Order management system

An order management system, or OMS, is a computer software system used in a number of industries for order entry and processing.

Electronic commerce and catalogers

Orders can be received from businesses, consumers, or a mix of both, depending on the products. Offers and pricing may be done via catalogs, websites, or broadcast network advertisements.

An integrated order management system may encompass these modules:

• Product Information (descriptions, attributes, locations, quantities)
• Inventory Availability (ATP) and Sourcing
• Vendors, Purchasing, and Receiving
• Marketing (Catalogs, promotions, pricing)
• Customers and Prospects
• Order Entry and Customer Service (including Returns and Refunds)
• Financial Processing (credit cards, billing, payment on account)
• Order Processing (selection, printing, picking, packing, shipping)
• Data Analysis and Reporting
• Financials (Accounts Payable, Accounts Receivable, General Ledger)

There are several business domains which use OMS for different purposes but the core reasons remain the same:
1) Telecom - To keep track of customers, accounts, credit verification, product delivery, billing, etc
2) Retail - Large retail companies use OMS to keep track of orders from customers, stock level maintenance, packaging and shipping
3) Pharmaceuticals and Healthcare
4) Automotive - to keep track of parts sourced through OEMs
5) Financial services

Order Management requires multiple steps in a sequential process like Capture, Validation, Fraud Check, Payment Authorization, Sourcing, Backorder management, Pick, pack, ship and associated customer communications. Order management systems usually have workflow capabilities to manage this process.^[1]

Recent advancements in order management systems saw the emergence of mobile phone based order capture. Mobile sales order management systems like FieldMax^[2] enables capture of sales order information using simple mobile phones ^[3]

Financial securities

Another use for order management systems is as a software-based platform that facilitates and manages the order execution of securities, typically through the FIX protocol. Order management systems, sometimes known in the financial markets as Trade Order Management Systems, are used on both the buy-side and the sell-side, although the functionality provided by buy-side and sell-side OMS's differs slightly. (Typically only exchange members can connect directly to an exchange, which means that sell-side OMS's usually have exchange connectivity, whereas buy-side OMS's are concerned with connecting to sell-side firms).

OMS's allow firms to input orders to the system for routing to the pre-established destinations. They also allow firms to change, cancel and update orders. When an order is executed on the sell-side, the sell-side OMS must then update its database and send an execution report to the order's originating firm. An OMS should also allow firms to access information on orders entered into the system, including detail on all open orders and on previously completed orders. Buy-side OMS's may offer direct market access (DMA) and support for algorithm trades. Some of modern issues that OMS face is to develop multi-asset functionality.^[4]

Choosing OMS

Order execution is not the only purpose of an OMS, of course, but the most important one. While a lot of worthy OMSs operate in the market, none fits all possible requirements 100%. The following issues should be taken into a consideration when choosing an OMS: the range of functionality, basic technology, reliability, system capacity, price, vendor's reputation.

See also

• Algorithmic trading
• Multi-channel order management
• Order fulfillment
• Sales Order
• Execution Management System

References

1. ^ Van Leeuwen, Matthys (2009). Managing Multi-Channel Orders with OrderCore - Enabling a Customer Focus in Order Fulfillment. Lulu. pp. 34–41. ISBN 978-0-557-03968-5. http://ordercore.blogspot.com. 
2. ^ http://www.fieldmax.in/
3. ^ http://www.thehindubusinessline.in/2010/08/06/stories/2010080651461900.htm
4. ^ ATMonitor, In Search of True Multi-Asset Order Management Systems, atmonitor.co.uk, May , 2010