The ABC’s of Operations: How to Manage Your Ecommerce Back-Office Operations
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With more and more companies rushing to move from offline to online, we find ourselves in a modern-day gold rush. But just like the gold miners, there are winners and losers when finding success online.
While sales and marketing are critical pieces to online omnichannel success, there’s an often-overlooked piece missing from the equation — operations. Because if back-end operations aren’t included as a pillar of your omnichannel strategy, you risk burnout and declining sales.
Today, many businesses use a combination of spreadsheets and legacy software to manage back-end operations: tracking inventory, planning, ordering, etc. However, these manual processes and disparate systems fall apart quickly.
So what should you do? How can you manage inventory, plan for product demand, and get the right product to the right customer? The answer, of course, depends on what you’re trying to do.
In this post, we’ll review the different types of back-office systems to help you determine exactly which one you need — and get you on the path to automation.
4 Types of Ecommerce Back-Office Systems
The most popular back-office systems for managing ecommerce operations include:
- Order management systems
- Inventory management systems
- Warehouse management systems
- Enterprise resource planning software
Each one has a specific functionality that can drive efficiencies, and selecting the right one, hinges on the needs of your specific business.
1. Order Management Systems (OMS).
Let’s kick things off with order management systems (OMS). At its most basic level, order management means how you handle orders from the moment the customer completes checkout until they receive their item (and sometimes when they send the item back to you). And the system is whatever method, or methods, you choose to complete the process.
This means your OMS will manage the processes tied to orders and their fulfillment, such as:
- Allocating orders to the appropriate warehouse for shipping
- Processing the orders
- Providing a record of data on the status of orders and the inventory they contain
Brightpearl does an excellent job of breaking it down even further if you want to get more granular details on what an OMS does. They also highlight the different types of systems for order management, including:
Manual order processing: This might look like printing a CSV spreadsheet, then, placing an order with your warehouse, printing a shipping label, and finally, picking and packing the order for shipment.
Managing orders through your ecommerce platform: If you only sell direct-to-consumer through your website, you can use your ecommerce platform to keep track of orders. However, if you’re selling on other channels, such as Walmart, or through social media, like Instagram, this can lead to trouble.
Order management software: For smaller businesses who don’t have a large tech stack, order management software can work well, especially if you can integrate it into your existing ecommerce platform. Some great examples include SureDone and Sellbrite.
The most important thing to keep in mind is that OMS software, unlike manual processes and ecommerce platforms, will help you automate. And automation is key when you’re looking to sell more and grow your business.
2. Inventory Management Systems (IMS).
Now, let’s move on to inventory management systems (IMS). Inventory management (sometimes called inventory control) is about monitoring the quantities and locations of your products. It accounts for the entire product lifecycle — whether it’s sitting on a warehouse shelf with your distributor, currently being fulfilled, or in the process of being returned by a customer.
So when you can effectively track your inventory, you know exactly how much of each item you have, which items are running low, and when you need to replenish them.
Brightpearl has another excellent guide devoted to inventory management for more details, but some of the benefits they highlight of effective inventory management include:
- Less risks of running out of stock
- More insights into high-performing products
- Better customer experiences
- Great theft deterrent
When it comes to inventory management systems, they’re very similar to the ones for order management:
Manual systems: This could include keeping track of inventory using a ledger or spreadsheets. However, these methods are very prone to error, especially when multiple people are involved.
Inventory management software: Software systems automate time-consuming manual processes and offer many features, such as low stock notifications and real-time stock reporting. Even better, cloud-based software can integrate with your existing tech stack.
For example, Shopventory can all easily integrate seamlessly with BigCommerce. This automated connection is particularly advantageous for saving time if you’re selling through multiple third-party marketplaces, like Walmart and Amazon, in addition to your ecommerce store.
The only downside to dedicated inventory management software is that it can get complicated for businesses with multiple technology systems that need to work together.
3. Warehouse Management Systems (WMS).
So if you already have an IMS, why would you need a warehouse management system (WMS)? While some people use IMS and WMS interchangeably, there is a key difference in the latter — it’s specific to warehouse operations.
As SkuVault explains, a WMS is an important element of your supply chain that manages inventory, picking processes, reporting and auditing. Your WMS can work with your IMS to track items as they move throughout the process of storage, picking and packing.
Additionally, a WMS can oversee multiple warehouses and centralize the information to facilitate the distribution of goods. Some warehouse management software can also help you automate the kitting and bundling process, which can potentially increase your sales.
SkuVault also shares the core components of a WMS:
- Handling receiving and returns, ensuring you have the right balance of inventory
- Managing warehouse logistics, improving efficiency by reducing labor costs
- Integrating with your existing technology, enabling seamless order processing
- Reporting and forecasting, helping maximize your warehouse space
So when you want to automate the receiving and sending of goods, warehouse management systems, such as the ones offered by SkuVault and Scout TopShelf, are an excellent choice.
Though these days, some inventory management systems also offer this functionality, along with a host of other features including order management, stock visibility and purchase order (PO) generation.
4. Enterprise Resource Planning (ERP).
Finally, we’ve reached enterprise resource planning (ERP) systems. ERP systems encompass many of the functionalities mentioned in the systems above — and then some.
In fact, another term for ERPs is business management system, for the very reason that they can manage multiple areas within your ecommerce back-end operations.
ERPs offer a bit everything, from inventory and orders to payments and warehouse operations — and can eventually become the single source of truth for your data. For instance, access to accurate data was a big reason why BigCommerce merchant Saddleback Leather switched to Acumatica for their ERP.
“I find more people are using Acumatica because it’s intuitive, makes sense and is so easy to use. We don’t have spreadsheets flying around and people have access to the same data all the time,” said Dave Munson, Saddleback Leather Founder and CEO.
However, not all ERP systems are the same. Legacy systems with limited functionality can actually inhibit your ecommerce growth. Acumatica provides a helpful checklist to help you evaluate the features you’ll need for your business, which include:
- Does it seamlessly integrate with your ecommerce platform?
- Can you perform critical accounting and business management functions?
- Is it on the cloud so that you can synch and access data from the internet?
- How will you be charged as you grow and scale your ecommerce business?
- Will the system enable you to reduce risk and improve security?
Additionally, due to their scope of capabilities and centralization, ERPs are best for larger companies (both B2B and B2C), fast-growing DNVBs, and complex use cases, such as selling on multiple sales channels, including online and in-store.
Key Takeaway: Automate Your Back-Office Operations
At the end of the day, whether you’re a small business just getting off the ground or a global enterprise, it’s imperative that you automate your ecommerce back-end operations. Because when you do, you unlock the keys to better customer experiences, less wasted time, greater efficiencies and so much more.
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