You may have an ERP that manages your inventory (sort of) and your order receipt and input (sort of) and your fulfillment (sort of), but was it designed to do that, or are you cobbling a Frankenstein monster of ill-fitting parts? The upside is that you are using what you already own. The downsides are many. Your ERP supplier is probably charging you plenty for the custom development. The parts don’t fit well together. Remember, when Dr. Frankenstein’s monster woke up, he caused all kinds of problems!
The customer you have is your most valuable customer. Odd, isn’t it, how we spend so much time prospecting for new customers and so little time taking care of the customers we already have. An excellent OMS does much of that automatically. What does a customer want? Beyond a good product at a fair price, the customer wants accurate order entry, fast delivery, responsive customer service, and excellent after-sales service. How can an OMS help you to deliver all of that? By ensuring that information is entered into the system quickly, accurately and simply and by transmitting all the information necessary to everyone (customers, suppliers and employees) that need it—when they need it—without having to resort to multiple screens or time-consuming additional inquiries.An OMS can help you in many other ways, as well. What if you could offer a wider array of products for sale by drop-shipping from your suppliers? Without the need to carry specific inventory, but with the assurance that you will know that the inventory exists and that you will have complete transparency into the picking, shipping, and billing for a drop-shipped order, the ability to offer items you don’t have to keep in inventory can dramatically add to profitability and customer satisfaction.
With most ERP systems, you would pay at least as much to custom-design these features as to purchase a separate OMS.
It cannot be overstated—the key to a satisfactory implementation of an OMS is in the experience of the OMS supplier in integration. The design and architecture of the software is very important. The quality of the implementation and integration is far more important.An OMS must be easy to use and fully functional for a variety of users. The following applications must be considered, in advance, before deciding on an OMS:
Again, many of these requirements involve both the architecture and design of the software, as well as the effectiveness of the integration and implementation.
Another whole set of considerations involve the extent of integration you desire with your accounting software. Billing, tax calculation, payment to drop-ship suppliers, promotional discounts, price matching, credit card authorization and fraud prevention, refunds, additional charges for additional services and many other activities have connectivity to your OMS. It is imperative to spend the time necessary to anticipate all of the required integrations with your accounting / billing systems and make sure that they are possible to integrate with your new OMS.
Do you sell products that require ongoing service? What coordinates the initiation of a billing cycle with the delivery of products?Still another set of important considerations is whether your business uses multi-sales channels and / or multiple identities (e.g., do you sell under more than one name?). In such cases, the design and architecture of your OMS must anticipate these requirements and the integration with your Channel Management Software (CMS) and the various types of order content and the sources from which order information will arise. Since one selling platform will undoubtedly be your web site, perhaps the most important integration is that to be created between your web site and your OMS, as the conduit to your inventory and fulfillment process, CRM, billing and other systems.
It used to be that your orders came from one place. Perhaps you had a bank of telephone operators receiving calls from customers, or a web site through which customers placed orders. Now, you may have a number of sources from which you receive orders, which may even include a brick and mortar retail location. Perhaps social media sites are connected so that you can receive orders. You probably also only had one fulfillment location, rather than several warehouses and drop-ship suppliers. But, as you became more successful, your order receipt and fulfillment activities became more complex and sophisticated. Can customers pick up merchandise at various locations, including your brick and mortar retail sites? Can you manage drop-ship locations?
Can you ship from a retail store? Unfortunately, your infrastructure may not have kept pace. The most likely deficiency will be found in your processing of orders and the collection and transmission of information associated with orders. How effectively can you have a single, consolidated view of all orders and how those orders relate to your inventory status at a variety of fulfillment locations, including drop-ship suppliers? This obviously will take a lot of planning and a dedicated system—modifying your existing ERP is generally a bad solution to such a specific and complex challenge.Adapting your ERP is difficult and necessarily complicated.
For example, how can you manage multiple ship-to addresses? What about orders that are sent to gift recipients? How can you create business rules to determine to which fulfillment center orders will be routed?If you have a variety of inventory locations, can you see a consolidated inventory report? Does your OMS relate the existing inventory to your item velocity to help you know when to order inventory, for which fulfillment location, by when? Do you have business rules created for “safety stock?” How is that information transmitted to your purchasing department? Are some purchase orders (subject to tight controls and logical business rules) automated?What about situations where part of an order ships from one fulfillment location and the balance from another?
Again, modifying an ERP to manage the business rules associated with these complexities will be ineffective and expensive. A customized and well-integrated OMS is a superior option.Another important consideration is the distinction between business-to-business sales, as compared to business-to-consumer sales. How do you ensure that multiple orders are consolidated for minimizing shipment cost? How do you balance consolidating shipments with fast delivery? Do you have business rules built into your system to reflect this balance? The excellence of your implementation partner is critical for you to successfully navigate these complex paths. How do you manage pricing differences between various B2B customers (who might have different volume-related pricing) and B2C customers?
Presuming you are convinced that an OMS customized by an expert implementation partner is better than trying to retrofit your ERP, how do you select the OMS and the implementation partner?The first thing to do is to create documentation of existing processes and activities. As a checklist, the following probably ought to be considered, although not every company will have to address the entire list.
Do your homework. Understand and document your current processes. Get input from employees, customers and suppliers. What additional functionality would be beneficial? Is the software you are considering scalable? How much does it cost to add users as you grow? Will you be locked into a system that becomes progressively unaffordable; a victim of your own success? Find an excellent integration / implementation partner—the best OMS in the world will perform poorly if it is poorly integrated or implemented. Research the functionality of the software you are about to purchase. If your software supplier suggests that it will handle your needs “out of the box” you ought to be very suspicious. A good rule of thumb is that the software should offer a maximum of 80% of your requirements, with the remaining 20% coming from an effective integration / implementation / customization. Don’t modify your ERP. OMS functionality is too complex and specific to retrofit an ERP. Purchase a customized application—it will allow you to achieve your potential.Want somebody to chat with about these complex and critical decisions?Call us. We can help you make the best decisions.