Stop using ERP system for order management!
Stop using ERP system for order management!
Regarding the ERP order managment
“We need an order management system now! It’s super urgent!”
This is just happening again, another our customer run to us demanding this request, hoping we can help them cover the fire in their backyard. In fact, it is quite a common case for us.
Seems nowadays most people don’t have a comprehensive understanding of the importance of order management aspect, often being too easily overlooked for most companies who want to start up their own e-tailing business, so they will think it’s totally fine to just use their existing ERP system, or other internal systems, for managing the online orders.
However, we’ve already dealt with a lot of cases about regretting:
“Our ERP system can’t fully handle the orders of our online store! We are spending too much time on dealing with orders!”
Today, we want to officially declare that,
Even though Enterprise Resource Planning (ERP) can manage the same orders in the system, it’s not designed for managing online orders but for the company’s internal processes management! Managing e-commerce orders is a very complicated activity and there is a system called order management system (OMS) specifically created for it!
What is ERP system?
Before you start reading this part, keep a keyword in your mind – “Internal”.
Enterprise Resource Planning (ERP) system is originally designed mainly for a manufactured purpose, managing manufacturing processes to enhance internal working efficiency.
Later, as demands for different aspects are appearing, ERP system slowly incorporated other areas’ functions for better managing a company’s internal processes, such as finance, accounting, retail, HR, manufacturing, supply chain, services, procurement, and others.
Nowadays, the ERP system can bring all different internal processes together and then build up “one single source of information” for a company’s internal management.
However, managing a huge amount of orders from the external side, an e-commerce store, is an utterly different story. We’re talking about order fulfilment, inventory monitor, data interaction, customer support, omnichannel retailing, and so on.
Why should not use ERP system to manage your e-commerce order?
We’re sure that there are many great reasons to choose an ERP system for order management, but the fact is that most retailers, at least according to our experience and the case we’ve met, will more intend to look for a pure OMS system for their e-tailing business afterwards.
Another signal is looking at the scale the e-tailing business, the vast majority of big players in e-tailing business prefer OMS. Therefore, we could comfortably say that ERP really is not the best choice and here are some specific main reasons from our point of view:
Insufficient to the complex order management
Only certain ERP systems are incorporate a native order management module.
Since ERP is a more internal-facing system, even if it has the order management module, its functionality is more to handle those orders from a company’s internal side, meaning the volume may be relatively small, the automation level may be relatively low, and the ability to deal with orders across multiple places may be insufficient.
Customer facing and customer service
Many ERP systems in use today are designed many years ago and mainly focusing on the manufacturing process.
The customer-facing and customer service aspects, which are extremely crucial for modern e-tailing business, are not being emphasized until in the last decade, so when you’re considering enhance the customer experience, it’s hard to say the ERP system is a good choice compared with other pure customer-focused systems like OMS and CRM.
Lack of mobile order management
People’s life now is no longer fixed in front of the desk but moving around while doing the online shopping. When you talk about a business or product, the mobile capability is the feature you definitely can’t miss.
ERP system obviously has been slower to adopt the mobile function because, back to the old days, adding mobile functionality when they’re customizing their system is either quite expensive or quite risky, which create a strong argument against using ERP for e-commerce.
Lack of real-time inventory monitor
To better deal with online orders, having a highly flexible way to manage your inventory in real-time could be essential for e-tailing business, yet ERP system is not an “expert” in this area because of its low level of automation and non-intelligent functionality.
For example, if you want to access inventories to information, you need to wait until they have been added to the system in the respective warehouse or offline store. Also, 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, which is difficult to create an overview of all available stock.
Hard to adequate for contemporary omnichannel e-commerce
Today’s customers are more expecting to have the unified shopping experience across online and offline, being able to seamlessly transition from one channel to the next. The ability to simultaneously manage all channels through one platform becomes the key to achieve omnichannel retailing, leading to a successful e-tailing business.
However, ERP system, lacking both solid mobile functionality and flexible inventory monitor, not only can’t provide a consistent user experience but also do not provide sophisticated rules for dynamic distribution of order items to multiple channels, making people flinch from applying it.
As the e-tailing business and the market are evolving dynamically, solely using the order management module of a conventional ERP system is no longer qualified to meet the demand.
You need an Order Management System!
People are always asking questions with a wrong perspective!
It’s not about “Can or can’t manage orders”, but about “can or can’t well manage orders”.
When you have the answer, you’ll soon realize that an operated and highly advanced order management system is all you need, to help:
- Reduce time on data searching by creating a centralized database.
- Catch every single online sale by receiving accurate order information.
- Pick the best fulfilment source through an intelligent order routing,
- Improve order processing workflows with a higher automated level,
- Improve service quality by building up your own support centre.
Order Management System (OMS) is not just a computer software system, but an advanced “ecosystem”. With its powerful integration feature, OMS system can encompass everything involved with taking and filling orders and include many related functions that all have to be working together, building up an integrated central hub to provide you with a smoother order processing.
