What is Order Management Software?

 What is order management software?

Order management software (OMS) is a type of software solution that streamlines and automates the process of managing orders and inventory for businesses. It’s a critical component of any ecommerce business as it allows companies to manage their orders, inventory, and shipping more efficiently.

It also enables businesses to manage and track their orders from different channels. The software then consolidates orders from various sources into a single platform, which makes it easier to fulfill orders, manage inventory and track shipments.

Order management software typically includes several modules that work together to manage orders from start to finish. The exact modules may vary depending on the specific software, but some common ones are:

  • Order capture: This module captures customer orders through various channels such as web, mobile, phone, or email.
  • Inventory management: This module keeps track of available product stock and helps ensure that orders can be fulfilled from available inventory.
  • Order processing: This module automates the entire process of processing orders, from payment processing to order verification and shipping.
  • Shipping and fulfillment: This module manages the shipping and fulfillment of orders, including shipping carrier integration, tracking and delivery confirmation.
  • Returns management: This module tracks and manages product returns including customer returns, refunds, and exchanges.
  • Customer service: This module provides customer support and manages customer inquiries related to orders including order status, tracking information and returns.
  • Analytics and reporting: This module provides insights into order data, including sales reports, order volume, order status, and other key performance indicators.

Graph showing six main OMS modules

Benefits of order management software

Though the benefits of using order management software are numerous, some of the key benefits are:

  • Centralized Order Management – Because order management software consolidates orders from various channels into a single platform, businesses get a centralized view of their orders which simplifies the order fulfillment process, reduces the risk of errors and improves efficiency.
  • Improved Inventory Management – Order management software allows businesses to track their inventory levels in real-time so they can have a clear picture of their stock levels. This helps them avoid stock-outs and overstocks, which reduces the risk of lost sales and excess inventory.
  • Faster Order Processing – Order management software automates the order processing process and in turn reduces the time required to fulfill orders. This enables businesses to fulfill orders more quickly, which improves customer satisfaction.
  • Better Shipping Management – Order management software allows businesses to track shipments in real-time so they have better visibility into the shipping process, which enables them to provide their customers with accurate information about their shipment status and reduces the risk of delayed or lost shipments.
  • Improved Reporting – With order management software, businesses receive detailed reports on their order and inventory data which then enables them to identify trends and make data-driven decisions that optimize their operations.

How order management software works

Order management software works by integrating with various sales channels such as ecommerce platforms, marketplaces, and physical stores. When an order is placed on one of these channels, the order management software automatically captures the order data and stores it in a central database.

The software then uses this data to manage the order fulfillment process, including inventory management, order processing, and shipping. It can also automate certain aspects of the order fulfillment process like sending order confirmation emails to customers and generating shipping labels.

Graph explaining how OMS works in five steps

Open source vs. proprietary order management software

There are two types of order management software to choose from: open source and proprietary. Open source order management software is software built on a foundation of source code that’s accessible to developers and private enterprises who want to build their own custom solution from that base (once they build that solution, though, it can’t be accessed or modified by other parties).

Proprietary order management software, on the other hand, is developed and sold by software vendors and does come with a recurring license fee. Proprietary software also cannot be customized the same way open source software can, as it is an off-the-shelf type of solution.

Open source order management solutions, such as Apache OFBiz, offer several advantages: 

  • They’re highly customizable, and businesses often choose this type of software specifically for this reason. 
  • Because open source software is customizable, the solutions it produces are much more innovative– because they have to be!
  • Each open source project is supported by a community of developers who offer their time to maintain and continuously improve that software, and businesses can get help and support from these projects should they need help with their software.
  • Open source order management projects are scalable, so as a business grows and changes, so too can their tech.
  • Open source software doesn’t have recurring license fees, which makes it an attractive option for small and medium-sized businesses with limited budgets, as well as larger enterprises that want to save on their technology costs. 

Proprietary order management software offers some advantages as well:

  • Businesses can get help and support directly from the vendor since it’s developed and supported by software vendors.
  • Proprietary software is a great option that doesn’t require any custom work if you know exactly what your business needs and that the solution exists as an off the shelf product.
  • Because it’s an off the shelf, ready to go type of option, proprietary software is very convenient, as the adoption process can be shorter since nothing is being custom built.

Apache OFBiz order management software

Apache OFBiz is an open source enterprise resource planning (ERP) system from The Apache Software Foundation that offers a wide range of modules for businesses to manage their operations, including order management. Some of the key features of this OFBiz module are:

  • Order Processing: Create and process orders from different channels such as e-commerce websites, call centers, and retail stores. This module supports different types of orders including sales orders, purchase orders, and work orders.
  • Order Tracking: Real-time tracking of orders from the time they are placed to the time they are delivered so businesses can keep track of their orders and make informed decisions.
  • Inventory Management: The order management module is integrated with the inventory management module, which allows businesses to manage their inventory levels in real-time and thus avoid stock-outs and overselling.
  • Shipping Management: This allows businesses to manage their shipping processes efficiently and includes shipping carriers integration, shipping label printing, and package tracking.
  • Payment Management: The order management module is integrated with the payment management module, which allows businesses to manage their payments efficiently. This feature includes payment processing, payment reconciliation, and payment gateway integration.

Graph describing five main benefits of Apache OFBiz OMS

How to choose an order management system

Choosing the right order management system can be challenging, especially for small and medium-sized businesses. While the most obvious reason for adopting an order management system is more streamlined and efficient order processing, each business will also have their own particular requirements to take into consideration when looking at different systems.

Whatever your particular business needs may be, here are some factors to consider:

  • Integration with sales channels – Choose an order management system that can integrate with your existing sales channels.
  • Inventory Management – Look for an order management system that provides real-time inventory management so you can track inventory levels across multiple channels.
  • Order processing – Choose an order management system that can automate certain aspects of the order processing process, such as generating shipping labels and sending order confirmation emails to customers.
  • Shipping management – Look for an order management system that provides real-time visibility into the shipping process so you can track shipments and provide customers with accurate information about their shipment status.
  • Reporting – Choose an order management system that provides detailed reporting on order and inventory data so you can identify trends and make data-driven decisions.
  • Scalability – Consider an order management system that can scale with your business as it grows; look for a system that can handle a large volume of orders and inventory levels.
  • Customer Support – Choose an order management system that offers excellent customer support, including technical support and training.

Order management software in a nutshell

Order management software is a critical component of any ecommerce business. It enables businesses to more efficiently manage their orders, inventory, and shipping. And in turn leads to smoother, more streamlined operations and higher customer satisfaction.

If you’re in the process of choosing an order management system for your business, remember to consider factors such as:

  • how robust of a solution you may need
  • ease of integration with other systems
  • and if an off-the-shelf solution meets all your requirements

Whether you choose an open source or proprietary option, your order management system will make your order fulfillment process easier, faster, and more customer friendly.

Infographic explaining what order management software does


DATE: May 16, 2023
AUTHOR: HotWax Systems
Open Source Software, OFBiz, Order Management