How do I transform my business operation to keep pace with the direct to consumer trend? What system architecture do I need to excel under new demands and requirements? Should I supplement, combine or replace?
First up: The manufacturers
As ERPs were initially designed for the manufacturing industry, these often legacy softwares are both ubiquitous and considered essential in the handling of raw and billing materials and works orders. However, with a growing requirement to deal with finished goods and order fulfillment, a primary concern for manufacturers is how can they implement new technology that integrates seamlessly with their existing ERP.
ERPs are a commitment, often locked down for 5-10 years. You have multiple options at expanding your service offering:
- Look to make fuller use of the existing ERP’s ‘warehouse management’ capability
Most ERPs will have some WMS functionality built into the overall solution. The default for most business, as the easiest first choice, is to attempt to use the existing WMS functionality to handle more and more finished goods and fulfillment.
- Limited functionality, as the WMS part is such a small factor in the overall ERP solution
- Locked down APIs, stopping you from plugging in any other tech for best in breed partner solutions
- Inability to handle high demand with a slow, clunky, undeveloped approach
We would question whether ERP WMSs are progressive enough to support your business as it changes.
- Tap into add-ons and other ERP collaborators and partnerships
If your existing ERP provider does have a stronger partner network, like Netsuite for example, they may be able to provide add-ons or extra features such as a ‘specialist’ WMS product. There are also barcode scan extensions from providers such as RF Smart. These products tend to be great ‘box tickers’: basic barcode scanning, license plating, expiry date management, batch and lot control, serialisation. All the pieces required by the manufacturing industry, that need to be tightly integrated into your ERP if you’re going to be using an extension for barcode scanning within the ‘WMS’.
- Transferring data back and forth between the ERP and mobile devices is not a smooth or seamless task.
- Multiple users updating the ERP at once causes severe delays
- High volume cannot be handled
- Processing large amounts of data at all times is highly inefficient.
As with all other companies in the business of buying, making, moving and selling of goods, the direct-to-consumer movement is an unavoidable trend. Manufacturers need to be ready and able to be marketing their own products, owning their customer experience, improving their overall offering.
Both the solutions mentioned above fall short if ecommerce and D2C fulfillment become even marginally more important within your overall business model. ERP WMSs and ERP Add-ons just don’t cut it; the WMS requirement is too different and too specialised, in terms of order profiles, workflows and operational demands.
You need to be able to handle anywhere from 1,000 to 100,000 orders a day, depending on the day, time in the calendar and even the weather! More and more companies are seeing low demand followed by periods of heavy demand: you need to be flexible and scalable in terms of operators, devices and workflows. And whilst it is fair to say most ERPs have a decent ‘entry level’ WMS solution as standard, with some advanced functionality for certain cases, in the world of ecommerce and e-tail, they are playing catch up. They don’t have the advanced functionality for scaling up and processing the sheer volume of sales orders with many concurrent users.
Moreover, and perhaps crucially, these companies don’t offer the ‘insider knowledge’ that comes along with a special build WMS for ecommerce. How to set up the warehouse is just as much of the battle as the tech you’re using.
Think about it this way:
If you were running an ERP business, you’d want to serve the broadest section of your customer base with the most generally useful product. If only 3% of your clientele needed or were using ecommerce specific functionality in the early days, would you be prioritising development and advancement? Or would you focus your resource on the 40% in manufacturing industries.
So what are the better options?
We are now seeing a rise in the number of companies opting for a new, double-system approach to their manufacturing, finished goods handling and fulfillment operation.
Instead of suffering at the hands of the limited ERP, they are using the ERP for its original purpose, and then introducing an entirely new, purpose built, modern ecommerce WMS that handles finished goods onwards.