Modern retail business is all about customer experience, and only the systems possessing real customer-focus nature can have a positive impact on the e-tailing business.
Undeniably ERP system is, in some way, the core of certain businesses, which could well manage different processes of a company. And to be honest, ERP system is qualified to do some order management related jobs, including receiving orders from in-store and online, checking your inventory, and sending products to your customers, but we are talking about small transaction volume.
As your business keeps growing, you will soon realize that an ERP system can no longer satisfy your appetite. What’s more, e-tailing business is not only around selling to customers, but also around interacting with customers, supporting your customer, creating a relationship with your customers, meeting the expectation of customers, and so on.
With the right order management system, you enable to truly offer the best shopping experience for your customers, obtaining their loyalty and creating a long-term sustainable business.
Let’s read the INNISFREE Case Study!
INNISFREE once mistook the capability of the ERP system, nearly jeopardizing the whole e-commerce store launching program.
Due to the rapid growth of the internet, various online retail channels were appearing to extract customers from the brick-and-mortar stores, a smell of a violent change regarding the traditional retailing was sensed.
At the time, INNISFREE, owned by one of the key players in the cosmetic industry called AMORE PACIFIC (Korea), realized that it’s becoming a crucial part to deliver a seamless service to customers when they are buying and interacting across different channels.
Therefore, in 2017, INNISFREE decided to start up their own e-tailing business to improve the online customer experience, better catching up what was happening across the entire retail industry.
By selecting Salesforce as the eCommerce solution provider, INNISFREE planned to launch their 1st Salesforce Commerce Cloud eCommerce website on Oct 2017 in their US market, the biggest e-commerce market in the world.
INNISFREE knew there is an order management module in their ERP system and they expected to use it as their OMS system to manage their massive online orders.
However, they soon realized that it’s a very bad idea. The capability of their ERP system was so limited regarding the order management aspect including:
- Real-time order management
- Partial cancellation,
- Partial return function,
- Way to do the customer service,
For truly handle the huge number of orders per month for the US market, a pure professional OMS system integrated with Salesforce Commerce Cloud (SFCC) and other back-end systems (SAP, POS, UPS, and CYBERSOURCE) was a must.
At the moment, time was the most precious thing for INNISFREE, they were urgently looking for a partner that enabled to deliver a completed OMS system implementing service in a challenging timeline.
Managing the communication simultaneously with staffs from US and staffs from Korea could be quite a challenge since there would be lots of cultural interaction got involved, especially when carrying out the system integration part.
Therefore, a deep understanding of both eastern and western culture and strong coordination skill were also what INNISFREE valued when they’re screening vendors.
Solution from RCI Global Services
- Order management (Sales Order, Cancel, Return, Exchange)
- Order fulfilment
- Customer management
- Product & Price management
- Inventory Management
- Fully-integrated approach
Designed for duly managing huge numbers of orders for big markets, OMS.Pro could totally achieve the real-time integration to adapt the workflow of INNISFREE, receiving orders in real-time from different channels and providing a single source of order information.
By running OMS.Pro, INNISFREE would be able to simply dip into the platform and quickly get overview information such as order fulfilment, sales across channels, and inventory, something that could never be achieved by an ERP system.
With a strong knowledge of retail-focus OMS system and rich experience in dealing with people from different cultural backgrounds, RCI Global Service had successfully helped lots of retailers carry out system implementation and integration project in a challenging timeline, making INNISFREE feel highly confident to put their faith on us.
- Consulting business requirement
- OMS implementation
- Data migration
- Develop customization for INNISFREE US market
- Develop integration with external and internal systems
- Thorough system testing
and confirming the staffs involved in the project, including 1 project manager, 1 business analysis, 3 developers, and 1 quality assurance, to ensure INNISFREE’s eCommerce website could be launched within 6 months along with a reliable and functional OMS system.
After 6 months of hard working, RCI Global Services have successfully delivered the OMS.Pro solution fully integrated with Salesforce Commerce Cloud (SFCC) and other various back-end systems (SAP, UPS, CYBERSOURCE) for INNISFREE eCommerce website.
Currently OMS.Pro is running functionally, managing tremendous transaction volume in real-time simultaneously for three different time zones (HK, KR, US) and providing dynamic distribution of order items to multiple channels.
With OMS.Pro, a customer-focused OMS system, INNISFREE could smoothly adapt the US retailing environment and consumers’ behaviors by applying localization design. What’s more importantly, by integrating INNISFREE POS system with OMS.Pro, a contemporary omnichannel retailing now have been achieved, offering a unified experience to customers across different channels and devices.
INNISFREE are extremely satisfied with the job we have done and thrilling to see their 1st eCommerce website launch without any delay, a meaningful step for their future growth.
Through this happy cooperation, INNISFREE is showing great interest in having another chance to do business with RCI Global Services, letting us deploy the OMS.Pro for their other markets in South of Asia.
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