It can be a tough job keeping track of all the different acronyms that crop up within e-commerce. With these terms specifically, it probably doesn’t help that there’s often an overlap between what each of them does. Oh, and they can also interact in different ways depending on which ones a merchant chooses, as well as the exact use case of each.
To make it more complicated, most of these systems don’t box themselves into one term, but instead, try and create new ones.
Together, ERPs, PIMs, WMSes, and OMSes store:
- Product content
- Product prices
- Product inventory
- Customer information
- Order information
- Shipping and fulfillment information
- Accounting information - Cost of Goods Sold (COGs), revenue, returns, assets/inventory
Now, let’s take a look at the specifics of each.
What’s a PIM?
A PIM is a Product Information Manager. It contains all the information in an organisation about the product catalogue, including inventory levels.
This information can then be synced to multiple sources via an API. It’s separate to the commerce platform/cart e.g. Shopify or Magento, because often, merchants need to store more data than those platforms have fields for. This is also the case because that information often needs to be synced to many places and within different formats, which a PIM can cater for. A PIM may even be used for something called a ‘catalogue’ too, which is basically an e-commerce site printed in book format.
Beyond fields, a PIM may also support internationalisation in the sense that products can be inputted in different languages with respect to local customs. A PIM will also allow you to optimize your product information for different channels. A good example is the title field on a product, which you might want to optimize differently for different platforms. For example, you might want to include your brand name in the title for Amazon, but not on your own website. A PIM will let you easily manage this in one place.
What do you store in a PIM?
Titles (different versions for different channels, for SEO, etc.), descriptions, categories, SKUs (Stock Keeping Units), images, prices, inventory levels.
When would you use a PIM with Shopify?
Shopify stores your product catalogue, so initially you might wonder how a PIM fits with Shopify. A PIM would be beneficial if:
- You have a large catalogue that combines information from multiple sources
- You sell on multiple channels and need one source of truth
- You have multiple Shopify stores and want to sync products between them
What are some example PIMs?
Akeneo, Salsify, Pimcore, Fabric.
What’s an ERP system?
An ERP (Enterprise Resource Planning) system is used to plan a company’s core operations, such as manufacturing, logistics and finance. Some common ERP modules are for CRM, Accounting, HR, Manufacturing, Order Processing, Supply Chain.
Really though, ERPs are built first for finance teams. And since finance is at the heart of a business, if a business has an ERP system, it is the heart of the company.
An ERP normally eliminates masses of spreadsheets, legacy systems and sometimes even paper systems too.
In e-commerce, it normally includes modules for manufacturing info, a CRM, order management, reconciliation with finance and accounting, warehouse and inventory management and a reporting suite on top of all of that.
When would you use an ERP with Shopify?
Larger businesses that have multiple channels and/or are operating in multiple regions will often have an ERP to consolidate operational information, especially information that needs to be reconciled with financials.
ERPs are often the ‘source of truth’ for businesses that have been around a while and that have seen many website front-ends. So it’s often a constant that is hard to migrate away from as it touches so many critical business functions.
What are some example ERPs?
Oracle ERP, SAP HANA, Oracle Netsuite, Microsoft Dynamics NAV and AX (AX is the grown up version for Enterprise).
Benefits of an ERP system include
- Efficiency/cost saving
- Easier reporting
- Better compliance
- Better end customer experience
What’s an OMS?
An Order Management System (OMS) is used to track all orders, across all channels in a business. That might include orders from a brand’s online store, retail shop, and phone-order channels. The OMS will track the orders, inventory levels and fulfillment statuses of each order. An OMS will often help with fulfillment tasks too e.g. printing labels, picking orders. Users of an OMS include customer service teams and fulfillment teams e.g. your warehouse or 3PLs.
A good OMS should support all your channels, geographies and warehouses. Integrating this with the other systems in your architecture is key.
If you’re selling online, you’ll be using an OMS already:
- It could be a module in that e-commerce system you’re using, such as Shopify or Magento.
- It could be a module in your ERP system e.g. SAP.
- It could be an external system like Manhattan Omni, Skubana
- Hey madman, maybe you even built your own!
Normally, you’ll use an external system if you’re selling through multiple channels, such as marketplaces, DTC, in-store retail. Platforms like Shopify can often handle this, but not always.
What sort of functions does an OMS handle?
