ERP, PIM, OMS, WMS, 3PL – what they are and when you might need them by Linda Bleijenberg
Hence this blog! Basically an advanced crash course in e-commerce lingo. After you finish reading it, you will know exactly what those acronyms stand for, and more importantly, how they might benefit your business. As a bonus we finish with an important tip from our CCO Bob on how to approach your choice of systems. Feel free to contact Code afterwards to make it happen ;)
ERP - Enterprise Resource Planning
This is one of the better known acronyms. An ERP is often the heart of a company’s operations in larger businesses. It’s an extensive software suite consisting of several modules: e-commerce businesses usually have modules for CRM (another acronym! Customer Relationship Management), accounting, HR, manufacturing, order management, and inventory management.
Advantages of an ERP system
All these modules are cleverly connected to each other and share information, which saves a lot of work and administration and cost, gives everyone in the company the same data, and makes sure the financial side of things is always clear. At their best, ERP systems give you more control, effectiveness and efficiency. For that reason an ERP is an expensive but smart investment for businesses with a complex setup and a lot of data going around, for instance companies with many different sales channels in a variety of countries.
ERP x Shopify Plus
An ERP is usually a level above your e-commerce platform, because its scope is bigger. At Code we see that, up to a certain size, Shopify is the hub of an e-commerce business, and all other systems are connected to Shopify. When a company starts working with an ERP this changes: at that point the ERP becomes the backbone and Shopify one of the systems connected to it.
With large companies that have been around for a while, it’s often the case that the whole business is in the ERP. Over the years they might even have changed e-commerce platforms a few times, which is almost a cosmetic procedure if an ERP is the core of your business. It also illustrates how hard it is to migrate to different ERP software. Choosing the right ERP is an important decision, because you will very likely be working with it a long time.
Examples of ERP systems
What is available in terms of ERP systems? Of course there’s the big names such as Oracle, SAP, NetSuite and Microsoft Dynamics, but there are ERP suites on the market for slightly smaller businesses as well. Two of them are close to home: Exact and ItsPerfect Fashion ERP, a made-in-Holland ERP specializing in fashion brands.
At Code we can’t build an ERP for you, but we are quite good at connecting the ERP of your choice to your Shopify Plus store(s). Recently we connected a few clients to ItsPerfect (Vandyck, O’Neill, Jane Lushka), and to Microsoft Navision (Megacollections, Boska).
PIM - Product Information Manager
It’s all in the name: a PIM collects all your product information in one place. A PIM gives every product a unique SKU (and there’s another acronym! Stock Keeping Unit): a unique product code with which the product can be identified and tracked everywhere.
Advantages of a PIM
For every item a PIM stores all the information belonging to that product, in all possible variants for all channels, countries and languages (and SEO): product titles, descriptions, categories, images, prices, sometimes inventory levels as well (although this is usually the domain of an OMS or WMS: more about them later), and anything else you come up with. Via an API you can sync the data with other systems, such as Shopify, or your ERP.
PIM x Shopify Plus
Of course Shopify can store a lot of product data itself as well, but there is a limit to the amount of fields per product. Even though a little extra product information can sometimes prevent a lot of returns. There’s also little room for an endless amount of different variants of the same SKU in Shopify. In a PIM, there’s plenty.
When would a PIM be interesting for your business? If you sell many different products, if you want to display a lot of information about your products, or if you need many variants of your SKU’s and want to keep an overview. You need all those variants if you want to optimize your product information for multiple channels: Shopify storefronts in different languages for instance, sales channels such as market places and social media, search engines, multiple countries with their region-specific customs and regulations, a B2C and a B2B webshop, you name it.
A PIM also ensures a flawless synchronization between the channels. This is essential if you have multiple Shopify stores and want to prevent differences in product information (prices, for instance). What’s more, a PIM can exchange product data in different formats, and with third party systems like those of your fulfilment partner.
Examples of PIMs
Akeneo is a popular PIM, and very good in our experience. We’d love to connect your business to it! At Code we also worked with Katana PIM, a Dutch partner. Other well known PIMs are Salsify, PIMcore and Fabric.
OMS - Order Management System
An OMS does more or less what a PIM does, only for orders. Like an ERP it consists of modules. An OMS collects and tracks all orders coming in via all sales channels, and their fulfilment via all the routes available to your business. When an order is placed an OMS saves it, makes a receipt, starts the fulfilment process via an integration with the systems used for logistics, and tracks the order status through packaging, shipping and returns. It checks inventory levels and adjusts them (returns as well), takes different warehouse locations into account, prints shipping labels, and can give instructions for order picking and packaging.
Advantages of an OMS
Order Management Systems are primarily used by fulfilment businesses, warehouses, and customer service desks. They are indispensable for e-commerce giants such as Zalando, Amazon and bol.com, who sell in multiple countries and through a variety of channels and store their products at many different locations.
When would an OMS be interesting for your business? Because it’s usually not cheap, and because your order management can be automated in other ways, an OMS is typically something large, international companies would use. Is your order volume high, do you sell in multiple countries and through various channels and storefronts, are your products in different locations, do you have the budget for an OMS, plus the means to integrate it seamlessly with all other systems in your business? Then it’s worth your consideration.
OMS x Shopify Plus
When you sell stuff online you really can’t do without some form of order management, obviously. For that reason an e-commerce platform like Shopify Plus already has lots of native order management functions built in. You will very likely also come across an OMS via third parties: when you work with a fulfilment partner they probably use an advanced OMS in which your Shopify store is one of the ‘sales channels’. If you work with an ERP, it will typically also have an OMS module.
