Mastering Operational Efficiency: How OMS and ERP Systems Complement Each Other

Viare Technical Solutions Consultant, Jarrod Goodwin, discusses how OMS and ERP Systems Complement Each Other

Order Management Systems (OMS) and Enterprise Resource Planning (ERP) systems both play crucial roles in automating workflows, analysing data, and integrating with other business applications. However, choosing the right solution for your supply chain management can be challenging. Let’s explore the distinctions between OMS and ERP to help you make the best decision. 

What’s the Difference Between OMS and ERP? 

ERP systems are designed to manage and integrate various core business functions, such as accounting, finance, human resources, and operations. On the other hand, OMS is specifically tailored for handling the order management process, from order creation to fulfillment. 

While both systems streamline operations, they differ in scope and focus. An OMS is concentrated on the order cycle, addressing complexities like multiple sales channels, inventory locations, customer preferences, and shipping options. In contrast, an ERP system handles broader back-office functions like production scheduling, material planning, accounting, and reporting. 

OMS is ideal for overseeing intricate order management processes, whereas ERP offers a holistic view of business activities and manages a broader range of operational functions. 

Can OMS and ERP Work Together? 

OMS and ERP systems can seamlessly integrate to optimise business operations. An OMS can communicate with your ERP to access real-time product, inventory, customer, and financial data, while an ERP can use order information from the OMS for accounting and reporting. However, they are not interchangeable. An OMS typically offers more flexibility and efficiency in managing orders, as it’s specifically designed for this purpose. 

Shared Features and Functions of OMS and ERP 

1. Data Collection and Analysis: Both systems collect data from various sources, including sales, inventory, and customer information. They also provide dashboards for data visualisation and reporting. 
2. Workflow Automation: OMS and ERP automate many key business processes, such as sending notifications, updating records and scheduling activities. 
3. Integration and Customisation: Both systems can integrate with various software applications, including eCommerce platforms, payment gateways, and shipping services. They are also customisable to meet the unique needs of your business. 

How OMS can Enhance Operations and Complement an ERP 

When deciding on a technology stack, businesses often wonder whether they need both an OMS and an ERP system. The truth is that these systems have complementary functions that can enhance customer experience and operational efficiency. 

An OMS handles the complete order lifecycle, from when a customer places an order to its fulfillment or return. It excels in managing complex scenarios such as: 

• Multiple sales channels 

• Multiple shipping options (Same Day, Next Day, Express, International) 

• Real-time inventory visibility 

• Omnichannel order fulfillment (Click & Collect, Warehouse, 3PL, Instore) 

• Order modifications, returns, and exchanges 

• Advanced order routing 

• Customer communications 

The OMS optimises the fulfillment process by selecting the best inventory source based on availability, cost, and customer preference. It acts as the system of record for inventory availability and, ultimately, what you will present on your website to the customer. 

An ERP system, on the other hand, integrates and manages critical business areas like finance, accounting, HR, supply chain, and manufacturing. While it stores and reports on product, customer, and order information, it’s not built to manage dynamic and customer centric order management tasks like real-time availability, order orchestration, or post-order processing. 

Benefits of integrating an OMS with an ERP 

• Real-time inventory data: An OMS ensures accurate, consistent availability across all channels based on real-time data from multiple sources. 

• Customer-specific fulfillment: It calculates fulfillment options tailored to each customer, factoring in product availability, shipping options and location. 

• Efficient order management: The OMS coordinates order fulfillment by selecting the best inventory source, communicating with shipping providers and tracking orders in real time. 

• Order modifications: It enables customers or businesses to amend orders, cancel items, change delivery details, or initiate returns or exchanges. 

• Improved customer experience: By providing a flexible, seamless order process, an OMS can enhance customer satisfaction and loyalty. 

• Cost reduction: The OMS optimises inventory usage, reduces shipping costs, minimises errors, and automates workflows, driving operational cost savings. 

While both OMS and ERP offer valuable features for streamlining business operations, an OMS is the better choice when focusing on optimising the order management process, enhancing customer satisfaction, and improving operational efficiency.