What is order management?

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 that when an order will arrive.

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 want 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.

• Inventory availability: A customer or sales team verifies that inventory is available as they review various products or services.
• Order: The customer places the order across a range of possible channels — web, mobile, call center, stores, 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: The 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. 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. 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.

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.

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

Book a consultation with an IBM expert to see how your organization can benefit from IBM Sterling Order Management or deploy with help from our Business Partners.