The eCommerce world is loaded with so many acronyms that it's easy to get lost. Two of the most important ones are OMS and ERP, which at times are mistakenly used interchangeably. Before we get into the differences between these two concepts, let's start by defining them.
OMS stands for Order Management System. In a nutshell, it is a centralised solution that covers every single step in the order management cycle. In the past, organisations would often have a different system for each step - one for stock levels, another one for order deliveries, etc.
It's easy to see what the problem with this approach is. The more systems you use, the more likely you are to make a mistake. Nowadays, companies avoid this by implementing order management systems that streamline and optimise the order cycle - from picking and packing to aftercare service.
Similarly, ERP stands for Enterprise Resource Planning. It is a type of software that companies use to manage day-to-day activities in real time. Like an OMS, an ERP is an integrated solution that helps organisations run their entire business. That covers everything from receipt of stock to sales fulfilment, managing returns and finance. Basically, it allows companies to use their resources wisely by simplifying processes of planning and coordination.
One of the main advantages of ERP systems is that they keep all workflows and information in one place. This enhanced visibility is particularly important for managers and team leaders who would otherwise have to check with each individual colleague involved in a project. Even better, because ERPs are centralised systems, they allow companies to track and analyse data in one department and see the repercussions in the rest of the company.
At this point, you might be wondering what the difference between an OMS and an ERP is. Read on as we explain all:
To explain the difference between these two acronyms, it helps to go back to the very beginning. ERPs were born as computer-based inventory management systems, and they were initially called MRPs (Material Requirements Planning). These go all the
way back to the 1960s. Unlike modern-day ERPs and their all-encompassing approach to business management, the main function of MRPs was to manage manufacturing processes.
With time, MRPs grew more and more sophisticated. Eventually, MRP software saw a series of upgrades that expanded its reach to an unforeseeable degree. In the 1990s, MRP software started to cover day-to-day business processes such as accounting, operations or customer service. This transformation led to the birth of a new term - Enterprise Resource Planning (ERP).
Thanks to software expansion, ERP systems started being used to manage sales and marketing processes. That is, companies started configuring their ERPs to function like an OMS. On paper, you can set up an ERP to handle functions similar to those of an OMS such as routing, storing and order reporting. However, there are many ERP solutions that cannot handle all the functions of an OMS very effectively.
Why is this? To start with, an OMS is a more specific type of software than an ERP. It is specially designed to take care of every process in the order management cycle. An ERP has a wider reach. While it is true that it can be configured to take care of order management, that is not what it was built for. ERPs are back-office solutions. They handle everything from supply chain to accounting.
Does this mean that companies have to choose between an OMS and an ERP solution? Fortunately, that's not the case.
In fact, an OMS can function within an ERP. By combining both solutions, your OMS will take care of the order management cycle whilst liaising with your ERP by sending back accounting and logistical information. This way, you can consolidate your order management system across every channel.
What are the advantages of an ERP that includes OMS solutions? While an OMS is not part of an ERP, that doesn't mean that the two are rival concepts. A dedicated OMS will complement your ERP perfectly. You could write an entire book detailing why having an OMS that collaborates with an ERP can be a game-changer. To make things a bit simpler, here are three of our favourite benefits.
1. Centralise your processes
In today's super-competitive sales environment, every little thing can make a difference. Companies are always on the lookout for new ways to reduce overhead costs whilst at least maintaining the same level of productivity. Centralisation is one of these ways. Thanks to the advent of OMS software that works within an all-encompassing system, it has never been easier to streamline all processes from order receipt to shipping.
2. Automation
Automation can help your business in a myriad of ways. A quality ERP solution such as Profit4 will include automated purchasing decisions that speed up processes that were handled manually in the past. How? For example, it will raise purchase orders on out-of-stock items so the products are automatically ready to be sold as soon as they arrive at the warehouse. This means that your employees will no longer have to perform time-consuming, menial tasks such as stock counting.
3. eCommerce integration
Nowadays, businesses of all sizes rely on eCommerce to provide a multi-function sales platform and build a user-friendly shopping experience. Having an ERP that works alongside your eCommerce solution will help you manage data effectively whilst bringing you closer to sustainable growth. That's why investing in a fully integrated ERP solution is of paramount importance. If you're looking for an ERP solution, make sure that it includes seamless integration with eCommerce platforms such as Shopify and WooCommerce.
Why choose between an ERP and an OMS when you can have it all? At OGL Software, we have developed a fully integrated solution that will take your order management to the next level. Even better, it will connect all your departments from warehouse to finances, giving you a 360° view of your company.
If you're ready to modernise your company by embracing centralisation and automation, get in touch with us today.
