Order Management Software

Order management software is a software solution for handling an order, from its initial acceptance to its final shipment. The process of order management in modern business is far more complicated than it used to be, with higher expectations regarding visibility, and updates delivered directly to the customer. This type of software tracks a range of variables, including things like third-party logistics, so that a clear picture of the order process can be built.

There are many aspects of the order process that this type of software deals with, but the core features revolve around the main stages of the order. Order management software can register an order in the system when it is received, track that order as it moves through the supply chain toward the customer, and register a completed order upon delivery. It will also feature some inventory management functionality and backorder management for orders of products that are not currently available.

In addition to giving an organisation a better picture of their inventory—even when said inventory is in transit—one of the main advantages of this type of software is the ability to provide an improved customer experience. Organisations using this kind of system can provide detailed updates on the status of a customer's order and also be apprised of any issues in the supply chain, sometimes allowing for alternative measures to be taken.

Order management software is closely related to inventory management and supply chain management. Furthermore, it will typically interface with software solutions handling these aspects of a business if it is not already part of one of those solutions. This type of software is increasingly provided as Software-as-a-Service (SaaS), as the online connectivity makes it easier to provide customers with the means to check the status of their orders.

Several considerations need to be factored in when a business decides on an order management solution. These include the size of the organisation, the type of customers they will be shipping products to, and the level of compatibility between the potential software and existing systems. For a software solution to be included in the order management category, it will usually include the following feature:

• Register the receipt of a new order in the system, confirming the customer
• Track orders as they move along the supply chain toward the customer, making information visible to the customer in the process
• Manage orders of products that are not presently available due to a lack of inventory
• Automatically create and manage digital catalogues of products, including price and specification information
• Keep track of available inventory, as well as manage the flow of goods from the company's warehouses to the point of sale

What is Order Management Software?

Order management software is designed to keep track of the progress of an order from the warehouse to the point of sale. This type of software makes the process of selling and shipping products much smoother, as the entire process is trackable, and problems within the supply chain or issues with logistics can be brought to relevant attention much sooner than in older systems. Order management software will also typically link up with inventory management software to automatically update inventory records when a product is sold.

In modern business, an effective order management system is essential, particularly for organisations which deal with consumers directly, which is not to say they are not critical for business-to-business transactions. Customers of all types expect maximum visibility when they order a product these days, and this category of software makes such visibility possible and straightforward. It achieves this through a plethora of small features, such as informing a customer that a particular item is out of stock—even letting them know when it is expected back in stock—providing an out-of-the-box portal for customers to track their orders, and more.

In addition to customer experience, businesses are facing higher expectations over the sustainability and ethicality of their supply chains. This area is typically covered by supply chain management software, but order management plays its role in maintaining the transparency and visibility needed to satisfy the growing regulatory and public demands on company logistics. Order management software can come in Software-as-a-Service (SaaS) or locally deployed variants. Furthermore, the advantages of cloud-native applications—particularly when it comes to customer-facing functionality—have seen cloud-native versions of this software become incredibly popular in recent years.

What are the benefits of order management software?

The benefits of order management software lead to improving the process of order fulfilment and cover a wide range of activities that all work toward that end. It also aims to improve relationships with customers, as the process of ordering and receiving a product is made smoother and more transparent, resulting in a better customer experience. Here are some of the benefits order management software can deliver:

