Order Management System:
What Is It and How It Works?

Streamline order fulfillment with Order Management Systems (OMS)! Automate tasks, manage inventory, enhance customer satisfaction. Find your perfect OMS!

Delivery person benefits from accurate order management system

Feeling overwhelmed by the ever-growing pile of orders in your business? Struggling to keep track of inventory, shipping details, and customer communication? You’re not alone! Many businesses, from established enterprises to budding startups, face the challenge of managing orders efficiently.

This is where Order Management Systems (OMS) come in as true game-changers. Think of an order management system as the central nervous system of your order fulfillment process. It streamlines operations, automates tasks, and provides valuable insights to optimize your entire order cycle.

But with so many order management system options on the market, choosing the right one can feel daunting. We’ll explore the key functionalities of an order management system, explore different deployment models, and provide crucial questions to consider during your evaluation process. You will learn:

By the end of this guide, you’ll be well-prepared to choose an order management system that empowers your business to fulfill orders seamlessly, delight your customers, and scale your operations efficiently.

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Order Management System Definition

An Order Management System (OMS) is a software application that streamlines and automates the entire order fulfillment process, from the moment a customer places an order to the final delivery. Imagine it as the central hub that coordinates all the moving parts involved in getting your products to your customers.

Key Components of an Order Management System

  • Centralized order management: An order management system acts as a single platform to capture and manage orders from various sales channels (website, phone, EDI) in one place. No more scattered information or chasing down order details across different systems.
  • Inventory management: An order management system keeps track of your inventory levels across different warehouses or locations in real-time. This ensures you don’t promise products you don’t have and avoids stockouts that disappoint customers.
  • Warehouse management: The system can integrate with warehouse management systems to optimize picking, packing, and shipping processes. This translates to faster order fulfillment and happier customers.
  • Automated workflows: An order management system automates repetitive tasks like order confirmation emails, shipping notifications, and inventory updates. This frees up your staff to focus on higher-value activities.
  • Shipping management: The system can compare rates from different carriers to find the most cost-effective shipping options for your orders. It can also automate label generation and tracking information.
  • Customer communication: An order management system facilitates communication with customers by providing order status updates, tracking information, and potential self-service options for returns or exchanges.
  • Data & analytics: The system provides valuable insights into your order fulfillment process. You can track metrics like order processing times, fulfillment costs, and customer satisfaction to identify areas for improvement and optimize your operations.

READ MORE: Sales and Purchase Orders Processing with Artificial Intelligence

Overall, an order management system acts as a command center for your order fulfillment, bringing efficiency, automation, and valuable data to the table. This translates to happier customers, reduced operational costs, and the ability to scale your business effectively.

Benefits of an Effective Order Management System

A well-oiled Order Management System (OMS) offers a multitude of benefits that can significantly improve your business operations and customer experience. Here’s a breakdown of some key advantages:

Quick Order Processing

Benefits of an Effective Order Management System

An order management software automates repetitive tasks like order confirmation emails, shipping notifications, and inventory updates, freeing up your staff for more strategic activities. By optimizing order processes such as picking, packing, and shipping processes, an OMS leads to faster order fulfillment times, getting products into your customers’ hands quicker.

Accuracy in Order Processing

By centralizing order information and automating tasks, an order management software minimizes the risk of errors that can occur with manual data entry across various systems. The system provides real-time insights into order status, inventory levels, and fulfillment progress, allowing you to make informed decisions and proactively address any issues. Real-time inventory insights help prevent stockouts and overstocking, ensuring you have the right products available to meet customer demand.

Elevated Customer Satisfaction

Customers can easily track the status of their orders with detailed information provided by the OMS, fostering transparency and trust. The system facilitates communication by automating order updates and providing self-service options for returns or exchanges, enhancing the overall customer experience.

Reduced Operational Costs

The automation and efficiency gains from an order management software translate to lower operational costs associated with order processing, warehousing, and manual tasks. In fact, a robust OMS can scale with your business growth, allowing you to handle increasing order volumes and product complexities without compromising efficiency.

READ MORE: Business Inventory Management: Definition, Methods, Software

By implementing a well-oiled Order Management System, you can transform your order fulfillment process from a time-consuming and error-prone task into a streamlined engine that drives both business growth and customer satisfaction.

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How to Choose the Right Order Management System

Choosing the right Order Management System (OMS) for your business is crucial for optimizing your order fulfillment process and achieving long-term success. Here’s a roadmap to guide you through the selection process.

Identify Your Needs and Pain Points

Analyze your current order fulfillment process. What are your biggest challenges? Delays? Inventory issues? Manual tasks eating up time?

Next, define your business goals. Are you looking to improve efficiency, reduce costs, or scale your operations? Also, consider your future growth plans. Will the order management system you choose be able to handle increasing order volumes and product complexity?

DISCOVER MORE: Sales Order Processing. How to optimize it with OrderAction?

Key Questions to Ask Potential Order Management System Vendors

  • Can the order management system handle your current and projected order volume?
  • Does the order management system integrate with your existing business systems (e.g., ERP, CRM, accounting software)?
  • What security measures does the order management system have in place to protect customer data?
  • What kind of implementation support and ongoing customer support does the vendor offer?

Also, make sure to understand the pricing structure of the order management system and any additional costs associated with implementation or customization.

Make an Informed Decision When Buying an Order Management System

  • Don’t be swayed by flashy features alone. Choose an order management system that addresses your core requirements and offers the best value proposition for your business.
  • Consider a cost-benefit analysis to compare the potential cost savings and operational improvements with the investment required for the order management system.
  • Get buy-in from key stakeholders across your organization who will be involved in using the order management system.
  • Don’t underestimate the importance of a user-friendly interface. Your team needs to be able to adopt and utilize the system effectively.
  • Look for a vendor with a strong reputation and a proven track record of success in your industry.

