Guide to order management

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04 Minute Read

What is order management?

Order management is an integral part of the overall customer experience. The process typically starts when a customer places an order and continues until the customer receives the product.

But what does order management mean for subscription-based businesses? Though it’s the oldest and most basic cycle of commerce, managing orders in a subscription economy can be surprisingly complex.

The subscription economy has grown by more than 400% over the past decade, and it’s expected to reach a market size of $1.5 trillion in 2025, underscoring both its emergence and permanence as a successful business model. According to the Subscribed Institute, businesses in the 2024 Subscription Economy Index report drive 3.4 times faster growth rates than companies in the S&P 500.

Subscription models, such as SaaS and product auto-ship, generate immense value but require the right tools to retain customers. A solid order management system (OMS) ensures efficient management of recurring orders, accurate billing, on-time delivery of physical goods, and seamless customer experiences.

Effective order management is essential for acquiring and retaining new subscribers long term. In this guide, you’ll learn everything you need to know about order management for subscription-based businesses, from optimizing your order fulfillment processes to planning for the future of OMS technologies and more.

What is an order management system (OMS)?

An order management system (OMS) is software that helps businesses streamline operations by tracking orders, inventory, and sales accurately and efficiently. It collects information from all sales touchpoints, both online and in-store, to help businesses deliver customer orders.

With OMS, companies can reduce manual processes and automate repetitive tasks. It also goes beyond tracking order fulfillment, often including features that manage customers’ data, automate billing, and streamline subscription alerts or changes.

Why use an OMS?

An order management system helps businesses boost sales, meet customer expectations, and provide insights into order fulfillment. Businesses of all sizes benefit from processing orders with a structured OMS.

Digital shopping windows

Both B2B and B2C shoppers increasingly expect digital-first shopping experiences. Research shows that 14% of B2B sales were generated digitally in 2023, although an estimated 56% of revenue will come from online sources by 2025.

Your audience wants to fulfill their entire order with a single click. However, website problems can derail orders before a customer even starts the process. To meet these customer expectations, businesses must have an effective website that’s clean, fast, and easy to navigate.

Fortunately, switching to an order management system makes it much easier for businesses to spot points of friction.

Revenue collection

The payment process must be both secure and user-friendly. A difficult-to-navigate payment process could lead customers to abandon their transactions, while a security breach has the potential to damage a company’s reputation and scare customers away.

Most businesses now use third-party payment services for billing and payment collection. Many order management systems include a payment solution or easily integrate with a third-party solution. Not only are they secure, but they also easily integrate with SaaS solutions, putting revenue collection on autopilot.

Transition from on-premise to a cloud-based system

The evolving business landscape now means companies must choose between cloud-based and on-premise order management systems. Cloud-based systems are faster to deploy, scalable, cost-efficient, and provide better disaster recovery and security than on-premise solutions.

Cloud-based systems are globally hosted, while on-premise systems require resource-intensive local maintenance. Businesses wishing to streamline operations, improve customer experience, and benefit from the latest innovations choose cloud-based order management systems. They are scalable, simple to deploy, and empower businesses to create disruption-free customer ordering experiences.

Adoption of omnichannel order management for seamless customer experiences

Consumers now interact and make purchases from brands across multiple channels. This omnichannel e-commerce environment requires businesses to embrace order management systems suited to multi-touchpoint experiences.

Meet customers where they are with an OMS. Omnichannel order management synchronizes inventory, product information, pricing, and customer data across all channels. It also enables customers to browse your offerings, place orders, monitor their account status, or manage their subscriptions, regardless of the medium.

Delivery

Most SaaS providers focus on digital delivery, but in some cases, physical logistics are necessary, especially if customers need specialized hardware to use your services. Delivery logistics are notoriously complex, but proper order management turns it into a customer-centric process with more opportunities to delight subscribers.

The new delivery landscape goes beyond the physical transportation of goods. It prioritizes real-time tracking, diverse delivery options, and last-mile efficiency. None of this would be possible without order management processes and systems, making this a crucial tool for subscription-based models of all sizes.

Key benefits of OMS

Order management, done correctly, will boost sales and customer satisfaction. From reduced errors to increased revenue, there are so many benefits to a structured order management process.