Examples of OMS’s
A few of the better known OMS’s are Veeqo, Brightpearl, nChannel, Manhattan Omni, Skubana, Odoo, and Fabric. Our experience in integrating your store to external partners in the ecosystem is what truly sets Code apart from other agencies. So, do you want to connect an OMS to your Shopify store? We’d love to talk!
WMS - Warehouse Management System
A WMS is for companies with their own warehouse or distribution center, who take care of fulfilment in-house. The WMS keeps an overview of everything that happens in your warehouse: what goods are coming in, where they are stored, and what the most efficient order picking route is for a batch of orders. In addition, it automatically prints shipping labels.
Through handheld scanners and barcodes a WMS enables employees to work faster, and brings down the error margin considerably. Moreover, a WMS shows you how to organize things in such a way as to be even more efficient, for instance by storing your bestsellers close to the packing area.
Advantages of a WMS
A WMS is great for optimizing your warehouse. At Code we know from experience that, from c. 50 orders a day and up, mistakes will be made if you take care of storage and fulfilment yourself. Hence, a WMS is something for you when you grow out of your brick-and-mortar store, office space or garage and want to start storing your products in a more professional way – but aren’t (yet) ready to outsource it to a 3PL partner (more about those later). Or if you already have a warehouse and want to take it up a notch in terms of efficiency.
WMS x Shopify Plus
A WMS can be a stand-alone solution, or a module in an OMS or ERP. It’s typically easy to connect to other systems or parties, such as Shopify Plus and the carriers you use. If you combine a WMS with Shopify Plus, the connector makes sure that relevant data you add to Shopify (for instance new products) is automatically exported to the WMS, and that the WMS supplies Shopify with real-time inventory levels.
Advantages of WMS software
In the Netherlands, quality WMS software can be found with Picqer and WICS. At Code we used them for clients such as Pieter Pot and De Gele Flamingo, and they’re very happy with it. PeopleVox is also a well known WMS, and as mentioned before there are WMS modules available in OMS’s (a.o. Brightpearl) and ERP systems (a.o. Netsuite).
3PL: Third-Party Logistics
The term Third Party Logistics encompasses all third parties who can take over the fulfilment and shipping of your orders. This type of company is also known under the term ‘fulfilment’ or ‘e-fulfilment’ (for the branch specializing in e-commerce).
Advantages of a fulfilment partner
Outsourcing your fulfilment to a specialist saves you an enormous amount of work. Not only does it take many processes off your hands (storage, inventory management, order picking, packaging, shipping, returns management), often the specialists are better at it than you could ever be. They have (a lot) more storage space than you, with their advanced software they make fewer mistakes, their picking robots work way faster, and because of their contacts with carriers you can typically offer better service at lower cost. Moreover, most e-fulfilment parties make sure they keep you posted on everything they do for you in real-time.
Not cheap, but definitely worth it! You will finally have time to focus completely on your branding, sales and marketing (and to take an old-fashioned vacation again).
3PL x Shopify Plus
Fulfilment businesses are typically highly automated and work with specialized software (usually a WMS, often an OMS as well). Many fulfilment parties, particularly the larger ones, have developed their own Shopify Plus connector with which it is quite easy to connect Shopify merchants to their own systems. When this is not the case, Code can build you such a connector as well. You can also call us if you need any help connecting your systems to those of your fulfilment partner, for instance because your IT setup is quite complex.
Examples of fulfilment parties
In the Netherlands you can find a lot of e-fulfilment partners, in all possible shapes and sizes. For various clients (Gladskin, Stoov, Daily Paper, MUD Jeans, Filling Pieces) Code has worked with a few who are compatible with Shopify Plus, among them Active Ants, Promese, Bleckmann and Monta (formerly Montapacking).
Choosing your tech stack: important tip from Bob
As you can see there is a lot of powerful software available to further automate your e-commerce business, and to optimize parts of your operations by using specialized tools. Such wealth also presents merchants with a dilemma though: when to add what to your tech stack? How do you make that choice?
Our CCO Bob’s advice: let your choices be informed by your success. “What I mean by that is that the best time to add something new is: when you need it. Not in advance, because some sales guy in a suit told you you cannot do without. Shopify is super easy to connect, so it’s perfectly feasible to connect things like a PIM on the fly.”
Flexible growth with Shopify Plus
Agility is also a big factor in that. An ERP combines a lot of functionality in one, but might also hinder your freedom of movement because of all the customization. When your business is not ‘settled’ yet, a combination of specialized tools might be a better fit for your brand.
This is particularly true for companies who are still in their growth phase. Our client Pieter Pot is a case in point: they grow fast but in a controlled way, and continuously adapt their tech stack to their changing needs. Bob: “With all the out-of-the-box cloud solutions and API’s that are available nowadays, this is a perfectly viable strategy: you practically only need to configure them and off you go.” In addition, make sure to check out what Shopify Plus is planning to launch in terms of new features. A lot of the functionality we mention above is already in Shopify in some form, and is constantly developed further.
“Do I really need it? That is the big question. And ask a colleague for advice, someone who, like you, has an online business - not a sales person!” With a single-product-store you don’t need a PIM, and an ERP is only efficient if it matches your needs and the size of your business: unused capacity is never functional.
Did you already decide with external systems can elevate your Shopify store to new heights? Or are you having trouble deciding what would work for you? Feel free to send Bob an email! We’re curious to hear about your wishlist and we would love to think along!