Shipping efficiencies: I fulfill from a single facility – Why would I need an OMS?

Shipping efficiencies – everybody needs them

Order management systems (OMS) are great at identifying the best facility to fulfill each customer’s order. But what about when you are running a single-facility site? You don’t need to select the best source of available inventory. It’s in Aisle 3.

In a single-facility operation, you might assume that an OMS is just used to direct incoming orders for fulfillment to the right warehouse in a network. However, an OMS does more than manage order flow. 

No matter your number of DCs, you’re losing out without an OMS. These systems improve fulfillment and shipping efficiencies for both single and multiple warehouses.

Here’s what an OMS can do for you regardless of fulfillment center/warehouse count.

Customer address cleaning – lower shipping costs and chargebacks

Don’t get caught with bad address data when creating carrier labels or the shipping costs add up. Let’s look at an example of how order management software creates shipping efficiencies in this area.

FedEx charges $21 per occurrence of having a bad or incomplete address on a carrier label. According to EasyPost, 4.7% of customer orders have bad or incomplete addresses, so if you aren’t catching and correcting them, that can turn into a $180,127/yr problem (assuming 500 customer orders/day). 

Many of these errors pass through natively on the original order header even if there is automated address validation in the customer-facing system. These could include incomplete information, fat-finger typos, and other innocent – but costly – mistakes and shipping inefficiencies. 

Deposco customers have leveraged OMS features, such as automated pre-processing rules, to catch and fix common address mistakes without slowing down processing time or risking SLAs. Automated order validations check each order upon import, removing manual review and avoiding expensive chargebacks and added shipping costs.

Real-time omnichannel inventory publishing

Omnichannel commerce is fast-paced, with multiple competing sales channels needing real-time access to accurate, up-to-date network inventory availability. Even if shipping from a single facility, many retailers and brands sell across multiple channels, increasing the risk of overselling and lack of shipping efficiency. 

It’s not just about having accurate available-to-promise (ATP) for your sales; your trading partners rely on it, too.

An OMS system is built to simultaneously handle selling the same inventory across many channels while minimizing the risk of overselling. Overselling is a large problem, a recent study found 4 in 10 retailers and brands have to cancel 10% of customer orders due to stockouts. This results in wasted spending to acquire new customers and higher shipping costs for rush fixes.

Better customer service via the remorse period

An OMS has specialized features for holding customer orders for a short time (usually an hour or less) to allow for customer-initiated changes. Most customer-initiated changes will happen shortly after the customer receives their order confirmation email. They may notice they sent the order to the incorrect shipping address. Or they accidentally kept an unintended product in their shopping cart when placing their order. 

Having a remorse period creates a better customer purchase experience, along with lower shipping costs, as there is less need to cancel customer orders when the order can no longer be modified. Or even worse, you have to reship a customer order because it is too late to stop the initial shipment, and it is going to an address the customer did not intend.  

On the business side, fewer additional actions equals less rework. Significant costs accumulate for work that shouldn’t have been done. If 3% of the time is saved on non-value tasks in a 40-person warehouse, you’d save ~$100,000/year above and beyond materials, returns, and potentially non-resellable merchandise.

OMS increases flexibility

Having an OMS solution between your sales channels and fulfillment network has additional benefits. 

Now that your fulfillment network is one step removed from your sales channels, your ability to add third-party fulfillment partners or new temporary or permanent facilities is much less complex.

• You can easily add new order types, such as wholesale orders
• You can adjust the flow of orders going across your fulfillment network for planned/unplanned downtime or as part of a new facility coming online as a future step in the growth of your organization
• You gain a high degree of optionality, shipping efficiencies, and control when adding an OMS to your warehouse management system warehouse management systems (WMS) tech stack.

Let WMS do what it does best

WMS systems were built to effectively manage processes within the four walls of the warehouse. They excel at providing warehouse workers the information they need directly on their handheld device allowing them to perform their roles in the most efficient way. 

Many WMS systems also offer the ability to inject custom business logic into their workflows. Some have used this ability to customize to create special processes for subsets of orders, such as those orders coming from a specific sales channel, as a workaround for not having an OMS that is purpose-built to accomplish these tasks. 

At some point, you must realize that each tool has its own job. Using one system beyond its intended capabilities can slow down business-critical order fulfillment by adding a few seconds here and there. This adds up when order throughput is in the thousands of orders per day. In addition to slowing things down, sometimes these processes still involve manual interactions to work properly in sequence as you are asking the WMS to accomplish tasks it was not built to do.  

Having an integrated OMS and WMS to solve these needs allows you to simplify your setup, maximizing order fulfillment throughput while achieving the same end – before considering all the functionality and shipping efficiencies that the OMS unlocks beyond the WMS.

Wrap up

There is much more to an OMS than determining the best location to fulfill an order. We covered several advantages to having an OMS, even if you are fulfilling from a single facility at this point in your growth journey. An OMS removes unwanted logistics and shipping costs, offers a better customer purchase experience, allows you to optimize your fulfillment processes within the warehouse, and prepares your organization for further growth.