ERP 101 (understanding the basics):
ERP. MRP. WMS. OMS. Chances are you have heard one or more of these acronyms when talking about business management systems. What do they mean? And most importantly, how do they relate to your business?
The acronyms – ERP stands for Enterprise Resource Planning and is really a catch-all term for an integrated suite of business management applications that allow an organization to operate more efficiently. MRP (material requirements planning), WMS (warehouse management system), and OMS (order management system) are all common components of an ERP system.
Your business – Depending on the nature of your business you may need some or all of the above, either now, or in the future as you grow. Let’s take a look three stages of growth for a typical e-commerce business. Which stage best describes the current status of your enterprise?
Stage one – Stage one businesses are typically getting by with a basic e-commerce package, simple order management, and no warehouse or fulfillment functionality. Stage one businesses should realize that rapid growth is often unexpected. With that in mind it is imperative to have an ERP plan in place that can be implemented quickly.
Stage two – Stage two businesses have moved into a “real” warehouse. They have more products and multiple suppliers. They are typically managing B2C customers and indirect B2C customers such as Amazon/eBay, along with wholesalers and distributors. They have outgrown the legacy system and need something more sophisticated. Stage two businesses can sometimes be caught in the re-platforming trap. They leap reactively from one system to another, chasing functionality as the need arises. It is important for stage two businesses to plan ahead for a solution that is flexible enough to minimize repeated re-platforming.
Stage three – Stage three businesses want to make a smart investment in a system that can manage their current needs, while facilitating big growth/expansion plans. Businesses of this type need a system that can grow and evolve with them. Now is the time to think big, and to pay special attention to seeking a solution that can quickly and seamlessly integrate with existing functionality.
Successful organizations don’t have the luxury of putting growth on hold. They need to adapt on the fly and continue to evolve. As their needs and their customers change, so must the systems that they use to run their businesses. The right ERP system can and should evolve and adapt through all stages of business growth, enabling organization to reach maximum potential with minimum interruption.