OMS: The Secret of How Retailers are Utilizing an Engine Behind the Scenes

Alexandre Soncini
Alexandre Soncini July 10, 2017
OMS: The Secret of How Retailers are Utilizing an Engine Behind the Scenes

What is OMS? It’s a multi-functional tool every digital commerce operation should be using to stay on top of all the fine-tuning, logistical, and critical data going on with their business regarding orders, inventory, payments, and processing it all.

What is an OMS?

OMS stands for Order Management System, and they are a key part of how many businesses get done these days. If you own or operate a digital commerce business and are not employing the use of an OMS, you are seriously behind on the times.

Running an online retail store in today’s day and age requires a keen attention to detail, and a keen awareness to all aspects of the operation, including how even the smallest details are managed. Regarding orders and high-volume shipping and logistics, it has become a mainstay that retailers implement OMS as a reliable means of managing every aspect to ensure smooth-running, timeliness, and efficiency.

Additionally, the more on-point your business is operating, the more satisfied your customers will be, and the more functional your overall daily flow will be. Each system will benefit, and each will work better as a result.

Think you don’t need an OMS? Think again. Here’s why:

OMS enables you to:

  • Support all channels of order entry + manage customer service
  • Manage your entire database of customers across all channels being utilized
  • Manage details such as personalized product offers and promos across channels
  • Offer appropriate promos to customers across channels, while adhering to guidelines
  • Maintain consistency and accuracy on inventory in all channels
  • Easily manage payment processing + issuing and tracking refunds
  • Optionally include a fulfillment module that serves inventory, receiving, finding, packing & shipping, and returns if that’s within your needs

Today’s Retail Environment is Highly Competitive; Don’t Lag Behind

The shift in buying behaviors and customer expectations for a seamless and transparent experience across channels is rarely a simple and straightforward process for the retailer. It adds new layers of complexity to order management, as well as the management of customer data, inventory levels, product information, fulfillment data, and more. Inadequate processing of these complex orders in many cases can lead to poor customer experiences that can have detrimental impacts on sales and customer loyalty. This is why the Order Management System (OMS) is such an important part of the backend infrastructure.

Most retailers use some form of order management functionalities, whether it is a part of their digital commerce platform, ERP, a home-grown system, or a centralized order management system. However, too often these solutions are not capable of handling the complexity of today’s customer expectations and many retailers struggle with disjointed order management processes and technologies.

In order to meet customer demands, today’s order management systems must include advanced functionality that enable retailers to manage the complexity of customer orders. In addition, the order management system must provide insight into critical data that can help retailers make better business decisions regarding merchandising, returns, inventory, marketing and much more.

As retailers and brands add new channels, these new order and fulfillment options significantly complicate backend operations, since they require new capabilities for both online and in-store order processing, inventory management, and fulfillment.

While the front-end ecommerce tools facilitate the customer interaction and experience, what happens behind the scenes is just as important.

Key Benefits of the OMS:

Some of the key benefits of a comprehensive OMS include:

  • Collection of all customer and order data, enabling comprehensive analytics of the entire business. This results in improved inventory management, merchandising, marketing, and more.
  • A single system of record-keeping, helping to ensure a consistent shopping experience.
  • More efficient backend operations.
  • A 360-degree view of customer purchase data across all channels, providing more comprehensive data to deliver more personalized customer experiences and to make better business decisions.

What to look for:

Closely tied to all aspects of retail operations, including the tracking and storing of customer data, processing of orders, and allocation of order distribution, the OMS must include advanced functionality that enables retailers to manage the complexity of customer orders. Look for these features in an OMS to truly support your business:

1. Multichannel order capture and processing

The ability to capture and process orders from multiple channels – including an order that may start in one channel and complete in another – is one of the most basic roles of an OMS. The system should be able to process both website and mobile orders; store associates should be able to process in-store transactions as well as place online orders for customers on-premise; call center and live chat representatives should be able to complete or adjust customer orders. While the above may seem like basic capabilities, in order to accomplish complete visibility, the OMS must be tightly integrated with all other systems in the retail infrastructure, enabling data to be shared across all channels.

2. Inventory visibility

Integration between the OMS and all other retail systems is essential for complete visibility across all channels for in stock, in transit, and purchase order inventory required to accurately provide customers information on availability of products. Once integrated, the OMS acts as the centralized hub that connects all information providing visibility. This is important because customers expect the same products to be available at all touch-points, and all channels to have access to shared inventory information.

