There's an old adage in business that "nothing happens until someone gets an order." Unfortunately, all too often companies find that nothing happens after someone gets an order. That's no longer something you can hide from customers. Chances are, they're measuring their suppliers' performance against the "perfect order" and exacting penalties not just for out of stocks but also for late shipments (measured in hours, not days), non-compliant packaging and labeling, and invoice errors.
If the order is the heart of a company's success, the order management system (OMS) is its circulatory system, delivering vital information across the enterprise. And because suppliers these days are continually opening new stocking locations in order to cut lead times, these systems are being asked to pump increased volumes of data through the system.
Though technological advances such as RFID and the bar code can help companies capture information as product moves through the supply network, you still need robust order management systems to make effective use of that info. Yet in all too many companies, the OMS is anything but robust. Invariably, when we go into a company we find that the OMS is one of the oldest applications in its IT portfolio. Typically, it's a "legacy" application, often mainframe based, often homegrown, with updates wired, bolted or taped on over the years to accommodate changing requirements. Many OMS systems were designed at a time when most orders were for large quantities sold on standard pricing models, replenished on monthly cycles and shipped from a single location. That's all changed. And if your OMS hasn't changed with the times, you're putting your company at risk.
A good way to determine whether your OMS is up to speed is to conduct an order management process audit. Follow a sample order from its point of entry through to final collection of payment. Interview all of the participants in the process to identify any productivity bottlenecks. Ask your customers whether they find it easy to receive your goods and reconcile invoices and make payments. What you find may surprise you.
So what should an effective OMS be able to do?
Here are some of the key requirements:
- The system should be able to process each order line as if it were an independent order. Orders may be taken and fulfilled from different locations or divisions, with different pricing models and shipping requirements, often necessitating merge in transit. Because today's orders are often fulfilled through third parties, the system must be able to manage the process in a way that will be transparent to the customer.
- The system must be able to integrate with multiple inventory systems in real time. The inventory system must be capable of determining timephased item availability; it also must be able to allocate physical inventory and manage documentation, compliance and shipping from many different locations.
- The system must provide real-time visibility and a mechanism for alerting personnel if something unanticipated occurs. That allows managers to resolve the inevitable problems as they occur, not after the fact.
- Today's OMS must be Internet-enabled so that third parties, customers, carriers and others can get access to order and inventory information from wherever they are at any time.
If your system fails the test, it may be time to implement a new OMS, however unattractive the prospect may be. Fulfilling orders efficiently is key to your company's success. Bolting on a customer relationship management (CRM) or sales force automation (SFA) module isn't the cure—these systems address demand creation issues.When it comes to demand fulfillment, the story begins and ends with the OMS.
