The peak season in ecommerce is fast approaching, and with it comes a renewed strain on warehouses with floods of new orders coming in. This can seem daunting, but the tidal wave doesn’t have to be feared, in fact, with the right systems in place you can go into the busiest time of year confident in your ability to fulfill orders as a business.
With the above in mind, selecting the right type of software is crucial as it is often a large task to get it fully integrated. Many will look to incorporate an order management system to manage their orders, while others may be more focused on the warehouse and be in favor of a warehouse management system (WMS) . Having an understanding of the different software options is critical for directors and managers alike. Keep reading to discover the key differences and how the two concepts work together.
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What is a Warehouse Management System (WMS)?
A Warehouse Management System (WMS) is a software application designed to optimize warehouse operations. It helps businesses control the movement, storage, and tracking of inventory within a warehouse, ensuring that processes like receiving, storing, picking, packing, and shipping are efficient and accurate. When using a WMS over picking by paper you improve inventory accuracy, and enhance overall productivity, helping to maximize space and streamline operations for better efficiency and customer satisfaction.
How WMS Improves Ecommerce Fulfillment:
- Improved Inventory Accuracy: It helps with automated inventory tracking, ensuring precise stock counts, minimizing or eliminating human errors.
- Enhanced Operational Efficiency: It streamlines processes like picking, packing, and shipping to boost productivity.
- Optimized Space Utilization: By using methodologies like chaotic storage, a WMS can enable you to get more out of your existing warehouse space. Graeme Wootton, Warehouse Operations Manager at DISHH ‘The transition to chaotic storage has increased stock holding capacity by 44%.’
- Reduced Labor Costs: It automates manual tasks, allowing businesses to save on labor while increasing output. “Implementing Descartes Peoplevox has reduced our Labor cost by 35%” Rob Hollis, Continuous Improvement Manager, The AYBL Group.
- Better Order Fulfillment: A WMS ensures timely and accurate *order processing, leading to faster deliveries and improved customer satisfaction.
*Here is one of the most important bits of information in this article: a good WMS will naturally have the ability to process orders all the way from picking and packing to shipping and fulfillment. So, what exactly does an order management system do?
What is an Order Management System (OMS)?
An Order Management System (OMS) is software that manages the entire order processing cycle, from order creation to fulfillment. It tracks orders, processes payments, monitors inventory, and coordinates shipping, ensuring orders are processed accurately and efficiently. An OMS helps businesses streamline operations, improve customer communication, and ensure timely deliveries, making it essential for managing customer orders in ecommerce and retail environments.
How an OMS Supports Ecommerce Growth:
- Streamlined Order Processing: It automates order workflows, reducing manual tasks and processing times.
- Improved Inventory Management: Many track inventory levels in real-time, preventing stockouts and overstocking. However, some do not and often rely on wider systems (like a WMS) to offer this visibility.
- Enhanced Customer Experience: An order management system provides accurate order tracking and updates, improving communication and satisfaction.
- Faster Fulfillment: It coordinates with shipping and warehouse systems to ensure timely delivery of orders.
Key Similarities Between a WMS and an OMS
There are a lot of crossovers between a WMS and an OMS and whilst a strong version of the former can alleviate the need for the latter, they are ultimately focused on two different things. An OMS is focused on tracking orders throughout the customer and operational journey whereas a WMS is focused on tracking inventory and making it as fast and as accurate as possible for those orders to be delivered. A combination of the two may be necessary to get the maximum output.
Here are some of the key similarities when you are evaluating potential software options.
Data Visibility:
Both Warehouse Management Systems and Order Management Systems provide real-time data tracking and visibility. A WMS tracks inventory movement within the warehouse, ensuring accurate storage and retrieval, while an OMS monitors order status from placement to fulfillment. This real-time visibility improves decision-making and enhances operational efficiency in both systems.
Integration Capabilities:
Another key similarity is their integration capabilities. Both systems can connect with ERP systems, ecommerce platforms, shipping carriers, and CRM tools. These integrations create streamlined workflows, preventing data silos and ensuring smooth coordination between inventory management, order processing, and shipping. This integration capability helps create a seamless customer experience for your buyers, even if multiple systems are working together in the back end.
