Inventory and Order Management: Best of Breed Tech Stack vs. ERP

The wonderfully quotable Jim Barksdale once said, “there are two ways to make money in business: bundling and unbundling.” For Stitch and many others serving modern retail, this means unbundling the functions of a traditional ERP, such as inventory management, and doing a particular function particularly well.

If ERP is a big block of integrated business processes—finance, HR, sales, etc.—Stitch and other “best-of-breed” solutions are smaller, nimbler, purpose-built bricks. Instead of taking a one-suite-fits-all approach, brands can choose the solutions best fit their needs.

But these unbundled choices also make for a crowded technology landscape—one that can be hard to navigate not just for solution-seekers, but for solution providers, too. Emerging product categories can be especially confusing. Brands come to us looking for inventory management, order management, both, and sometimes something else entirely. The lack of clear differentiation (and clear expectations) helps explain why the space simultaneously feels oversaturated and underserved.

Despite significant overlap between inventory management and order management, there are meaningful differences between these software categories:

Order Management Software

Order management software emphasizes order entry and processing—from initial customer inquiry to organizing fulfillment (pick/pack/ship), invoicing, and tracking delivery.

While traditionally built for front-line sales and support (think old-school catalog companies), modern order management software can process multi-channel eCommerce orders, and sometimes includes built-in shipping software. This can be a real bonus for brands looking to keep fulfillment in-house but without all the bells and whistles of a dedicated shipping solution.

Inventory Management Software

Inventory management software was designed to help back office teams put inventory to work.

Inventory management functions include planning for future purchases and production, tracking procurement, allocating across multiple locations, selling inventory across multiple platforms, and managing sales order fulfillment.

While originally built for the back office, today’s inventory management software can be just as important to top-line growth. Effective inventory management can help brands sell more efficiently and actually ship what they sell, boosting top-line metrics like average order value, repeat revenue, and customer lifetime value.

Heavy Overlap

For a goods-based business, order management and inventory management are fundamentally linked. To manage orders well, brands need to know what they have and where they have it. To manage inventory well, brands need accurate and up-to-date sales data.

Most order management solutions will boast inventory tracking capability, just as inventory management solutions boast order management features. If your business model emphasizes one need over the other, it’s worth seeking out a focused partner.

If your brand needs to manually key in lots of orders or is looking to keep fulfillment in-house via an all-in-one solution, an order management solution may be just the ticket. If, on the other hand, you need comprehensive inventory management more than you need manual order entry and/or integrated shipping, a focused inventory solution should deliver more value.

If there’s something I missed in either category, please share. If Stitch lives in a totally different category for you, I definitely want to hear your take!

If you want to learn more about inventory management, you can find our “Back to Basics” webinar here

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