What Is An Order Management System: The Distributor’s Guide

 

 

 

Do you see order management as a logistics problem, or is your order fulfillment process turning your prospects into loyal buyers? If you aren’t using your order management system to delight buyers, you’re missing out on an important strategy to scale and grow your business. 

 

The logistics of order management is a crucial function of your business. Your team is most likely receiving orders from a variety of channels—the company website, Amazon, or direct sales. In addition to this, buyers demand order visibility across channels, for both logistical and ethical reasons.

 

In this case, getting the right products to the right buyers in a timely manner is critical to a distributor’s success. For example, a Deloitte report asserted that “superior fulfillment (we will get it to you overnight)” is still a “foundational” capability for wholesale distributors, even though wholesale distribution is pivoting towards the importance of “a compelling B2B experience.” 

 

In other words, a bad experience with fulfillment could not only lead to the loss of that buyer, but the loss of an opportunity with many others if word gets around that you don’t have successful order management processes. 

 

On the flip side, you can supercharge your order management system and turn each shipment into a brand experience. This can turn your buyers into loyalists and set your business apart from the competition.

 

In this guide, we will explain what an order management system is, the order management process and cycle, and how to choose order management software in order to better your business.

 

What is an Order Management System?

 

An order management system is the technology and processes your business uses to receive, pack, ship, and follow up with orders. The order management system is a key component of the business, as it ultimately fulfills the promises made by demand generating departments like sales and marketing. As discussed above, fulfilling your brand promise is extremely important in retaining buyers. 

 

Though the technology and processes portions of the order management system should be closely interwoven, we will look at each of them in turn.

 

The technology of order management includes things like software, barcodes, RFID tags, and warehouse equipment. These should allow your business to track orders, bundle items into kits, and follow up with buyers to get their feedback on the fulfillment process. Many distributors may still use Excel sheets for this portion of their process. This could be a big problem as spreadsheets are too clunky and error prone for a growing distributor making multiple shipments through multiple channels.

 

Your processes can comprise how you fulfill your orders. For example, does your business leverage drop-shipping? Do you have the ability to easily integrate pick, pack, and ship in your warehouses? 

 

Both the technology and processes of your order management system need to be in alignment. To achieve this, it’s a necessity for you to build out the rest of your order management system. Let’s dive in to understand the order management process and cycle. 

 

The Order Management Process and Cycle

 

The order management process contains several distinct steps. If the process is smooth for buyers, they will be more likely to purchase from you in the future.

 

  • Placing the Order: The ordering process begins when the buyer places an order. For an omnichannel distributor, this can have many forms. Channels could include in-person sales, trade shows, a web store, or third-party sales platforms like Amazon or Ebay.
     

  • Accepting the Order: The order management system must have up-to-the-minute information on inventory levels in order to make sure you have the goods available to promise for order fulfillment. This means close integration with suppliers if you are using something like drop shipping directly from the manufacturer. Automated re-ordering from manufacturers is also crucial here. In addition, customers will want multiple payment options, so offer to pay by invoice or credit card.
     

  • Packing the Order: This is when your warehouse staff may use processes like pick, pack, and ship or technologies like barcodes or RFID scanners to prepare an order. As a wholesale distributor, your retail partners may often want certain SKUs bundled together as kits. Packing is more important than it may seem, as it is an important part of the brand experience. For example the unboxing experience is a major driver of a brand's identity. In this case, distributors of Lego sets might want to package very carefully as collectors prize pristine boxes.
     

  • Shipping: The order must then be shipped, either through your own shipping department or through close alignment with third-party logistics (3PL). Shipping visibility throughout the entire delivery process is extremely important to buyers. As Supply Chain Dive reports, 89% of buyers are concerned with receiving products late. Good order management should update buyers at each step of the fulfillment process through digital communication like automated emails.
     

  • Follow Up: A seamless return experience is key to transforming buyers into brand loyalists. For distributors, creating loyal retail partners could not be more important. For this reason, order management should include soliciting feedback from the retailer about their buying experience. If all goes well, your business can thrive from repeat business where the cycle begins again.

 

Risks of Order Management Systems

 

With such a complex process, there are both threats and opportunities for a distributor building out the order management system. 

 

The biggest risk to your order management system is not building one out at all but instead relying on ad-hoc solutions and cumbersome technology like spreadsheets. In this case, you may be at risk of:

 

  • Running out of inventory. Stock outages are a major problem facing distributors. A single stock outage could lose you not only that customer but many more through negative word of mouth and reviews.
     

  • Shipping the wrong products is almost as bad as not meeting orders at all. An incorrect shipment could seriously damage your relationships with retail partners. This could also include incorrectly configured kits.
     

  • Slow shipping. The B2B space is increasingly taking cues from B2C commerce. Buyers demand fast shipping for their goods and failure to meet these expectations could leave them dissatisfied.
     

  • A chaotic warehouse. If your order management system still runs off spreadsheets, you are drastically increasing the risk of human error in your fulfillment process. This can lead to a chaotic warehouse as workers scramble to correct orders or find products.
     