Key Differences Between WMS and OMS
Scope of Operations:
The first key difference between the two systems is in their scope of operations. Warehouse management systems will focus on the optimization of warehouse tasks like inventory management, picking and packing, layout design etc. An order management system, by contrast, is more focused on the lifecycle of an order, starting when the purchase is made by the customer all the way through to delivery.
A WMS emphasizes optimizing physical stock, while an OMS focuses on order tracking.
Customer Experience Focus
The main benefit of having a dedicated order management system in a customer experience context is its ability to provide real-time order tracking and communication, ensuring accurate and timely updates throughout the order process. This improves transparency, reduces errors, and enhances customer satisfaction by offering a smoother, more reliable purchasing experience.
The benefit goes beyond this element of tracking though; with an order management system you can get better integration within your sales channels. It works seamlessly with features you may offer including in-store fulfillment, managing inventory across physical stores and multiple warehouses all whilst giving your customer visibility over their goods.
When to Use a WMS, an OMS, or Both?
There are a number of scenarios where it may be better to have a WMS, an OMS or a combination of the two to achieve operational excellence.
Scenarios for Implementing a WMS:
If you are responsible for managing large warehouses with thousands of SKUs across different locations, then having a strong WMS is all but a necessity in the modern environment. Say you are a 3PL provider for a range of different clients and product types, in this use case, a WMS is crucial.
A WMS can reduce picking and packing errors by transitioning from paper-based methods to barcode scanning, ensuring greater accuracy in order fulfillment. It also boosts staff productivity by optimizing workflows, allowing businesses to get more out of their current workforce, rather than continually hiring more staff.
Additionally, as order volumes grow, a WMS helps warehouses stay efficient and scalable, preventing bottlenecks. This is where a solution like the WMS from Descartes Peoplevox can dramatically increase many aspects of your warehouse functionality.
Scenarios for Implementing an OMS:
Modern businesses live online, but many also prefer in-store experiences too. If you are responsible for order fulfillment of a business that operates both online and through physical retail stores then a strong OMS can be a massive help. It gives you the ability to manage in-store stock, online fulfillment and all of the complexities that come with that.
If you are a business selling through multiple sales channels like eBay, Walmart, Amazon, etc., then a good OMS can provide clarity over the different items you may be sending on each platform. It is worth noting that this can become trickier to manage at larger volumes, so keep an eye on the tracking process as you grow to make sure you are stable.
When to Combine a WMS and an OMS:
Both systems can complement each other from a supply chain perspective, and a combination of the two may be the way to go for a business growing in terms of ecommerce fulfillment needs. An OMS can help you give customers that visibility they need when it comes to order tracking whilst a WMS can give you the additional support needed when it comes to managing the physical tasks in the back end like order handling, picking etc.
The two together can help you seamlessly manage the process from order capture to fulfillment, including warehouse operations. The WMS, for example, would manage the order picking, packing and shipping process whilst the OMS would help with the routing and managing of orders from a customer-facing perspective.
FAQs
Can I use both a WMS and an OMS together?
Yes, using both systems together allows businesses to streamline their warehouse operations and order management, ensuring efficient order fulfillment and accurate inventory tracking.
How does a WMS help with warehouse management?
A WMS can improve warehouse management by optimizing inventory storage, automating picking and packing processes, and providing real-time visibility into inventory levels and movements.
Why is an OMS important for ecommerce businesses?
A good OMS is crucial for ecommerce businesses as it automates order processing, improves customer communication, tracks orders in real time, and ensures accurate and timely deliveries.
Which system should my business prioritize?
The priority depends on your business needs: prioritize a WMS if you need to improve warehouse efficiency, and an OMS if order processing and customer satisfaction are the main focus.
Key Takeaways
- WMS vs. OMS Focus: A WMS optimizes warehouse operations, including inventory management, picking, and packing, while an OMS manages the entire order lifecycle, focusing on customer experience and order tracking.
- Key Differences in Scope: A WMS enhances physical stock handling and warehouse efficiency, while an OMS coordinates order processing and customer communication, often integrating multiple sales channels.
- When to Use Each or Both: Businesses should prioritize a WMS for large warehouses and complex inventories, an OMS for improving order management and customer satisfaction, or combine both for comprehensive fulfillment efficiency.
