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What is an Order Management System?

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  • Written By: M. McGee
  • Edited By: Lauren Fritsky
  • Last Modified Date: 30 August 2016
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An order management system is a computer program used to automate steps of a buying and selling process. These programs are used by many industries to streamline the buying and selling of goods, services and securities. In most cases, an order management system provides a framework where a business inputs its own specialized information. In addition, most of these systems are modular; users only need to purchase the portions they need. These two factors will generally make an order management system very customizable.

These systems are common in nearly every type of business. Companies that manufacture or sell goods use them to track the materials coming in to the business and the sales going out. Service-based industries often have an order management system that keeps track of invoicing so small additions or subtractions to the bill are less likely to be lost. In the financial world, these programs often track the buying and selling of securities, making sure that sales are both instant and properly tracked for governmental reasons.

The majority of these systems are customized for the individual client. After a company purchases the system, it customizes it specifically to the business. This means adding in its own part numbers, sales totals, customer database and other items specific to its business. When it’s done, the database of information is usually available throughout the system.

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In addition to being customized for a specific client, most of these systems are made of individual modules. These modules cover different areas of a business like sales, invoicing or marketing. This allows a customer to buy specifically what he needs for his business. If his business expands at a later time, he can buy more modules to cover his new areas.

With the exception of the cost and initial training, these programs have very few drawbacks. They streamline business practices and automate many areas of sales, marketing and shipping. They truly have only one flaw; they are not compatible with one another. This means that a company using an order management system has a very difficult time switching to a new system. The company often needs to start over completely, as none of its former information is compatible with the new system.

Consumers encounter these systems more every year. When a person purchases an item online or uses a self-checkout at the grocery store, that is an order management system. Originally, these programs were designed for a more behind-the-scenes position, but modern business practices have brought them out. This has resulted in more streamlined interfaces and new modules that specifically address things like customer ratings and comments.

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