Order Management Solution vs. ERP: What’s Right for Retail Fulfillment?

The supply networks are growing more complicated, customer expectations are rising, and their needs are changing rapidly. Manufacturers are finding it difficult to keep up with the changes. They require advanced technologies to predict and respond quickly to shifting needs. In this area, two major solutions that can play a role are Order Management Systems (OMS) and Enterprise Resource Planning (ERP) systems.

OMS and ERP systems automate workflows, gather and display data, and link with other business applications. An order management system solution is the best at tackling the issues of order fulfillment, which in turn runs the manufacturing process smoothly. As for ERP systems, they tend to simplify things, improve inventory management, and also provide better customer service.

While the goal of both is to improve efficiency, it is important to note their different roles and how they vary, which in turn will inform where to invest.

Understanding Order Management Solutions and an ERP

What is an OMS?

A retail order management solution is useful for managing the full course of the order journey, which includes inventory control, fulfillment, sending out order status updates, and taking care of returns and exchanges. It also helps in automation and provides a real-time report across all of the customers’ orders.

What is an ERP system?

ERP systems integrate and run different aspects of a business, which include sales, finance, marketing, planning, human resources, and procurement. ERPs function as a back-office system that connects many platforms in near real time and presents a unified picture of financial, operational, and business data.

How to Choose Between OMS and ERP?

Even though both ERP and OMS aim to simplify processes, they vary in scope and intention. ERP platforms combine and oversee different areas of a business. On the other hand, the primary role of an order management system solution is to process orders.

An order management solution has been developed for the task of managing complex and continuously changing order scenarios, which include multiple sales channels, inventory sites, delivery methods, and customer options. Also, an ERP system puts in place solutions for back office processes, which consist of production planning, material scheduling, accounting, and reporting.

Here’s how an OMS is different from an ERP.

• Differences

1. Scope and Complexity: A retail order management solution is a dedicated and very specific system that focuses on the order handling process. ERP is a larger, more complex system that looks after many aspects of business operations.

2. Setup Costs: OMS is usually a more affordable and faster option to implement as it requires less hardware, onboarding, and training investment. ERP is generally more expensive and takes more time to set up, which is a result of its many modules, components, and configuration requirements.

3. Advantages: Order management system solutions improve order accuracy, speed, and customer satisfaction. ERP systems do the job of simplifying processes, reducing costs, and improving decision-making.

4. Drawbacks: OMS has issues like data safety, scalability, and compatibility. While ERP has failed implementation, poor data integrity, and change management issues.

• Shared Features

Despite the differences, OMS and ERP share several features that allow them to work together to improve overall performance. Some of them include:

1. Data Capture and Analysis: They gather and store data from different sources, including sales, purchases, inventory, and customer records. They also present dashboards for analysing and reporting through charts and graphs.

2. Process Automation: Both systems have the ability to automate various business processes. They issue invoices, send out alerts, update records, and put in place task schedules.

3. Integration: Reliable OMS and ERP systems integrate well with other software, which includes eCommerce platforms, payment gateways, and shipping services.

Order management systems that can tie in with ERP to share out product info, inventory status, customer data, and financial info. The ERP can receive order data from the OMS to update accounts and reporting.

• Finding the Right Fit

When choosing one among these business software, it depends on the industry, the company’s objectives, and goals. For small businesses, an ERP may be too costly or complicated. For large enterprises, an OMS might not provide the full functions required.

But size isn’t the only factor to look at. The following are some steps to determine the proper system:

• Defining business goals and needs.

• Identifying the main issues that the OMS or ERP needs to address.

• Listing the essential features and functions needed.

• Researching and comparing services to determine the advantages and disadvantages.

• Asking for trial access to evaluate usability, flexibility, integration, and level of customer support.

Companies can go for order management system solutions, which are in industries that deal with large-scale orders, complex workflows, multiple sales paths, and diverse customer requirements. OMS works well for businesses that are into selling products or services online, like in the eCommerce, retail, wholesale, or subscription-based space.

An OMS plays a crucial role in increasing customer satisfaction for such companies; they also report cutting costs, improving efficiency, and to better stock levels.

Order management solutions help these companies to connect various channels and tools in online sales—shopping carts, payment systems, warehouses, delivery partners, and CRM solutions. For retail fulfillment, OMS provides more benefits than an ERP.

Bottom Line

When organizations are pursuing improvements in operational excellence, selecting either an OMS or ERP from the perspective of the organization can be extremely important. Each option has unique advantages, challenges, and differences. It is therefore important for organizations to understand their own specific needs and growth objectives.

As retail fulfillment is typically a complex landscape of processes, supply chains, sales channels, and order volumes, a coherent retail order management solution is paramount. An enterprise resource planning (ERP) system is likely to be suitable if the company sees itself as needing an all-in-one business management solution. 

Whether choosing the efficient focus of an OMS over the broad integration of an ERP, the organization's choice should align with its objectives and set the organization up for future success and growth.