Why ERP is not enough for a Multichannel DTC or Retail Business
If you are running a multichannel direct to consumer (DTC) or retail business, you might be familiar with the challenges of managing your inventory, orders, and fulfilment across multiple channels and platforms. You might also be using an enterprise resource planning (ERP) system to integrate and streamline your business processes and data. However, is ERP enough to handle the complexity and dynamism of today’s multichannel commerce? In this blog post, we will argue that ERP is not sufficient, and that you need specialised peripheral systems such as an order management system (OMS) and a warehouse management system (WMS) to pivot your business to ever changing market conditions.
What is ERP and what are its limitations?
ERP is a software system that integrates various functions of a business, such as accounting, finance, human resources, manufacturing, sales, and marketing. ERP aims to provide a single source of truth for all business data, improve efficiency and productivity, and reduce operational costs and errors. ERP is often considered as the backbone of a business, as it connects and coordinates all the internal and external stakeholders and processes.
However, ERP is not designed to handle the specific needs and challenges of a multichannel DTC or retail business, such as:
Managing inventory across multiple channels and locations.
ERP systems typically have a centralised inventory management module that tracks the quantity and location of products in a single warehouse or store. However, if you are selling your products through multiple online and offline channels, such as your own website, marketplaces, social media, pop-up stores, or third-party distributors, you need a system that can synchronise your inventory across all these channels and locations in real time, and prevent issues such as overselling, stock-outs, or inaccurate inventory counts.
Processing orders from multiple sources and fulfilling them efficiently.
ERP systems usually have a basic order management module that records and processes orders from a single channel or platform. However, if you are receiving orders from multiple sources, such as your own website, marketplaces, social media, or phone calls, you need a system that can consolidate and manage all these orders in one place, and route them to the best fulfilment option, such as your own warehouse, a third-party logistics provider (3PL), or a drop-shipper. You also need a system that can handle complex order scenarios, such as split shipments, partial shipments, backorders, returns, exchanges, or cancellations.
Optimising warehouse operations and logistics.
ERP systems usually have a generic warehouse management module that controls the movement and storage of products in a warehouse. However, if you are operating a large or complex warehouse, or multiple warehouses, you need a system that can optimise your warehouse layout, picking, packing, and shipping processes, and automate tasks such as barcode scanning, label printing, or inventory replenishment. You also need a system that can integrate with your carriers and shipping partners, and provide real-time visibility and tracking of your shipments.
What are OMS and WMS and how can they help?
OMS and WMS are specialised peripheral systems that complement ERP and address the specific needs and challenges of a multichannel DTC or retail business. Both these systems are often integrated with ERP and other systems such as e-commerce platforms, marketplaces, point of sale (POS) systems, customer relationship management (CRM) systems, and analytics tools.
OMS: Manage inventory and orders across multiple channels and locations.
Centralise and synchronise your inventory and orders across all your sales channels and fulfilment locations with OMS:
- Maintain accurate and real-time inventory visibility. OMS can track and update your inventory levels and availability across all your channels and locations, and prevent issues such as overselling, stock-outs, or inaccurate inventory counts. OMS can also help you manage your inventory allocation, reservation, and replenishment policies, and optimise your inventory turnover and profitability.
- Process and fulfil orders from multiple sources efficiently. OMS can consolidate and manage all your orders from different sources in one place, and route them to the best fulfilment option, such as your own warehouse, a 3PL, or a drop shipper. OMS can also help you handle complex order scenarios, such as split shipments, partial shipments, backorders, returns, exchanges, or cancellations, and automate workflows and communications with your customers and partners.
WMS: Optimise warehouse operations and logistics.
Control, optimise and manage your warehouse operations and logistics with WMS:
- Optimise your warehouse layout and processes. WMS can help you design and manage your warehouse layout, and assign optimal locations for your products based on their demand, size, weight, or other criteria. WMS can also help you optimize your picking, packing, and shipping processes, and automate tasks such as barcode scanning, label printing, or inventory replenishment.
- Integrate with your carriers and shipping partners. WMS can help you integrate with your carriers and shipping partners, and compare and select the best shipping rates and services for your orders. WMS can also help you provide real-time visibility and tracking of your shipments, and generate reports and analytics on your shipping performance and costs.
Conclusion
ERP is a powerful and essential system for any business, but it is not enough for a multichannel DTC or retail business. You need specialised peripheral systems such as OMS and WMS to pivot your business to ever changing market conditions, and to provide a seamless and satisfying customer experience. OMS and WMS can help you manage your inventory and orders across multiple channels and locations, and optimise your warehouse operations and logistics. By integrating OMS and WMS with ERP, and with other systems such as e-commerce platforms, marketplaces, POS systems, CRM systems, and analytics tools, you can create a robust and agile multichannel commerce ecosystem that can help you grow your business and stay ahead of the competition.
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