Outsourcing and OMS: When Does It Make Sense?

Whether they’re shopping from a smartphone, PC, an in-store kiosk or a catalog, today’s consumers expect a seamless experience across channels and devices. The delivery of that optimal omnichannel customer experience requires a robust order management system (OMS). In fact, 73% of retailers plan to utilize an OMS as their unified commerce platform within 3 years, according to Boston Retail Partners.

[Related: MCM Outlook 2017: Seismic Shopping Shifts Bring Evolution to Fulfillment]

An OMS will soon become a prerequisite for the optimal omnichannel customer experience; however implementing such a sophisticated system requires internal expertise, financial investment, ability to scale, etc. Many retailers find that outsourcing to a 3PL allows them to realize the benefits of an OMS more efficiently, seamlessly and cost-effectively.

Here are a few questions to when deciding if outsourcing makes sense for your business.

Is logistics/supply chain a core competency for your organization?

A skilled 3PL with an integrated OMS will remove the burden on operations time and overhead and allow you to focus on what you do best. Outsourcing supply chain operations allows you to put fulfillment in the hands of experienced partners that specialize in just that – supply chain operations. This gives you the unique advantage to provide your customer with an experience that is handled by experts from inception to product delivery.

Do you have the internal expertise to manage the system?

Many companies have an experienced IS department, but have they worked with an OMS before? Do they have current, comprehensive knowledge of the WMS? Are they able to integrate the two? Can they troubleshoot when problems arise? Is their ability to navigate the system sufficient to keep customers’ orders flowing and maintain customer satisfaction?

All of these are important questions when considering investing in an OMS or outsourcing to someone with experience running an OMS. The time and cost associated with training current employees on the system should be a factor as well.

Are you ready to make the requisite financial investment?

An OMS can be a costly venture. Most systems require a major capital outlay up front, followed by associated monthly fees as well as customer support fees that accrue as you learn the system and require assistance. In addition to the expense associated with the OMS software purchase, other business costs also must be taken into account. Employees will need to be trained on how to utilize the software. Downtime will escalate during the integration phase, and initial utilization of new technology can also cause order errors – resulting in unsatisfied customers and increased returns.

Is your competition already using an OMS?

With widespread adoption of OMS technology expected in the near future, chances are, your competitors are considering or have already begun using an OMS. Are you anxious to join your competition in the omnichannel market but unsure how to navigate the inner workings of your inventory management? Do you know that more software is needed but don’t know exactly what you’re looking for? Is your current system incapable of fulfilling from multiple sources to accommodate growing order volume? Outsourcing your OMS to a 3PL may enable you to compete in the omnichannel market.

Evaluating Potential Partners

When looking for a potential OMS partner, consider what your core competencies are and where you struggle. Find a 3PL who can fill the gaps and help elevate your operations to the next level in the omnichannel game. In addition to meeting the criteria identified above, the following qualities can be valuable.

Integration with current WMS and TMS

Your ideal OMS partner should be able to quickly and effectively integrate with your current WMS and TMS. The less time you are offline with customer orders, the better. You want a partner who can seamlessly integrate your systems across platforms to perform optimally for your customer experience.

Availability across all facilities

In order to leverage your entire inventory and make available items visible, you want a partner who can integrate your OMS through all facilities, including DCs, stores, vendors, etc. Improving inventory accuracy will result in faster fulfillment turnaround and get your products in customers’ hands as quickly as possible, ultimately creating a better customer experience.

Prebuilt integration with major commerce partners for quicker start-up

Do your potential OMS partners integrate with the commerce platforms you are currently using for your business? Disrupting commerce communications can lead to issues with receiving and fulfilling orders. Evaluating the commerce platforms that your partner’s OMS integrates with is vital.

Expertise, proven experience

The right OMS partner will provide invaluable expertise and proven experience. Since OMS is a relatively new technology, it’s important to confirm that you’re working with a qualified 3PL with in-depth knowledge of the inner workings of a robust OMS. A partner fluent in OMS operations will allow you to focus on what you do best, knowing your customers’ omnichannel experience is in good hands.

Whether you choose to invest in your own system or outsource to a well-qualified partner, you’ll value the ability of an OMS to improve visibility, inventory management, customer service, and cost control.

Steve Congro is Director, OmniChannel Fulfillment Technology at Saddle Creek Logistics Services.