Why should I consider a specific OMS (Order Management System) rather than adapting my ERP?
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!
An OMS that is designed and implemented to integrate your
order input and processing with your inventory and fulfillment processes is a
more predictable way to succeed.
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.
An OMS has more specific functionality to manage orders
than can be retrofit into an ERP. These
include:
Connecting the dots between order receipt, inventory
management and fulfillment
Managing drop-ship suppliers, including payment
authorization to drop-ship suppliers
Automatic inventory updating and reordering
Providing complete visibility into order status at every
stage
Management of returns and exchanges
With most ERP systems, you would pay at least as much to
custom-design these features as to purchase a separate OMS.
The key is to buy that OMS from a supplier with a history
of fast and effective integration with the other software in use by your company.
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 –
Define the required web functionality
Ensure mobile device access and efficacy
Does your system support touch-screen operation?
Does it offer point-of-sale integration?
What are your requirements for social media connectivity
and user access functions such as “search?”
What reports will be generated?
How will they be disseminated?
How automatic is the integration with new product
introductions?
Does your OMS support extreme seasonality?
Does it manage multiple sites, including drop-ship sites?
How do kits (multiple products assembled for one purpose)
or back orders get processed?
What customer notifications are automated?
Does your OMS manage service provision at your customer’s
place of business (e.g., installation)?
Does the OMS help to automate your Customer Service
Function, including prompting your CS representatives to best assist customers?
Again, many of these requirements involve both the
architecture and design of the software, as well as the effectiveness of the
integration and implementation. Choose
your software carefully. Choose your
implementation partner even more carefully.
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.
Yes, it’s getting complicated … and that’s the reason you
need a good integration partner.
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.
Users – who, where, department (eg., CSR, drop-ship, 3PL,
accounting, in-houses and field sales, operations, logistics, personnel,
purchasing, etc.), customers, suppliers and others.
Channels – How do you sell? Do you use the Web, brick and mortar? Call centers?
Catalogs or other direct mail? Do
customers order via mobile devices? Do
you have sales personnel in the field?
Order entry – How do you create orders? Modify existing orders? Validate orders?
Notify customers at various stages? Manage exceptions? Receive orders from B2B customers? Receive orders from B2C customers? Calculate
taxes? Calculate shipping costs? Verify inventory before accepting an order?
Reports – What reports do you have now? What reports would you like to have? Can you see all orders across all sales
platforms in a single view? Can you see
the allocation of orders to particular fulfillment centers? Do your orders automatically update inventory
velocity reports?
Accounting – How do you ensure accurate billing. How do you accomplish fraud protection? What do you post – batch or individual
transactions? How do you manage B2B credit limits?
Fulfillment – How are orders transmitted to fulfillment
center? How do you manage Pick / Pack /
Ship scheduling? How do you remain aware of order status and package tracking
and how do you communicate this to your customers? What happens when inventory isn’t available
and partial shipments are required? How
do you manage backorders? How do you
assign shipments to multiple fulfillment centers?
Returns – What if only one line item is returned from a
multiple line item order? How do you
reverse entries for sales tax and shipment costs? What if the items were fulfilled at different
fulfillment centers, but returned to a single location? How do you handle exchanges?
User Interface – Can users save data in particular
ways? Are different menus available for
different users? Can you modify and
adapt menus and user interface in-house without the need to retain your
software supplier? Do your screens effectively
prompt employee activities?
Purchase Orders – To what extent are POs issued
automatically? Subject to which business
rules? How are credit limits
anticipated? How are shipping times by
vendor calculated into inventory requirement processes? How are suppliers created?
Inventory – Do you have a WMS? Is it well integrated with your OMS? If not, how do you manage inventory? What inventory visibility do you have? Is it synthesized with your item velocity
information? Does it incorporate cycle
counts and inventory confirmation processes?
Does it help you plan inventory ordering, receipt, putaway, quality
control, picking, packaging, shipping and reorders? How does your system help you decide which
suppliers are optimal where multiple suppliers for a single item exist?
Customer Service – Do your CSRs have all the information
at their fingertips to answer every question without delay? Are all order details available to CSRs,
including order and shipping status?
Does the order history of the customer appear on the CSR screen? Can a CSR perform checkout tasks for a
customer? Can a CSR edit or cancel an
order? Can a CSR schedule and monitor
ancillary services provided to the customer, such as installation or future
service appointment scheduling?
Value Added Services – Does your system help you
upsell? Can your system manage work
orders? Does your system help you
understand and manage any capacity limitations?
Conclusion – 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?
Please call us at Avectous Integrated Software. We can help you make the best decisions.
Take Control
TEL. (714) 656-2898 | info@avectous.com
http://avectous.com
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