What is an Order Management System (OMS)? Definition and How to Choose an Order Management Solution
When your business starts to grow, it’s important to find an order management system that supports D2C manufacturers looking to get more control over their sales and manufacturing order management, inventory, and production planning. That's why we've put together a hotlist of tips to help you get started on this search.
In this article, we explore order management solutions, tips you can follow to pick the right order management software, and the benefits of improving your order management.
Already know what an order management system is? Check out the order management solution from Katana MRP – designed for growth.
What is an Order Management System (OMS)?
An order management system (OMS) is a tool or piece of software that follows the order-to-cash process between B2B and D2C manufacturers to help you improve your order management processes and efficiency.
An order management system will help you track your sales, orders, inventory, and fulfillment order rate to easily allow you to identify your manufacturing bottlenecks and track your products from the factory floor to the customer.
As mentioned earlier, between owning a physical store, managing e-commerce, and social media sales, you need your order management system to help you track your:
PRO TIP: Your order management is greatly affected by how well you manage your inventory. If you feel as though your business is not ready for order management solutions, then a good place to improve your order management would be to work on your small business inventory management.
Order Management Process Explained
Before we look into order management tools that support your manufacturing, the order management process flow will go:
Step 1 - The Customer
The order management process starts with the customer placing the order, be that online, in-store, or over the phone, where the customer's details are saved.
Step 2 – Fulfillment
The next step in the order management process flow is the sales details are sent to the warehouse for picking and packing.
Step 3 – Accounting
This order management process flow involves recording the sale. The task is made easier when using a tool like Xero inventory management.
Step 4 – Shipping
At the final order management process flow, the order is dispatched to the customer, and the sale is recorded as delivered in the order management software.
When Do You Need an Order Management System?
In the early days of your business, it was pretty easy handling orders. You can probably even recall your first, from the customer's information to the product you sold, and even how you delivered it.
But with each new sale, you’ll lose that magic you once felt as more and more sales roll in.
And the quicker you grow your D2C brand and reputation, the quicker the number of sales your business is handling increases.
In this make or break moment, if you’re unable to fulfill the increasing orders, you’re going to do more harm than good.
At this stage, it’s important to find the perfect order management system specifically built for manufacturers. Otherwise, you’re going to drive away customers, damage your reputation, or get set up with an order management system that doesn't support D2C manufacturing.
The Six Benefits of Using an Order Management System
Now you know what is order management, what are the benefits of adopting an order management system?
- Automation efficiency
You might be the lord and master of the spreadsheets, but unfortunately, you won’t be able to outperform manufacturing process automation.
Effective order management can have an impact on saving money on manual labor, decreasing the risk of human errors, and frees up time so you can refocus your priorities on growing your business and improving customer satisfaction.
- Around the clock access
If you suddenly wake up in a nervous sweat and want to quickly check your orders for peace of mind, without a cloud-based order management software, it’s going to be a sleepless night for you.
By getting set-up with cloud manufacturing software, especially one that has order management capabilities, allows you to check your orders from any place, at any time.
Other than settling any paranoid thoughts about your order management being out of whack, this instant, 24/7 access allows for greater data control, improved customer services, and a more efficient order management process.
Your order management system automates your order processes. More importantly, it takes all your sales channels into one single platform.
This smooth automated process will run in the background, so you can free up time to collect and analyze data.
Invaluable free time to gather this information allows you to intelligently plan to further grow your business and identify any issues along your manufacturing process.
- Inventory management
Order management solutions will greatly improve your inventory management by giving you real-time information on current stock levels, items sold, returned, exchanged, or in production.
This helps manufacturers avoid over-selling inventory or not manufacturing enough.
However, most order management software has been built in-mind for retailers, or drop shippers hoping to get more control over their business. When looking into an order management tool, be sure to find something that can help you out with your raw material inventory management.
- Centralize your business
As touched upon earlier, using an order management system allows manufacturers to not only manage their sales channels in one place but manage their entire business from one dashboard too.
An order management tool will break down complex information to simplify your orders into one place, protecting you from order errors, customer dissatisfaction from delays, or lost revenue from low inventory, and incorrect invoicing.
But once again, as a manufacturer, you want to centralize your sales, but also find a tool that can help you manage your production planning and scheduling too.
- Real-time information
Finally, and once again touched upon in the earlier points, having real-time information about your business’s performance with an order management system is a critical component to growing your business.
Even if you’re using small business order management software, having live updates on inventory and sales is going to help you react to any issues immediately with your automated order management, rather than allowing problems to develop and for the customer to be left dissatisfied.
Alongside this, having all your information in real-time means the product, manufacturing, and payment data are up to date.
So, that’s everything you need to know about order management systems, the only issue now, is how do you go about choosing the right one for your business?
How to Choose the Right Order Management System?