For instance, if the retailer wishes to offer “endless-aisle” capabilities, retail associates should be able to look up inventory for an out-of-stock item at all other locations, and have the ability to fulfill an order from any location or store for delivery to the customer’s home or arrange in-store pickup. Likewise, with complete inventory visibility and cross-channel order routing capabilities, web and mobile storefronts can display accurate inventory information pulled from multiple sources.

3. Cross-channel order routing

The ability to route orders for fulfillment to various inventory distribution locations (based on business rules and algorithms) is also a critical capability of an omnichannel-ready OMS. Retailers are increasingly using their brick-and-mortar locations as secondary fulfillment centers to reduce out-of-stock situations, provide quicker product delivery, and ensure the most cost-effective shipping expenses. Having a centralized OMS that can facilitate cross-channel order processing and routing enables retailers to optimize these benefits.

4. Order online/ pickup in store

Another popular option derived from customer demand is the ability to offer “buy online/ pickup in store” and “reserve online/pickup in-store” capabilities. To facilitate this capability, the OMS must be able to process the order from one channel, ensure that the product is available at the retail location, and then provide the necessary information to the retail staff so they can prepare the order for customer pick-up.

This option requires real-time updates of inventory levels to ensure that the product is available at the store location, and offer a timely and accurate communication of the order flow from the digital commerce system to retail associates to ensure that the order is ready when the customer arrives.

An added value that this feature offers is the cross-sell and upsell opportunities once the customer is at the store location. To facilitate this, the OMS should enable store associates to access and adjust the original online order.

5. 360-degree customer view

Essential to providing a consistent customer experience is a unified customer database that gathers and stores data from all touch-points. Store associates, customer service representatives, as well as digital commerce platforms and mobile applications, must be able to access data about customer orders, purchasing history, and preferences to enable clienteling, accurate order tracking, and personalized customer service. The OMS should be tightly integrated with all other systems to provide this complete customer view and provide visibility into customer data and corresponding orders across all channels.

6. Promotions, product content information, and pricing

While some promotions will be exclusive to certain channels, there are advantages for retailers to honor promotional initiatives across channels. Since customers do not distinguish between channels, they expect to find consistent product information, imagery, and pricing, regardless of whether they are shopping on their laptop, on a mobile device, or visiting a store. The OMS should allow all channels access to the same pricing and promotional information which, for instance, could enable call center and store representatives to honor the same pricing and promotional details customers see online.

7. Returns and reverse logistics

A key element of the order management process is returns and the effective management of reverse logistics. Return processes are critical to the customer experience; no matter where the return originated, the process should be easy and cohesive. Inefficient reverse logistics can be one of the largest expenses incurred by a retailer or brand manufacturer. In the omnichannel environment, handling reverse logistics becomes much more complex because it requires multiple return options that may result in inventory returns to different inventory facilities. The OMS must be able to effectively track items throughout the entire return process and help to automate the return of items to stock. Visibility into complete transaction history data as well as analytical tools are required functions of the OMS and should provide return rates data, by customer and by product, to enable the retailer to make better business decisions regarding product quality, product information, or other customer issues.

8. Delivery and service scheduling

Some products may require delivery and service scheduling in conjunction with the transaction. This process is typically managed after the order transaction has been placed, and often requires manual processes that are prone to errors and do not always result in an optimal customer experience. The OMS should be able to link to other service systems to enable the scheduling of a delivery, installation, or other services during the order process.

9. Predictive processing/analytics

With complete visibility into all sources of inventory supply, the order management solution is able to predict when disruptions in supply will impact promised delivery dates. The order management system can then alert the appropriate systems and locate the next best source of supply. Essentially, it provides the analytics to make more informed business decisions regarding inventory, merchandise and marketing.

Wrapping it up

A fully integrated OMS enables the 360-degree view of the customer, which is so critical to achieving omnichannel success. As the centralized order engine, the OMS captures data regarding the product catalog information flow to multiple channels as well as the origination of orders from all channels and customer data.

The aggregation of this data and analysis of this insight can help retailers make better business decisions and ensure a seamless customer experience. Leveraging a commerce solution that offers full-featured OMS capabilities will quickly benefit from more efficient backend operations, helping to meet customer expectation and achieve the omnichannel promise. The bottom line is efficiency on every level, and that’s the core tenet of having an OMS in place.

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