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12 Jan 2023

Five options for order management: pros and cons of each approach

In this blog article, we take a look at different systems that can be used to handle order management.

What is order management?


Order management includes everything from receiving, processing, routing, fulfilling and potentially returning orders for customers, whether in a business-to-business (B2B) or a business-to-consumer (B2C) model. Order management is the business process of managing the data associated with an order including inventory availability, customer information, order details, transaction data, financials and fulfillment data.


Brief history of commerce and order management


According to Investopedia, the definition of commerce is “the exchange of goods or services among two or more parties.” Commerce has been an essential aspect of society since the beginning of time when humankind would trade and barter goods. Over time, the commercialization of buying and selling would become more formalized, introducing physical locations to buy and sell such as markets, shops and retail stores.


As the internet and personal computers gained popularity in the 1990s, sellers began to create online channels, adding digital ways for buyers to purchase. Now with smartphones, widespread internet access and the omnichannel commerce mentality – meaning an order can be placed or fulfilled in many different ways — buying and selling can be as simple as one click.


But managing inventory, orders and data across multiple channels is complex.


Why order management is critical


Effective order management helps make your customers happy. It encompasses the technology and processes most closely related to your customer experience, and therefore can help or hinder customer acquisition, retention and brand loyalty.


Order management touches every stage in the order lifecycle:


  • Inventory — Exposing available to sell (ATS) and available to promise (ATP) inventory across the enterprise including distribution centers, stores, goods in transit or vendor drop shipping
  • Order processing – Centralizing all product, order, customer data from all order sources
  • Order routing — Determining the best node to fulfill an order from, whether based on proximity, cost, fulfillment capacity or other business preferences
  • Fulfillment — Sending orders for fulfillment (i.e., pick/pack/ship, or pick/pack/pickup)
  • Transactions — Processing all “transactional activities” associated with an order including payment, tax, fraud, loyalty programs, etc.
  • Notifications and alerts— Notifying customers of order status (ideally beginning with the creation of an order) and preventing time-consuming “where is my order?” (WISMO) support calls
  • Appeasements — Enabling customers, customers service agents and store associated to update, modify, cancel or potentially return an order.


Simply put, poor order management results in poor customer experience. In fact, in their future of customer experience report, PwC found that 1 in 3 customers will leave a brand they love after just one bad experience. Additionally, PwC reports that churn results are potentially even more impactful in a B2B model.


End-to-end order management

Options for order management


So, what are the best systems for order management? The answer depends on several criteria, but for the remainder of this article, we will look at the five most common options for order management:


  1. Leverage ERP functionality
  2. Leverage your digital storefront
  3. Leverage your WMS
  4. Build your own system
  5. Modern, dedicated order management system (OMS)


Option 1: Leverage your ERP


Initially, when order management first became a recognized business process, many organizations used their enterprise resource planning (ERP) system. It made sense at first, as the ERP usually is the record-of-truth for financial information.

However, the main function of an ERP originated as a back-end operational system for inventory and manufacturing. It was never designed to be a system focused on the customer experience (CX). Very often, ERP systems are monolithic in nature, requiring time, money and effort to modify to make it work for a different purpose— and the risk of something going wrong can impact the operation at large.


Option 2: Leverage your digital storefront


For many digital-heavy brands or retailers, it may make sense to leverage the commerce storefront (i.e., Adobe, Shopify, Salesforce Commerce Cloud) for order management functionality. The storefront is the system capturing the order, so perhaps there are some benefits to using one system for both.

The primary downside of leveraging a commerce storefront is that most often, the order management functionality is very “lite” and not suitable for high-volume, complex omnichannel operations. Additionally, the primary goal of a commerce solution is to convert visitors to customers. While order management can impact conversions (i.e.. available inventory), the function spans the entire order lifecycle and end-to-end customer experience through final delivery/pickup.


Option 3: Leverage your WMS


Many organizations consider using their warehouse management system (WMS) for order management. The reasoning here is that the system responsible for fulfilling the orders could “manage” them as well.

Like the previous two options, a WMS was built for the pick, pack, ship process which only accounts for a fraction of the order lifecycle, therefore they are limited in terms of capability and functionality. Many times, a WMS does not aggregate orders across all sources, but rather a primary distribution or fulfillment center.


Option 4: Build Your Own System


To solve immediate pain points, some organizations look at building their own system for order management. Often, these “homegrown” solutions work in tandem with their ERP, WMS and/or their storefront.

While this may work for smaller organizations, many have learned that maintaining a system to meet market demands requires dedicated time, resources, and budget to maintain. Additionally, keeping owned systems competitive with the broader market is challenging without a dedicated research and development team to keep pace.


Option 5: Modern OMS


The most effective option for order management is a modern, dedicated order management system (OMS). A dedicated system means that the system was intentionally built for the purpose of managing orders throughout the order lifecycle to curate the most ideal, easily repeatable customer experience.

In the last five years, more dedicated OMSs have entered the market as a direct response to the complex challenges and the need for automated, trustworthy experiences.


Learn more about Körber's Order Management System


Pros and cons for each option for order management

ERPCan be cheaper initially for lite functionality
Able to leverage workarounds
Some OM capabilities
Single vendor for multiple functions
Not the intent of the software
Expensive to customize
Monolithic in nature
Lack specific, innovative OM capabilities
Commerce storefront or WMSSingle vendor for multiple functions
Can be cheaper initially as part of a "suite"
Often minimal capabilities
Omnichannel limitations
Lack OM expertise
Home-grown solutionTighter control of system
Built by brand/business SMEs
Internal support for system
Difficult to build without expertise
Expensive to maintain/resource
Challenging to keep software competitive in the market
Difficult to measure ROI
Dedicated OMSPurpose-built for OM - best in breed
Advanced, innovative functionality
Robust omnichannel capabilities
Easy to extend and scale to other systems
Predictable, measurable ROI
Can be difficult to narrow down options (~27 vendors)
Users do not own the product roadmap but can influence
Can be difficult to confirm functionality


Order management is not “one size fits all.”  Depending on your business, there are technology systems that may be a better option for meeting your long-term organizational goals.

For high-volume, complex omnichannel organizations looking for an order management solution, download the Forrester Wave Report or contact the Körber order management experts for a free consultation.

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