Order Management System for Retail

The expectations placed on retailers are becoming increasingly complex due to the various sales channels and the high availability of touchpoints. For this reason, not only winning customers, but also retaining their loyalty is becoming a particular challenge these days. At the same time, retail companies must also work economically and optimize their own processes and procedures. A contradiction? With a >Order Management System>> companies can adapt to these new challenges and automate many processes and make them more efficient. This allows companies to increase customer satisfaction, optimize their own warehousing and logistics and sustainably reduce costs across the entire sales process.

Since most customers use a wide variety of channels to purchase from companies, they need to show more and more flexibility. The gathering of information and the actual purchase and returns can occur via many different channels. Typical customer expectations of omnichannel retail are:

• Orders in the online store with direct shipping to the customer
• Orders in the online store with collection from a local store
• Reserve an item in the online store with the above solutions
• Returns of an item purchased online via shipping to the company
• Returning an item purchased online to a store
• Purchase in the online store with shipping from a store (ship-from-store)
• Cancellation or partial cancellation of an order via telephone customer support
• Change an order via telephone support or directly at the local store

A high degree of flexibility in these areas requires a functioning and powerful order management system.

An order management system is extremely complex in its functionality and combines various functions and systems with one another. To illustrate the performance and potential of such a system, it is important to take a closer look at the various processes and see where an order management system is used and its impact on the company's processes. At this point, we will follow the logical and logistical steps in the company to take a closer look at the points in sales and returns where an order management system unfolds its full potential.
 

1. Determine stock levels

   As a first step, the system must have all the relevant information about the goods stored in the various warehouses and production facilities. Depending on the size of the company and the IT infrastructure status, the initial effort required to consolidate or even fully record all the goods inventories can be high. However, once the stocks are available, they can be automatically integrated and used by the order management system. As a rule, a logistics system already knows the stocks and can provide them via an interface.
    

2. Incoming orders from the customer

   When an order is received from a customer, the system can trigger various processes. On the one hand, a good order management system can provide various risk checks or connect external risk management systems. For example, when an order is received, the system can check and react automatically if an order is unusual, e.g., if unusually large quantities of a product are ordered. In this case, either a further (possibly human) check can be requested, or the payment method can be changed to a secure one, such as prepayment by bank transfer. In principle, the system also compares the orders and purchase orders with the available stock and can, therefore, ensure that only orders that are covered by the stock are accepted. If the store backend is directly integrated, this can be done before the customer pays, which reduces order rejections due to lack of stock to an absolute minimum.

   Depending on the degree of integration of the system into the company, the order management system can also be used to control production and thus replenish stocks in the warehouse or generate proposal data for subsequent deliveries.
    

3. Processing of the order

   The order management system handles the order processing with a very high degree of automation. Regardless of the channel through which an order enters the system, the order management system accepts the order and automatically determines the channel and warehouse through which the corresponding logistics process must be initiated.

   The optimization criteria are configurable and enable rapid adaptation to external changes. This not only ensures greater customer satisfaction through shorter delivery times but also optimizes the processes in merchandise management and, thus, the company's costs. Ideally, both the customer and the company will benefit in the long term from faster and better order processing. This includes the various work areas that now follow.
    

4. Payment processing and order confirmation

   The order management system always keeps track of everything. As soon as the order is received, the customer and their order are stored in the system, and this data can be used by Customer Service. The order management system creates the order confirmation and sends it to the customer after risk checks and checks have been carried out.

   After this, payment method-dependent processes are run through. For example, in the case of prepayment, the delivery release is only granted after receipt of payment, or, in the case of missing incoming payments, reminder emails are sent, and finally, the order is automatically canceled.
    

5. Article shipping

   The Order Management System is also important when shipping items from customer orders. The OMS monitors the shipment after determining the optimal warehouse or branch and transmitting the data, the OMS monitors the shipment. If there are any delays, the customer is informed in good time to minimize customer service inquiries. Depending on the configuration, express shipping fees can also be automatically refunded, or vouchers can be enclosed. In the event of fast shipping, the customer will receive a shipping confirmation with links to track the shipment.

   The OMS provides mobile apps or special web interfaces for shipping from branches or third-party suppliers, so they do not have to provide additional systems.
    

6. Returns

   Even with returns, an order management system can offer considerable advantages. This is because returns can be made in various ways with such a system and can be booked directly in the system. Returns via shipping can also be specifically controlled and routed to the appropriate warehouse. If a product is not returned due to a defect, the system can determine in which warehouse the product can be stored most cost-effectively and create the corresponding returns bills. In the case of returns to a store, the system will also determine where the product needs to be delivered and via which supply chain this can be done most efficiently. The order management system makes the most economical decisions based on the available data and thus ensures extremely high-cost efficiency, even for returns by the customer. The fast and simple handling of processes also ensures greater customer satisfaction.

When switching to an order management system and thus to an improved omnichannel strategy, there are various challenges that companies have to face. Both the introduction and operation of omnichannel sales in retail initially generate costs for the company. For this reason, cross-departmental cost optimization within the company is of particular importance here. This becomes particularly challenging when not only online retail is affected, but also when the various processes are to be implemented in the local stores. Omnichannel branch processes require maximum flexibility and an adaptation of their own action and sales strategies, especially from the employees in the branches, and should be initiated in a targeted manner.