link resides outside ibm.com), George Kokoris, Supply Chain 24/7, 28 June 2018.

²“What are the basic steps for Order Management?” (link resides outside ibm.com), Revathi Karthik, Quora, 27 September 2017.