• More accurate order tracking: These software solutions integrate and communicate with various other systems—including those belonging to third-party companies like logistics firms—to provide a detailed picture of the order. This more detailed tracking enables a business to make better-informed decisions when dealing with customers regarding disputes or special offers. It also provides the customer with more information.
• Inventory monitoring and management: Order management is not just concerned with the progress of an order from the warehouse to the customer. Shipping a product has a knock-on effect on other areas of the business, such as inventory management. Getting inventory management correct is a vital aspect of any enterprise that maintains physical stock, particularly for businesses that deal primarily with their customers electronically. Accurately and instantly updating inventory to reflect sales avoids overselling items, overstocking them, and making poor forecasts based on inaccurate sales and inventory data. This aspect of the software also cuts down the human labour required to manage this aspect of a business since the sale does not need to be manually recorded.
• Facilitate order fulfilment: Order management solutions will typically offer a range of functions aimed at streamlining the order fulfilment process. These features may vary but can include things like the routing of sold items to the appropriate warehouse, the automatic printing of shipping labels, and more. Streamlining the order fulfilment process has many benefits, from reducing the cost of fulfilling an order to improving the customer experience. It can also reduce the human labour needed to deal with customer queries since the majority of those queries can be handled automatically, such as updating the estimated time of delivery.
• Improved customer service: All of the benefits provided by this type of software add up to lots of small improvements to the customer experience. From more efficient delivery to clear and up-to-date tracking information, the customer—be it a consumer or a business—will have a better experience than with older order management systems, and that should lead to better, lasting relationships.
• Faster ordering process: The combination of automatic inventory management, warehouse routing, and other automated features of order management software speeds up the order process. Confirmation of the order can be delivered automatically and instantaneously. Furthermore, the process of fulfilment can be initiated as soon as the order is made. The relevant information can also be readily accessed by sales representatives, allowing them to deal with potential customers definitively without having to check spreadsheets or call up the office.
• Reduced order processing errors: Moving the order fulfilment process into a largely automated realm significantly reduces the number of processing errors that occur, which are largely down to human error at some stage or another. Features like barcode tagging, inventory updating, and automatic label printing remove many of the opportunities for mistakes to be made.

What are the features of order management software?

The features of order management mainly focus on creating a more streamlined and efficient order fulfilment process, and it does this through several common features. Here are some of the most common features of order management software:

• Order entry: The first part of processing a new order is entering the order into the system. Order management software takes care of this aspect of order processing automatically, ensuring that all the relevant information is stored and passed on. The next step in the process can begin. This will also involve delivering order confirmations to the customer.
• Order tracking: Once the order is placed, the software will track the order, updating the order's status as it moves along the supply chain. Some of this information will be available to the customer so that they can be kept up to date with the order's progress. This stage will generally involve interfacing with third-party systems such as those belonging to suppliers, manufacturers, and logistics companies, all of which will be involved in the supply chain.
• Inventory management: This plays a crucial role in order processing. From the very start of the order, the order management system needs to be able to check that the requested product is in stock. If it isn't in stock, it should be able to determine when it will next be in stock (if that information is available) and pass that information on to the customer. Online orders and orders in different branches can happen simultaneously, so order management software will also update the inventory to reflect sales immediately, avoiding the possibility of an item being oversold.
• Backorder Management: Another aspect of the inventory management side of this software is the handling of backorders. Some customers, when told that a product is out of stock but will be in stock soon, may choose to order the item anyway. Order management systems will manage these backorders to avoid an item being out of stock before it has even been re-stocked or giving an incorrect restock date to a customer.
• Catalogue management: The process of creating digital catalogues that can be viewed through apps or websites is widely automated, and order management software plays a significant part in that. In some cases, the catalogue will be entirely created and managed by the software, including details like price and specification.
• Order information centralisation: As with any modern business software solution, order management systems perform the important task of centralising information. This avoids the possibility of misinformation negatively affecting orders because all of the information is coming from the same source. This single point of authority also ensures that miscommunication with the customer is significantly reduced.
• Fulfilment point integration: For businesses that have several fulfilment points, order management software provides integration that includes selecting the appropriate fulfilment point for a given order. In the case of order management solutions designed for dropshipping business models, they will also allow the seller to track the progress of an order.
• Customer management: Customers increasingly expect as much information as possible about their orders, something that businesses are incentivised to provide because detailed order progress reporting reduces customer support requests. Order management solutions can automatically send correspondence to a customer regarding the progress of their order, and provide a customer portal where the progress can be checked.
• Shopping platform integration: Many businesses build their online store presence on top of read-made shopping cart platforms rather than building their own. Effective order management solutions will provide a range of integration options and should work with the most popular shopping cart platforms.

What should be considered when purchasing order management software?