By following these steps and conducting a thorough evaluation, you’ll be well-equipped to choose an order management system that empowers your business to fulfill orders seamlessly, delight your customers, and scale your operations for sustainable growth.

Automate your order management tasks and cut down on labor costs with OrderAction. Let Artsyl's OrderAction handle your orders automatically, freeing your team to focus on strategic activities.
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Real-Life Examples of Using Order Management System

Order Management Systems (OMS) are used across various industries to streamline order fulfillment and enhance customer experience. Here are some real-life examples:


A fast-growing online fashion retailer noticed that manual order processing led to delays, inaccurate inventory levels, and frustrated customers. It implemented an OMS that automates order processing, integrates with their warehouse system, and provides real-time inventory visibility.

Benefits: Reduced order fulfillment time by 50%, improved inventory accuracy, and increased customer satisfaction with faster deliveries.


A manufacturer of industrial equipment with complex product configurations and custom orders had difficulty managing orders with multiple components and tracking production progress for each order. It implemented an order management system with advanced order configuration features and integration with their manufacturing systems.

Benefits: Improved order accuracy by eliminating errors in complex configurations, streamlined production scheduling based on order requirements, and enhanced communication with customers regarding their order status.

Wholesale Distribution

A distributor of food and beverage products with a large network of customers and diverse product lines had difficulty managing inventory across multiple warehouses, fulfilling orders for different customer types (retailers, restaurants), and ensuring accurate delivery routing.

It Implemented an order management system with warehouse management capabilities, customer segmentation features, and integration with shipping carriers.

Benefits: Optimized picking and packing processes based on warehouse location and order size, efficient delivery routing for cost savings, and improved visibility into inventory levels across all warehouses.

Subscription Box Service

A subscription box service offering curated beauty products with recurring billing was challenged managing customer subscriptions, order fulfillment for recurring boxes, and integrating with payment gateways. It implemented an order management system with subscription management features, automated order fulfillment based on subscription cycles, and integration with payment processing platforms.

Benefits: Streamlined subscription management process, reduced manual work associated with recurring orders, and improved customer experience with on-time delivery of subscription boxes.

As you can see, order management system adoption is widespread across various industries. From large enterprises to small businesses, companies are leveraging order management system solutions to gain a competitive edge through efficient order fulfillment, improved customer satisfaction, and the ability to scale their operations effectively.

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Key Terms Associated with Order Management Systems

What Is Order Processing?

Order processing is the sequence of actions taken to fulfill a customer’s order, starting from order receipt to delivery. This process includes steps like order verification, inventory check, payment authorization, packaging, and shipping. Efficient order processing ensures timely and accurate delivery of products to customers, enhancing customer satisfaction. Automated order processing systems help reduce errors and improve operational efficiency. Proper order processing is crucial for maintaining a smooth supply chain and meeting customer expectations.

What Is Inventory Management?

Inventory management is the systematic approach to sourcing, storing, and selling inventory—both raw materials and finished goods. It involves tracking stock levels, orders, sales, and deliveries to ensure that the right quantity of products is available at the right time.

Effective inventory management helps prevent stockouts, overstocking, and inventory shrinkage. It is essential for optimizing inventory turnover rates and maintaining the balance between supply and demand.

Modern inventory management systems often use real-time data and automation to improve accuracy and efficiency.

FIND OUT MORE: Efficient Manufacturing: ERP Order Processing Workflow

How Important Is Order Fulfillment?

Order fulfillment refers to the complete process from receiving an order to delivering the product to the customer. This includes picking and packing items, shipping, and handling returns or exchanges if necessary. Effective order fulfillment also involves proper communication with customers about the status of their orders.

Efficient order fulfillment is key to customer satisfaction, as it ensures that products are delivered on time and in good condition. Companies often use fulfillment centers and advanced logistics solutions to streamline this process.

What is the Role of Shipping and Logistics?

Shipping and logistics encompass the planning, execution, and management of the movement of goods from the point of origin to the final destination. This includes transportation, warehousing, and distribution of products. Advanced logistics management systems optimize routes, track shipments, and manage carriers to enhance efficiency.

Effective shipping and logistics are crucial for ensuring timely delivery and minimizing costs. Properly managed shipping and logistics help businesses meet customer demands and reduce operational disruptions.

What Is Return Management?

Return management, also known as reverse logistics, involves the process of handling returned products from customers. This includes authorizing returns, processing refunds or exchanges, and managing the logistics of getting the products back into inventory. A streamlined return management process also provides valuable insights into product quality and customer preferences, helping businesses improve their offerings.

Effective return management is essential for maintaining customer satisfaction and operational efficiency. It helps in minimizing the costs associated with returns and recapturing value from returned products.

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Final Thoughts: Order Management System Is Critical for Your Business’s Success

By understanding the core functionalities, deployment models, and evaluation factors presented in this guide, you’ve taken a significant step towards making an informed choice.

Remember, the best order management system is the one that seamlessly integrates with your existing workflows, addresses your specific pain points, and helps you achieve your business goals. Don’t hesitate to leverage online resources, request vendor demos, and consult with industry experts to ensure you find the perfect fit.

With a powerful order management system by your side, you can transform your order fulfillment process from a chaotic tangle of spreadsheets to a well-oiled machine, propelling your business towards greater efficiency, customer satisfaction, and growth.

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