1. Improved customer experience

Improving the customer experience is a significant benefit of perfecting your order management process. When customers get their order at the right time, with the right amount of information and notifications at every step, they have a more favorable impression of your company and a better experience overall.

2. Increased efficiency and productivity

Order management systems help businesses complete orders faster. Considering that 23% of customers abandon their carts due to slow shipping, order management is also a smart method for improving conversions.

Not only does an OMS make the customer experience more efficient, but it also maximizes company resources. Order management saves the company time and money since they can optimize, scale, and integrate each order management component. These days, you can field automated order tracking and fulfillment systems in your order management software for the most productive order output.

3. Reduced errors

Few things are as stressful as managing an incorrect customer order. Some systems mistakenly sign up customers for the wrong subscription or charge inaccurate payments. These errors are just a reality of doing business, but an order management system can significantly reduce the incidence of these costly (and embarrassing) mistakes.

By helping to ensure a positive customer experience every time, order management helps subscription-based businesses reduce their churn rate and retain subscribers.

Order management tracks orders from start to finish, reducing the chances of losing subscription data. For example, if you mail customers a physical product or piece of equipment, order management ensures they get precisely what they ordered.

4. Enhanced supply chain visibility

Order management gives businesses better visibility into their warehouse and supply chain. Features like location management, capacity mapping, and inventory tracking give you a more transparent and less error-prone supply chain and help anticipate potential problems.

5. Increased revenue and profitability

Structured order management processes stack benefits, from errors to better customer experience. It’s only a matter of time before order management improves your bottom line.

For one, a more streamlined pipeline of processing and completing orders means you retain more subscribers. A repeat customer or a recurring subscriber has great potential for your business’s revenue, too.

Common types of OMS

There are several types of order management systems on the market. The best option for your business depends on your customer needs, business model, industry, and size. Let’s take a look at some of the most common types of OMS available today.

Cloud-based OMS: On-premise solutions offer a degree of control, but cloud-based OMS are the standard. These solutions work in the cloud, allowing businesses to scale up as needed without the costs of hands-on maintenance.
Enterprise OMS: This type of order management system caters to the unique needs of enterprises with complex orders and thousands of customers. It integrates with ERP and other advanced tools.
Warehouse OMS: Warehouses have unique challenges. A warehouse OMS includes specialized logistics features for managing inventory, generating real-time updates, and more.
Subscription OMS: This type of OMS supports recurring payments for products or services like SaaS subscriptions, streaming platforms, and more.
Retail OMS: Brick-and-mortar retailers rely on order management services to handle online and offline sales, supporting an omnichannel strategy.

Understanding these common types of OMS will help you evaluate your options and align your order management processes with your organizational goals. However, it’s important to note that having a platform doesn’t guarantee success. There are some potential challenges to effective order management.

Challenges in the order management process

As with any business operation, order management isn’t without its drawbacks. Plan for these order management challenges:

1. Order errors and inaccuracies

Sometimes, an order management system will inadvertently make the same errors that it intends to fix. In that case, those errors may be more challenging to detect, making them more difficult to solve.

For instance, the order management system might delete a recurring order from the database during a system update. Unless you have a mechanism to notify you of such an event, you’ve lost the customer behind that order. Worse, the customer may not know they’re out of the system until much later.

2. Order tracking and delivery issues

If there’s an error with inventory monitoring, it will likely also cause issues with order tracking and delivery. If the system no longer has the customer on record, there’s a good chance it won’t deliver the order correctly, either.

Depending on the integrations between your customer relationship management (CRM) software and order management system, there might be a break in the order tracking sequence initialization. That could cause the system to validate an order late or not at all.

3. Excess maintenance costs

There’s a cost to running and maintaining an order management system. Maintenance costs are a priority because they make your business more efficient and scalable. Still, there’s the possibility the cost of maintenance will exceed profits. If that happens, you have an excess maintenance cost with few options to scale down.

4. Complexity as you scale

Order management systems can handle complex processes, but to do this, they also need complex features. As your customer base grows, your OMS can become more and more complicated, making the process even more daunting. With highly complex systems, you might need to hire more technical support to ensure full functionality. That will raise implementation costs, too.

While order management has its challenges, it’s still valuable. Using it effectively comes down to understanding and optimizing every stage of the ordering process for your customers’ needs.