There are so many options available on the market right now. It's hard choosing an order management system. Unfortunately, the majority out there support regular old retailers, and wholesalers, and not manufacturers.
But don’t worry, we’ve got your back. We’ve put together a checklist that you can follow to select the perfect order management software for your business:
- Your Budget
Your order management to be is going to be a crucial ally in your business’s success. You might commit to an order management system that is cheap to save money, but in the long run, it’s going to cost your business so much more.
The same can be said about the other extreme because some desktop or intranet order management tools can cost above $1,000 and not perform any better than a straight to the point cloud-based system.
Be realistic with the amount you’re willing to spend, as most systems will charge different rates depending on what you need, so be sure to compare the market.
- Compare the Market
There are a lot of order management systems that don’t match well with manufacturers. Yes, you can use them, but you run the risk of having to get set up on a load of tools, even though there are order management systems out there that can support your entire business from one dashboard.
Luckily for you, there are lists already dedicated to finding the best manufacturing inventory tools, and you can check out Capterra’s top 20 MRP software, which features the best order management solutions for 2020.
At the end of the day, if you’re a traditional manufacturer, ecommerce business, or a D2C business, you’re going to need an order management system that can integrate with your existing e-commerce, accounting, and whatever other tools your business has decided to adopt.
After you’ve made your list of the order management systems you want to use, explore their integration features to see if they support all your sales channels. But, be warned, with most order management solutions, the more integrations you need, the higher the cost will be.
Be tactical, and only select an order management system with the necessary integrations.
- Production Flow
D2C manufacturer’s production processes are very likely to change. Maybe you realize that an assemble to order model is better for the holiday seasons, or perhaps you start offering bespoke products for customers who’re looking for more customization.
Regardless of the reason for your production flow change, you need a system that can adapt to your business, and support you in whichever way you take your business.
A flexible order management system will make it easy to change your business processes, handle stocked inventory and custom orders, and allow you to make edits to customers' orders on the move.
- Free Trials and Demos
Following the four points above, you should now have a list of different order management systems that:
- Are reasonably priced;
- Can integrate with your other software; and
- Can support different types of manufacturing processes.
Go through each piece of software and sign up for a trial to see if the order management system is suitable for your business.
But, don’t be intimidated by booking demos either, as some software providers offer a live step-by-step integration session, using your business as the example data, so you can see firsthand how their order management solutions can benefit your business.
- Review Your Shortlist
However, it’s important not to just outright commit with one that seems like a match made in heaven.
A survey by Retail Systems Research found that 29% of logistic firms, suppliers, and retailers identified legacy systems as their biggest obstruction to omnichannel execution in 2017.
You also need to consider wider criteria as you need to take into account the entire business relationship that you will have with your chosen order management system. Consider factors such as they an expert in this area? Is it an order management solution that was designed with me in mind?
It’s a nightmare finding an order management system as a manufacturer, as most software on the market are just missing those tools needed by manufacturers, especially when it comes to handling raw material and tracking the conversion of those materials into a finished product.
That’s why Katana gives you tools such as:
The Auto-Booking System
Never lose track of material and remove the headache of manually committing your raw materials into production. With Katana, create a manufacturing order, and the software will allocate available materials to the open order for you. No more second-guessing yourself, so you can get back to making your products.
Multi-Location Inventory Management
Do you have warehouses or inventory stored here, there, and everywhere? Not a problem! If you have inventory on consignment, with an outsourced manufacturer, or sat at another location, Katana allows you to track each location, so you know your exact stock levels. Got some inventory spare at one location, perform a stock transfer, and have the issue solved.
Purchase Order Management
Sometimes your orders don’t arrive together, and you can quickly forget some is on the way and order more material that you don’t need. Katana’s order management software allows you to partially receive deliveries, so you and your team members know more is on the way.
Fed up of constantly making a schedule, and then a new order or a lack of material means you have to redevelop the entire thing? Leave that hassle behind with an order management process flow that you can easily rearrange with a quick drag-and-drop. Best of all, Katana will redistribute your finished goods and raw material to satisfy the new workflow.
Katana offers way more, like integration with e-commerce and accounting software such as QuickBooks order management, so you can streamline your entire business onto one, easy to read, dashboard.
And there you have it! The perfect guide to selecting the best order management software for anyone looking to find the winning formula for D2C manufacturers.
Adopting order management software will eventually become a necessity, especially when your business starts to grow, and you need a system that you and your team members can easily access to track orders.
However, it’s important to test out the tools beforehand, since many have been built for retailers, and can’t handle the complicated requirements needed of a manufacturer.
That’s why Katana Smart Manufacturing Software offers a 14-day free trial, so you can take the software for a test drive and see exactly how it is built to support your business.
If you liked the article or have any questions, feel free to pop us a message below or reach out to us over on our social media channels.
And until next time, happy manufacturing.