What kind of Order Management System (OMS) are you running? If that question got you scratching your head as to why your ecommerce business needs an OMS or at what point an OMS makes sense for your business, or even what exactly an OMS does, read on.

At a high level, an OMS increases your efficiency by streamlining your business workflows and improving your operations. It does this in a few key ways:

• Ensuring you ship orders promptly and correctly
• Adjusting inventory accurately
• Managing back-orders
• Making shipping statuses visible and easily accessible
• Improving your ability to respond to customer inquiries with accurate, up-to-date data

Delays and mistakes in any part of the process can destroy your business and your reputation. You need to get it right every single time. This is easy to do when you’re small, but as your business grows you’ll find that relying on manual processes or technology that isn’t designed for order management has limitations that will impede your ability to compete.

Here are five common signs that indicate your business is in need of an OMS:

1. Growing number of sales channels.

Your business started with your own website and now has grown two different websites and selling on Amazon, eBay, Newegg, and other marketplaces. In addition, you’re considering opening up a small storefront at your warehouse. If the number of systems containing your orders are multiplying and there is no central system in place to manage inventory, orders, and customer service — it may be time to look at an OMS. Depending on the complexities of your operation, volume and the workflow around order fulfillment, an OMS could prove useful with only one channel. Typically, companies start investigating OMS solutions when they are looking to add a second or third sales channel.

2. Too many mistakes in data entry, shipping, purchasing, invoicing, and accounting.

As a company grows in size, revenue or SKU count, its complexity increases, and so do the chances for making mistakes. An OMS can cut down on the paperwork and manual process by automatically syncing orders and inventory across all channels into one central location.

3. Trouble keeping up with customer demand

Timeliness is essential for order processing and good customer service. Are employees spending more time chasing down information about fulfilled orders than handling new ones? If the sales volume is getting to a point where there aren’t enough hours to handle the day’s orders, consider an OMS. You can automate screening for fraud, make sure everything is in stock, generate a PO to a supplier for replenishment and more — and all of this happens automatically. Some additional signs that demand is surpassing your operational capacity that an OMS can solve include:

• Your staff has to work overtime to get a day’s orders out the door
• You do not start packing orders until mid-afternoon because you’re manually reviewing orders
• Customer service team spends more time looking for order information than helping customer resolve the problem

4. Too many inventory surprises

Running out of stock, or worse yet, not knowing you are out of stock, can lead to lost revenue. On the other hand, purchasing too much merchandise ties up funds and increases the risk of losing money on unsold goods. An OMS can provide full visibility into stock levels and sales history, generate forecasts, and automate re-orders to suppliers.

In the case of Too Fast Apparel, they quickly realized that more orders meant more inventory, order processing, and shipping. The manual processes they used to run their business could no longer scale. An OMS helped them meet the challenge of finding the right balance between minimizing operational costs and maximizing customer service and satisfaction.

5. Increasing staffing costs

Is your staff working more days and longer hours because your sales are growing? Compare the cost of an order management system designed and priced for your company versus additional time staff is spending on manual processes. An order management system may be a lot less expensive.

If any of the above situations sound like something going on inside your business, it’s time for you to look into an order management system. Look for a system that will automatically route an order to the best source to fulfill each line item, prioritize backorders, seamlessly notify customers of delivery time and, most importantly, address exceptions in the processes. If you choose the right system, you will see a significant improvement in workflow and efficiency, decreased order costs, reduced inventory costs, and a marked decrease in fulfillment errors.

For more details, download this free whitepaper on how to choose an order management system.