When purchasing order management software, it is critical to consider several factors regarding what that software solution provides about the specific business buying it. These days, most enterprises will benefit from a cloud-native solution, though some may still find a locally deployed solution sufficient and cost-effective. Here are some of the most important considerations when purchasing an order management solution:

• What are the key features? The key features of an order management solution should always be the first thing a business considers when looking to purchase one. If the solution does not provide the features that a business needs, it is essentially a waste of money to purchase it. Furthermore resulting in those missing features needing to be made up elsewhere, either with additional software solutions or through less cost-effective means, such as manual input.
• What are the costs? After the features, the next most important factor is cost. Any potential software solution should be worth more to the business than the cost of purchasing it or subscribing to it. For locally deployed software, there will typically be an initial investment, whereas Software-as-a-Service tends to work on a subscription model. Despite the appeal of paying the entire cost up front and not having an ongoing financial commitment, the benefits of cloud-native and SaaS solutions tend to be worth accepting that ongoing commitment.
• Does the solution integrate with existing platforms? As mentioned above, order management solutions are encouraged to work with other software solutions to be effective. From inventory management systems to shopping cart platforms, a business will need to make sure that the order management solution they choose will work with any existing platforms they are using. Alternatively, they will need to factor in the cost of changing those other systems when deciding whether to purchase a particular order management solution.
• Will the solution need additional software to meet the business's needs? It is not a common concern for modern enterprises, but sometimes an enterprise will need to consider other software solutions to complement their order management solution. A common example of this is when a business wants to start using an order management solution but does not have a shopping cart platform or inventory management system in place. Requiring additional software should not be an automatic deal-breaker, but the additional costs will need to be factored in when making the decision.
• How does the solution handle customer data? The way businesses handle customer data is increasingly a hot-button topic as more concerns over data privacy arise. For modern enterprises, it is not only a matter of regulation that customer data be handled securely but also a matter of customer perception and public relations. It is critical to ensure that customer data is appropriately handled when purchasing a locally-deployed solution or a cloud-native solution that the business will be hosting itself. In these cases, the business will be solely responsible for what happens to the data they hold.
• Is the solution used by partners? While not an essential feature, a solution that is already being used by partners of the business—such as suppliers or shopping cart platforms—may make the transition to using the system a little smoother. Alternatively, if the software solution being considered is part of a suite or family of solutions from the same provider or developer, the software included in those suites will likely work smoothly together.
• Is the solution suitable for the size of the business? It won't need explaining to anyone who runs a large fulfilment operation, but there is an enormous amount of difference between a small business with a single location and a large business with several warehouses and fulfilment points. For smaller businesses, the main question is one of cost. More expensive software solutions will undoubtedly be sufficient, but they may be overkill and provide several features that are not needed. For larger businesses, the problem is reversed; less expensive solutions may not provide all the features that a business will require.

What are the most relevant order management software trends?

When considering a new order management software solution, it is crucial to consider future trends in this space. These trends will not only have some bearing on the best solution for a business but may also inform other decisions that that business must make going forward. The most relevant trends within the field of order management are as follows:

• Cloud technology for inventory management: The cost of maintaining reliable and secure data storage that can be accessed is a significant expense for modern businesses, and one that is growing as the amount of data being dealt with grows. The move to SaaS solutions not only reduces the cost to the enterprise but also allows them to provide better service since it frees them up to focus on what they do while the service provider can focus on providing their specific cloud service.
• Multi-warehousing: Multi-warehousing is, as the name suggests, a strategy that involves storing goods in multiple warehouses. This allows a business to send goods from the nearest warehouse, reducing the delivery time for the customer and the logistics costs to the enterprise. Effective use of multi-warehousing is only possible using smart cloud technology, and as these solutions become more widely adopted, the prospect of multi-warehousing will become viable to more businesses.
• Third-party logistics use: Traditionally, third-party logistics companies were only an option for things that weren’t critical. The breakdown of walls between a business and third-party logistics companies that are facilitated by order management solutions makes it more feasible to rely on these logistics firms for critical tasks.
• Internet of Things (IoT): It is already commonplace for logistics companies to use things like barcode scanning to track the progress of a parcel, but this trend can be expected to grow. For example, it is possible to track things like the environmental conditions of a warehouse, information that is then plugged into order management and inventory management software.
• Inventory analytics: With the vast amounts of accurate, real-time data that businesses now have access to, together with increasingly insightful (often AI-powered) analytical tools, there will likely be an increase in the use of inventory analytics to more efficiently manage stock, especially in sectors where the stock is perishable.