ERP and OMS: the Whole is Greater Than the sum of the Parts
ERP systems are increasingly reaching the limits of their capability, as they are simply not designed to deliver this agility in operational settings. Rather, they were conceived as enterprise-centric applications that replicate internal business processes in standardized, digital forms. Conventional ERP systems can no longer meet the demands of dynamic e-commerce with its rapidly evolving markets and customer expectations. The key reasons for this are as follows:
- ERP systems replicate internal business processes that are usually slow to change and only do so with input from multiple departments.
- Many ERP systems in use today were designed many years ago and are no longer adequate for contemporary omni-channel e-commerce.
- ERP systems can only access inventories after they have been added to the system in the respective warehouse or offline store. ERP systems are often unable to display dropship stock or inventories held by external suppliers or third-party logistics (3PL) providers.
- ERP systems typically handle inventories separately based on channel and supplier. It is often difficult to create an overview of all available stock.
- ERP systems do not provide sophisticated rules for dynamic distribution of order items to multiple warehouse locations or suppliers. If a customer submits orders via multiple channels, they cannot be merged to create a single order.
As independent research and advisory firm Gartner notes, the use of ERP systems is expected to change significantly in the future. The current strategy of concentrating all processes in a single ERP system will gradually disappear.
Legacy ERP systems tend to limit flexibility and have high operational and support costs—which is why they are increasingly viewed as a potential problem area. Accordingly, companies are now looking for new solutions in order to reduce their IT costs and boost their flexibility and agility.
ERP systems will need to adapt to these changes. They will play a key role within companies as a “system record,” ensuring that all mission-critical data is accurate and consistent. However, differentiated processes will be implemented as specialist solutions that are closely integrated with the ERP system.
“[Order management systems] complement your existing ERP platforms by directing orders between ERP instances, adding capabilities that many ERPs lack, and providing a consistent view of orders across all front-office systems,” says Duncan Jones of Forrester.
According to Forrester, order management products complement ERP systems by adding important functionality, such as consistent order capture across multiple channels and business units. They allow for a reliable insight into order status, irrespective of which channel was used to capture the order. This provides the basis for optimum allocation of orders to the various fulfillment systems. The result: harmonious orchestration of the order execution process.
An order management system is the perfect complement to a typical ERP system. When the two are combined, the order management system serves as the central interface between a rapidly changing marketplace with diverse, customer-oriented applications on the one hand and established ERP-based business processes on the other.
The question is not whether it is better to adapt an existing ERP system or to introduce an order management system. In order to increase agility in day-to-day operations without impacting your accounting and financial processes, you have to create an effective symbiosis of ERP and order management systems.
Intershop offers an OMS, and it can be fully integrated into your digitization journey: https://www.intershop.com/order-management