When an order comes in, you have to issue a receipt. You also need to store the order until it can be fulfilled, and keep track of the order status. You also need to decrement product inventory (and increment for returns). If you’re drop-shipping, you need to hook in to those systems to let them know about new orders. And at the end of the day, you need to report on what exactly has happened. And often, you need to do all of that at scale. That’s what an OMS does.
What about 3PL?
An OMS is great at keeping organised when it comes to logistics… so can connect back into your 3PL for sending orders through for picking, packing and shipping.
What do you store in an OMS?
Incoming orders, inventory levels, warehouse locations, picking and packing instructions.
When would you use an OMS with Shopify?
If you want to consolidate orders across multiple channels or storefronts and direct them to multiple fulfillment routes, an OMS makes sense.
What are some example OMSes?
Veeqo, Brightpearl, nChannel, Skubana, Odoo, and Fabric.
What’s a WMS?
Whoa now partner — now you’re getting advanced. At a certain scale, you’ll need to handle your own fulfillment from a distribution centre and get really clever with this. But where does this fit into your IT?
The answer is a WMS (or rather, a Warehouse Management System). This keeps track of all your warehouse operations. It starts with goods in (think trucks unloading palettes), then put away (where do the fork lifts put those goods?), then, when orders come in, the WMS works out the most efficient picking route for your pickers. A WMS keeps an audit trail as good flow, in and out of the warehouse. WMSes also handle reverse logistics (returns) too.
A WMS will be linked to barcode scanning hardware used by warehouse staff. This speeds up product unloading, picking and packing, and — crucially — reduces errors. A WMS will help you optimize your warehouse beyond the basics e.g. making sure barcodes are facing outwards, grouping bestsellers together near the base station/boxing area.
What are some examples of WMS systems?
PeopleVox. Brightpearl and Netsuite also have WMS modules.
So, what’s the difference between these systems?
The difference between an ERP and a PIM
An ERP has a broader scope than a PIM so is usually bigger, more sophisticated and expensive software.
A PIM normally has more specific fields when it comes to products e.g. more fields for SEO and for different channels. PIM support for your e-commerce platform might be more out of the box, such as an app in the Shopify App Store.
ERP integrations tend to be more custom because of the sheer number of configurations.
An PIM may utilize a feed from the ERP system to populate basic product content.
The difference between an ERP and an OMS
In theory, an ERP can be configured to handle OMS-like functions, such as storing, routing and reporting on orders. But an OMS is a more specific software that’s especially designed for order management.
ERPs are general back-office software solutions that handle HR, accounting, supply chain, manufacturing, wholesale and so on.
With that said, an OMS can be an add-on to an ERP, and can handle those e-commerce and retail needs better than a general purpose system, whilst feeding back logistical and accounting information to the ERP.
The difference between a PIM and an OMS
A PIM stores product information, quite like a database of your catalogue. An OMS stores order information, giving a list of which customers have ordered which products. Normally, products are matched between systems using their SKUs.
Choosing the right architecture
The combination of an ERP, PIM, OMS, WMS and e-commerce platform constitutes your architecture or ‘tech stack’. It is, however, unlikely that you’ll have all of these systems in place.
An ERP often combines multiple functions, but because they’re generally not e-commerce-specific, they aren't always suited to particular tasks for which a PIM or OMS might be better.
A good general approach when making these big decisions is a ‘weighted scorecard’:
- Write your ‘wish list’ of all features
- Give each a weighted score (1-5 will do)
- Compare how each platforms ‘score’
Note that, for point 3, you’ll want to make sure to get your hands on a demo of the platform. Many platforms’ sales teams will tell you “of course it does what you need”, but don’t always understand exactly what you’re asking for, or are even clueless about the feature in reality.
Some solutions will offer more than one of these functions too (you might have noticed in the examples throughout that Brightpearl has both an OMS and a WMS, for example). There may be tradeoffs depending on what you go for (many more specialized systems vs. one that does it all) in terms of expense, convenience, specialist capabilities) so you’ve got to weigh it all up.
When you factor in budget, it’s best to compare Total Cost of Ownership (TCO) over a 5-year period. This type of decision benefits from an e-commerce consultant who can steer you on best practices and examples they’ve seen in the wild.
Also, we have a lot of experience integrating these third-party solutions with Shopify Plus, so if you need to get rolling with your integration — or simply want some advice selecting — give us a shout.