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    September 26, 2023

    Why Order Management Software Isn’t Always Enough

    Even a very small company might see the need to improve how it gets its products out the door, or get a better handle on what’s in stock. Many businesses start using an Order Management System (OMS) to improve their order fulfillment, especially if they intend to take digital orders.  

    For those who are automating parts of their fulfillment process for the first time, there are many low cost OMS options that can help streamline things for both the company and its customers. In some cases, software with other uses (QuickBooks accounting software is one example) have an order management module that combines order fulfillment with some basic inventory management.

    OMS software can be a sufficient solution for a while. This is good news for many small businesses that are reluctant to invest a lot of money in automation that is too complex or has features they won’t use. But as a business scales, there are functions within a warehouse besides orders that can benefit from automation too. A Warehouse Management System (WMS) offers a more comprehensive solution, handling order fulfillment, full inventory management, and much more. 

    Understanding the differences between OMS and WMS can help determine when order management software is no longer enough and it's time to upgrade to something more robust.

    Defining Order Management Software and Warehouse Management Software

    OMS manages fulfillment and order processing. It guides the company through the sales process from the moment a customer places an order, through delivery of the product. It can keep track of inventory, the customer database, billing, and returns. It is able to do this for multiple sales channels, including both online and brick-and-mortar stores.

    There is considerable overlap between OMS and WMS, and it is easy to confuse the two. Warehouse management software also handles order fulfillment and all that goes along with it. But where OMS manages the order lifecycle from a sales and customer perspective, WMS focuses on the operations of the warehouse itself. This includes an emphasis on real time inventory, forecasting, storage configuration, and workflow sequencing that encompasses slotting, picking, packing, and shipping.

    OMS is concerned with the best way to process individual orders. WMS looks at optimizing fulfillment and storage in a more strategic sense, with the proper handling of products from the time they arrive at the warehouse until they leave.

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    Where OMS Excels

    OMS works at the front end of the business, fielding orders from a company’s website, eCommerce store, or point of sale. The software can then route the order to the warehouse and ensure fulfillment. It is helpful to companies who struggle to manage their orders and need to improve customer service.

    Although it ranges from very basic features to more comprehensive offerings, order management software typically does not reach beyond exactly that: order management. For some companies, the standard list of functions might be enough:

    • The software automates several parts of the order fulfillment process including order creation, inventory counts, tracking orders, and billing.
    • OMS works well when selling through multiple sales channels.
    • The system tracks inventory levels in real time at each location.
    • Some OMS can report on basic KPIs such as order fill time, cost per order to pick, pack, and return rates.
    • OMS maintains a customer database.
    • It allows customers to take advantage of options such as “buy online, pick up in store,” “buy in store, return via mail,” etc.  
    • OMS can be part of existing accounting or retail software such as QuickBooks or Saleforce, minimizing the need for additional investment.

    Automation is always better than maintaining manual systems, and order management software helps streamline the fulfillment process and make it more efficient. But there are often inefficiencies in warehouse operations outside of the order management process. Such inefficiencies call for additional help—help that an OMS can not provide.

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    What WMS Can Offer That OMS Might Lack

    WMS offers a core operating system that centralizes and streamlines every aspect of a warehouse. Order management is just one part of this system. WMS does not simply fulfill orders, it optimizes the storage and movement of products within and among warehouse locations.

    There are products on the market calling themselves order management software that promise many of the features that are more typically found in a WMS. These are also more expensive than the basic OMS packages used by newer or smaller companies. To keep things clear in our comparison, we will refer to the more traditional products in the OMS category. 

    Companies using only order management software are likely missing out on some of the following useful features found within a WMS:

    • WMS helps design and organize the warehouse layout to optimize efficiency.
    • WMS can dictate storage according to mixing and allotment rules.
    • Warehouse management can also help with slotting to use space efficiently.
    • Orders are assigned the best picking method and pick paths for fast and accurate fulfillment.
    • Managers can use order data to schedule labor. 
    • Inventory is not only counted in real-time, its exact location is tracked, too.
    • Triggers can be set to alert low stock levels for reordering.
    • WMS can manage compliance for regulated inventory.
    • WMS supports barcode scanning, something not all OMS can do.
    • Automations are available for kitting, assembly, and customization of items.
    • Using WMS allows scanners to document every step in the process and each time an item is touched or moved.
    • WMS provides reporting and analysis of numerous KPIs and customizable benchmarks.
    • Data from a WMS can provide predictive analytics about trends and seasonal spikes.
    • Some OMS might not support EDIs with wholesalers.
    • WMS integrates seamlessly with CRM, ERP, subscription management, and supply chain partners. Integration with OMS might be possible, but can mean cobbling together a patchwork of workarounds.

    More than anything, an OMS can lack the customization abilities of a WMS. And when it comes to reporting and data analysis, OMS is fine at telling you how you did. WMS goes a step further by offering ways you can do it better next time.

    Making the Best Choice for Your Business

    OMS and WMS differ in the range of things they can track and control. Order management software’s purpose is right there in its name: order management. It is a fine tool and a great way to automate the order fulfillment process.

    Warehouse management software does that and more. Larger operations with complex orders, 3PLs, and companies for which metrics and forecasting are essential will get more out of a WMS. It manages the entire warehouse from the way it is organized to how inventory is handled before and during order processing. 

    Is your OMS fulfilling all of your warehouse’s order fulfillment needs? Contact us and request a demo to see if it’s time to graduate to a WMS.

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