eStar chief strategy officer Matt Neale discusses the difference between ERP and OMS.
Order Management Systems (OMS) and Enterprise Resource Planning (ERP) systems are two critical components in the modern retail business environment. While ERPs have been a stalwart presence in all manner of businesses for decades, OMS is a relatively new kid on the block. The age gap between the two systems reflects the evolution of business needs and technological advancements over time.
For most modern retailers, having a comprehensive ERP system in place is a given. An ERP typically serves as the "source of truth" for most, if not all, aspects of the business, effectively performing the role of a master conductor. ERP’s excel at informing, measuring, and controlling a wide range of business processes and data elements.
ERP systems are primarily built for general use cases, aiming to provide a broad framework to handle various business functions. This adaptability is both a strength and a weakness. This breadth of focus can enable a wide array of processes, but it rarely, if ever, results in high performance in any single area.
Whilst there are some cases where ERP systems can perform some specific tasks well, the more generic nature of the business processes they are designed to support means most are only done adequately, and the reality is that they simply cannot match the efficiency and effectiveness of specialized tools, designed for specific tasks and processes.
This is where specialist systems provide far greater advantages in efficiency and competitiveness, and enable businesses to function well.
This brings us to the concept of Order Management Systems. Order management is, at its core, a business process that involves functions typically found in an ERP. However, the crucial difference lies in the phrase "does well". Whilst an ERP might perform order management tasks adequately, it will always lack the sophistication, finesse and efficiency of a dedicated Order Management System.
OMS systems are specialists in their domain, purpose-built to support modern, always online, order management functions in modern businesses. They are finely tuned to address the intricacies of order management and processing across complex and distributed fulfilment environments, including inventory tracking, order tracking and customer communication. Unlike ERPs, OMS systems are not generalists; they are specialist systems with a distinct role within a modern retail stack.
Why is OMS gaining traction in the modern business landscape? In short, it's because of the online revolution. The relentless and ongoing growth of eCommerce, and the shift towards digital business models have highlighted the need for efficient, specialized order management. OMS systems are equipped to handle the complexities of online order processing, including managing multiple sales channels, high volumes of orders, and providing real-time visibility into inventory and order fulfilment activities. In an era where customer expectations for speedy and accurate order fulfilment are at an all-time high, OMS systems have become indispensable for retailers striving to meet these demands to remain competitive.
Whilst ERP systems have a long-standing presence in the business world and provide a broad framework for managing various functions, OMS systems have emerged as an essential component for modern retailers. The specialization, efficiency, and agility of OMS make it the ideal choice for businesses navigating the complexities of online order management. As technology continues to evolve, the symbiotic relationship between ERPs and OMS will likely evolve as well, ensuring that businesses can adapt and thrive in an ever-changing landscape.
Considering the rapid evolution of fulfilment technologies, modern OMS solution will play an increasingly pivotal role in extending the lifetime and enhancing the capabilities of existing ERP solutions, offering specialized workflows tailored to meet the demands of contemporary online fulfilment activities.
OMS supplements and enhances your existing ERP by enabling real-time visibility and tracking of orders across multiple channels and geographies. Seamlessly integrating with eCommerce platforms, marketplaces, and third-party logistics providers, an OMS often holds the most accurate real inventory position and Available to Promise stock. This facilitates quicker decision-making, more efficient allocation of orders, click-and-collect offers and logistics, and greater customer satisfaction.
In addition, OMS adds sophistication and capability to fulfilment processes. It supports split orders, intelligent order routing, and inventory allocation, optimizing the use of stores, DC’s and 3PLs, minimising shipping costs and maximising DIFOT (Delivered In Full On Time). It empowers businesses to offer diverse delivery options such as buy online, pickup in-store (BOPIS), same-day, or conventional delivery, meeting the growing consumer expectations for speedy and convenient shopping experiences.
In conclusion, a modern OMS complements ERP by enriching it with the agility and precision required for today's online retail landscape, ultimately driving customer satisfaction and operational excellence.
Viare, an eStar company, has developed its technology over twenty years and helps facilitate more than $1.5B in annual sales online. Viare scales to manage a high volume of orders across multiple Sellers and inventory locations and allows retailers to make all store stock available for sale enabling store-based fulfilment to be a retailer’s competitive advantage. Its intelligent order management has been recognised by Gartner as one of the leading distributed order management systems in the world.