In the rapidly evolving landscape of digital commerce, businesses are always trying to meet changing customer expectations. In this quest, companies often look to software such as order management systems (OMS) and enterprise resource planning (ERP) systems.
Today, we’re looking at the distinctions between OMS and ERP systems, so you can determine if you should purchase either, both, or just one of these systems.
OMS vs ERP: An Overview
At their core, OMS and ERP systems serve distinct yet interrelated roles within an organization.
An OMS specializes in managing the complete order cycle, from when an order is placed to its fulfillment and any post-delivery services. This platform centralizes order processing, returns management, and other order-related processes within the fulfillment journey.
Conversely, ERP systems offer a more extensive array of functionalities, integrating back-office processes such as finance, supply chain management, human resources, and manufacturing. This integration provides a unified view of an organization’s operations, enabling data-driven decision-making and resource optimization.
The 2024 Top 10 ERP Systems Report
What vendors are considering for your ERP implementation? This list is a helpful starting point.
The Role of an OMS
Since we’ve written extensively about ERP software over the years, we’ll dedicate this next section to OMS software.
The role of an OMS is to fulfill four main functions:
- Offer Management: The system ensures that product and service availability is displayed consistently and reliably across multiple sales channels. This enhances the customer shopping experience.
- Promise Fulfillment: The system provides accurate fulfillment promises to customers, detailing exact delivery or pickup times based on real-time inventory data.
- Order Fulfillment: The system oversees the picking, packing, and shipping processes, while maintaining a consolidated view of order status and managing customer communications across fulfillment nodes.
- Order Lifecycle Management: The system handles post-order processes, such as order modifications and returns. This streamlines customer interactions and decreases operational costs.
Why Not Just Use an ERP?
While ERP systems are capable of handling various order management functions, the question isn’t merely about capability but about agility.
If a business has a legacy ERP system that’s been in their company since the dawn of time, it might not have the flexibility they need. As new fulfillment demands arise, the company might alter its business processes only to discover that its ERP system can’t handle these processes without disruptive and costly modifications.
Order management systems tend to be more flexible than legacy ERP systems. An OMS system is designed to adapt seamlessly to changing business environments and eCommerce demands.
It’s important to note that if a company has a modern ERP system, it’s more likely to have the flexibility they need. These systems allow for customization and scalability with less disruption. In fact, many of the top ERP systems have modular structures that allow businesses to tailor the system to their specific needs.
This adaptability is crucial in today’s fast-paced market, where businesses must be ready to integrate with emerging technologies, comply with new regulations, and scale their operations.
Consider the integration of artificial intelligence (AI) within modern ERP systems. This integration allows companies to dynamically analyze vast amounts of data from various business operations. Companies often use AI in ERP to access predictive insights and preemptively adjust their business strategies.
ERP vs OMS: If You Had to Choose Just One
When deciding between an OMS and an ERP, businesses should evaluate several key factors:
- Complex Fulfillment Networks: As fulfillment options expand to include warehouses, stores, third-party logistics, and drop shipping, an OMS system’s ability to provide a unified view of inventory becomes invaluable.
- Customer Experience: An OMS enhances customer service through efficient order lifecycle management. An ERP system does this via customer relationship management (CRM) functionality or by integrating with a dedicated CRM.
- Business Integration: ERP systems integrate business processes, providing a holistic view essential for strategic planning. For example, integrating warehouse management processes with supply chain processes is essential for comprehensive inventory management.
The Best of Both Worlds: OMS and ERP United
The integration of OMS and ERP systems can unlock several benefits. Most importantly, it centralizes processes, automates decision-making, and enables seamless connectivity with eCommerce platforms.
This synergy allows businesses to leverage specialized order management capabilities as well as comprehensive business management functionalities.
What are Your Digital Commerce Goals?
In the dynamic landscape of digital commerce, you must understand your specific business needs.
What are your customer experience priorities? How complex are your fulfillment processes?
Asking these types of questions ensures you’re equipped to handle the challenges of digital commerce today and flexible enough to embrace emerging trends and opportunities in the future.
Contact our ERP consultants below to learn more.
