Order management system
Encyclopedia
An order management system, or OMS, is a computer software
system used in a number of industries for order entry and processing.
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An integrated order management system may encompass these modules:
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.
. 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.
Computer software
Computer software, or just software, is a collection of computer programs and related data that provide the instructions for telling a computer what to do and how to do it....
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 networkBroadcast network
A broadcast network is an organization, such as a corporation or other voluntary association, that provides live television or recorded content, such as movies, newscasts, sports, Public affairs programming, and other television programs for broadcast over a group of radio stations or television...
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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
Workflow
A workflow consists of a sequence of connected steps. It is a depiction of a sequence of operations, declared as work of a person, a group of persons, an organization of staff, or one or more simple or complex mechanisms. Workflow may be seen as any abstraction of real work...
capabilities to manage this process.
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 protocolFIX protocol
The Financial Information eXchange protocol is an electronic communications protocol initiated in 1992 for international real-time exchange of information related to the securities transactions and markets...
. Order management systems, sometimes known in the financial markets as Trade Order Management Systems, are used on both the buy-side
Buy side
Buy-side is a term used in investment banking to refer to advising institutions concerned with buying, rather than selling, assets or securities...
and the sell-side
Sell side
Sell side is a term used in the financial services industry. It is a general term that indicates a firm that sells investment services to asset management firms, typically referred to as the buy side, or corporate entities...
, 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
Direct Market Access
Direct market access ' is a term used in financial markets to describe electronic trading facilities that give investors wishing to trade in financial instruments a way to interact with the order book of an exchange. Normally, trading on the order book is restricted to broker-dealers and market...
(DMA) and support for algorithm trades
Algorithmic trading
In electronic financial markets, algorithmic trading or automated trading, also known as algo trading, black-box trading or robo trading, is the use of electronic platforms for entering trading orders with an algorithm deciding on aspects of the order such as the timing, price, or quantity of the...
. Some of modern issues that OMS face is to develop multi-asset functionality.
See also
- Algorithmic tradingAlgorithmic tradingIn electronic financial markets, algorithmic trading or automated trading, also known as algo trading, black-box trading or robo trading, is the use of electronic platforms for entering trading orders with an algorithm deciding on aspects of the order such as the timing, price, or quantity of the...
- Order fulfillmentOrder fulfillmentOrder fulfillment is in the most general sense the complete process from point of sales inquiry to delivery of a product to the customer...
- Sales orderSales OrderThe sales order, sometimes abbreviated as SO, is an order issued by a business to a customer. A sales order may be for products and/or services. Given the wide variety of businesses, this means that the orders can be fulfilled in several ways...
- Execution management systemExecution management systemExecution management systems are software applications utilized by institutional traders designed to display market data and provide seamless access to trading destinations fast for the purpose of transacting orders. They contain broker provided and independent algorithms, global market data and...