What is Order Management?
Order management is the end-to-end process of receiving, tracking, and fulfilling customer orders from the moment they are placed through final delivery and any post-sale activities like returns. An Order Management System (OMS) is the software that orchestrates this entire lifecycle, coordinating inventory allocation, warehouse routing, shipping, invoicing, and customer communication. Modern OMS platforms handle orders from multiple channels — online stores, marketplaces, phone, and in-store — through a single unified workflow.
Why It Matters
As businesses sell through more channels and customer expectations for fast, accurate delivery increase, order management complexity grows exponentially. Poor order management leads to shipping errors, delayed deliveries, overselling, and frustrated customers who leave negative reviews and never return. A robust order management system matters because it ensures every order is fulfilled accurately, on time, and cost-effectively, regardless of which channel it came from or which warehouse ships it.
Key Features
Core capabilities and components you should know about.
Multi-Channel Order Capture
Consolidates orders from all sales channels — website, marketplaces, phone, EDI, and in-store POS — into a single order management queue for unified processing.
Inventory Allocation
Automatically reserves available inventory for incoming orders based on configurable rules like warehouse proximity, stock availability, and shipping cost optimization.
Order Routing & Fulfillment
Intelligently routes orders to the optimal fulfillment location based on proximity to the customer, stock availability, shipping cost, and delivery speed requirements.
Shipping Management
Integrates with multiple shipping carriers to compare rates, generate labels, schedule pickups, and provide customers with real-time tracking information.
Returns & Exchange Management
Manages the reverse logistics process including return authorization, shipping labels, quality inspection, restocking, refund processing, and exchange fulfillment.
Order Visibility & Communication
Provides real-time order status to customers and internal teams through automated email notifications, tracking pages, and dashboard views across the entire lifecycle.
How It Works
An order management system works by acting as the central hub that orchestrates every step between order placement and delivery. When an order arrives from any channel, the OMS validates it, checks inventory availability, allocates stock, determines the optimal fulfillment location, and creates a pick-pack-ship workflow in the warehouse. As the order progresses through each stage, the system updates its status, notifies the customer, and records the transaction for financial and operational reporting.
Key Benefits
Consolidates orders from all channels into a single system for unified processing and reporting
Reduces fulfillment errors through automated inventory allocation and warehouse routing
Improves delivery speed by routing orders to the nearest warehouse with available stock
Enhances customer satisfaction with accurate order tracking and proactive communication
Streamlines returns processing to recover inventory value and maintain customer relationships
Common Use Cases
Frequently Asked Questions
What is the difference between OMS and ERP?
An OMS focuses specifically on the order lifecycle from placement to delivery and returns. ERP is a broader system that encompasses order management as one function alongside finance, HR, manufacturing, and other business processes. Some businesses use a standalone OMS alongside their ERP, while others use the order management capabilities built into their ERP.
Do I need a separate OMS if I have an ERP?
It depends on your order volume and complexity. If you sell through one or two channels with straightforward fulfillment, your ERP's built-in order management may suffice. If you manage high volumes across many channels with complex routing, split shipments, and sophisticated return processes, a dedicated OMS adds significant value.
How does OMS help with inventory accuracy?
OMS improves inventory accuracy by providing a single source of truth for stock allocation across all channels. When an order is placed, inventory is immediately allocated, preventing the same unit from being promised to multiple orders. This real-time allocation eliminates overselling that commonly occurs with disconnected channel-specific inventory counts.
Can OMS handle international orders?
Yes. Modern OMS platforms support international order processing including multi-currency pricing, customs documentation generation, duties and tax calculation, international carrier integration, and compliance with local shipping regulations. This enables businesses to scale globally without separate systems for each market.
Related Topics
What is eCommerce Integration?
eCommerce integration is the process of connecting your online store with back-end business systems like ERP, CRM, accounting, inventory management, and fulfillment platforms so that data flows automatically between them. Rather than manually transferring orders, inventory levels, customer information, and financial data between disconnected systems, integration creates a seamless data bridge that synchronizes information in real time or near real time. This connectivity is typically achieved through APIs, middleware platforms, or pre-built connectors.
What is an Inventory Management System?
An inventory management system is software that tracks, manages, and optimizes a company's stock of goods across the entire product lifecycle from procurement to sale. It provides real-time visibility into stock levels, locations, movements, and valuations, enabling businesses to make informed decisions about purchasing, warehousing, and fulfillment. Modern inventory management systems go beyond simple stock counting to include automated reordering, demand forecasting, multi-location management, and integration with sales channels.
What is Warehouse Management?
Warehouse management is the systematic process of controlling and optimizing all operations within a warehouse, from receiving inbound shipments to storing goods efficiently, picking and packing orders accurately, and shipping them to customers or downstream locations. A Warehouse Management System (WMS) is the software that automates and optimizes these operations through barcode scanning, intelligent slotting, directed picking routes, and real-time inventory tracking. Modern WMS solutions integrate with ERP, eCommerce, and shipping systems to create end-to-end fulfillment workflows.
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