  • Decreased margins. All of this chaos reflects inefficiencies. An inefficient warehouse is one that is not maximizing margins on each item shipped because it increases costs for labor and fixing errors.
     

  • Strained supplier relations. If you experience a stock out, you may have to pressure suppliers to restock your warehouse. This can put a strain on the relationship and make your business a less valuable partner.

 

Benefits of Order Management Systems

 

New processes always have risks but the benefits and advantages can be invaluable as you scale your business. There are many benefits available to distributors who invest in these systems, including:

 

  • More visibility into what sells. You can avoid wasted space with goods that do not move, and issue targeted promotions to turn over product even faster through the analytics of an order management system.
     

  • Streamlined shipping. Whether it’s utilizing drop shipping or seamless integrations with 3PL partners, a good order management system can give a serious boost to your shipping processes.
     

  • Better brand experiences. Every interaction the buyer has with you contributes to their perception of your brand. An order management system can provide transparency for the buyer and tracking for your business along the entire buying journey.
     

  • Buyer loyalty drives business. A great brand experience can turn buyers into lifelong customers. This is especially important for wholesale distributors as they thrive on great partnerships with retailers and repeat business. A superior order management system can help you stand out and bring more value to retailers.

 

Crafting Your Own Order Management Solutions

 

With so many benefits available, the distributor who wants to grow must build out an organized and efficient order management system. But not just any order management system will do. It is important to design and execute a plan that fits the specific needs of your business.

 

In designing your unique solution for order management, the best place to start is to think about your distribution business. These are some questions to ponder:

 

  • Multiple Channels: Are you selling through multiple channels, like a website as well as an eBay store? How many different suppliers do you have to manage?
     

  • Packing: Are you maximizing the buyer’s brand experience starting with packaging? How convenient is it for you to bundle items together in a kit?
     

  • Ordering: Do your retail partners place large quantity orders? Is it easy for them to order at any time? Can you offer targeted discounts?
     

  • Transparency: Do your buyers demand order visibility across all of your different channels?

 

In order to address these needs, here are some capabilities you will want in your order management system:

 

  • Pick, Pack, and Ship. This capability allows your warehouse to run more smoothly with either barcodes or RFID tagging. It provides your warehouse workers with all the information needed to make order fulfillment a breeze.
     

  • Virtual Warehouses. These digital areas give a complete view of your inventory in physical space. Instead of the confusion of a spreadsheet, utilize the power of the virtual warehouse for a more precise understanding of your inventory.
     

  • Automated Ordering From Suppliers. Maintaining stock levels and avoiding stock outages is of paramount importance to wholesale distributors. Automated ordering alleviates stock worries.
     

  • Automated Communication With Buyers. B2B buyers today increasingly demand order transparency. You can increase your value to your retail partners by communicating with them every step of the way, from ordering to shipping transparency.
     

  • Follow Up with Buyers. Your relationships with your buyers doesn’t end with order fulfillment. You will want a system that easily follows up with buyers and tracks the entire buyer journey, hopefully leading to repeat sales.
     

  • Automated Re-ordering. Easy to use websites are extremely important to B2B buyers today. What could be easier than offering free reordering for their most popular items?

 

In order to maximize the value addition of your order management system, you should seek out a single software that is capable of addressing all these needs.

 

How To Choose an OMS Software: Order Management Solutions & Tools

 

A powerful eCommerce suite can address these needs and more through its array of order management features. Most importantly, it can help you sell more product to happier buyers around the clock. These are some key features to consider when deciding on your OMS software:

 

  • Omni-channel Order Integration. All distributors need to expand to selling through multiple channels. You will want to be able to sell and manage orders in any channel, including marketplaces like eBay and Amazon.
     

  • Flexible shipping and 3PL integrations. You need the flexibility to integrate your 3PL partners, or utilize drop shippers as needed.
     

  • EDI or Easy to Use B2B Portal. Tighten relationships with suppliers and make the buying journey hassle free. You can use EDI to place orders with EDI only vendors, or receive orders from large buyers. A B2B portal can allow sales staff to make a one click conversion from quote to order.
     

  • Point of Sale Software. This will allow you to take orders on the spot, for example, at trade shows. You will also want to push orders to the buyer record, centralizing buyer data.
     

  • Product/kit Configurator. This can allow your business to bundle products into kits to sell more products to happier buyers.
     

  • Return Merchandise Authorization. Make returns a breeze and reap the benefits of increased buyer loyalty.
     

  • Discount Level Structures. These can move product that is taking up space in your warehouse. You can also extend special deals to your best clients, increasing your value as a wholesale partner. A B2B portal should allow buyers to see their custom pricing levels when placing orders.
     

  • Mobile Application. A cloud-based order management system means you’re in business anywhere you can access the internet. A mobile application of your OMS software will ensure your team can process sales or access order information no matter where they are at that moment. 

 

Systum is a B2B eCommerce software that combines all these features of an order management system and more into one platform. It does away with spreadsheets and ensures OMS success through seamless integrations and always available cloud-based data. 

 

Learn more about how Systum can help you build excellence in order management through an integrated software platform.