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SkuNexus vs Homegrown Order Management Systems

Derrick Weiss
August 23, 2018

The story is one you've heard before:

A merchant starts off selling products - online or in-store, and eventually grows to the point where they need technology to help them be more efficient in their operations.

They look at the options available to them - schedule demos, investigate websites, and call their peers.

They thoroughly vet each solution out there. They know exactly what to look for. They know exactly what they want.

But they can’t find it anywhere.

If that sounds like you, the customizability of SkuNexus might be exactly what you've been looking for. Schedule a demo to find out.

So the founder rolls up his sleeves, and creates his own system. It isn’t easy, and it isn’t quick, but it’s exactly what the company needs at that time, and helps them overcome a large challenge.

It works well, and the founder is able to add onto it as needed, whenever the team thinks of an improvement.

But it’s not perfect, and it’s a bear to maintain.

As revenue doubles, it becomes the founder’s full time job to build, maintain, and test the system. New systems outside the realm of the current one are purchased, and need to be integrated. New modules are added, tested, and improved.

It’s still exactly what the company needs.

But something is nagging at the founder - this isn’t why he got into this business.

His passion is for making customers happy with the products he’s cultivated and serviced over the years, not building an order management system.

And more importantly, when his team reviews the numbers at the end of the month, there is a sizable portion of labor costs that isn’t going to revenue generating or customer retention activities.

They’re leaving money on the tableBut they’re so far into their proprietary system that it’s hard to back out and see what’s what.

It’s a difficult position to be in, since this provides exactly what the company needs in terms of order management, but doesn’t directly contribute towards core competencies.

Still, for a business that wants to grow, there might be a better way.

Homegrown OMS Strengths and Weaknesses

It's exactly what a business needs

An order management system helps businesses manage every aspect of their backend operations, and ensures orders get to customers on time.

Every business has a different order management process, though, so many solutions that attempt to be one-size-fits-all don’t quite cut it.

A proprietary order management system totally removes that barrier. Since it’s built by the same company that uses it, it’s perfect for complex processes that an off-the-shelf solution wouldn’t be able to handle.

Additions are quick

One of the cons of a traditional SaaS order management platform is that the speed and breadth of new features or updates is controlled by the vendor, and individual merchants don’t have much input over them.

Since a proprietary system is built in-house, the speed and breadth of feature updates and new functions is barely limited.

If there’s a team member assigned to the system, they can usually get started on something like this straightaway.

Fast Communication

Also, communication is speedy between the users of the system and the admin of the system.

With any other system, you’d have a point of contact that you interface with, and they'd interface with a product or engineering team.

That creates a bit of lag between communication - something that is totally removed if your admin is just a few seats away from you.

Minute control over details

Because of the other strengths above, there exists a level of control that is unparalleled in proprietary order management systems.

Working with an outside vendor, you’d likely never have the chance to sit down and playtest a new scenario, function, or UI change.

With a proprietary order management system, that’s exactly what you’re getting, and it provides details that would otherwise be lost when working with a third party vendor.

Some examples are steps for quality assurance in the pick pack ship process, skipping a step altogether, or applying different fulfillment processes for hazardous or refrigerated orders.

Weaknesses of Proprietary OMS

It’d be nice if there were only positives. But that’s never the case, is it?

The strengths of a homegrown order management system come with costs as well. Literally - the cost will be higher. But it’s structured differently:

  • If your team is building the system, then the costs likely go to salaries of the team running the system, and maybe server or hosting costs.
  • If you’ve hired a custom development shop to build the system, the costs go towards their fees, and any additions you need to make.

Technical staff doesn’t contribute revenue.

Every business has this challenge.

Do you bring critical infrastructure functions in-house, or outsource everything?

There’s usually a balance, but if you’re using a proprietary order management system, that is one cost that will be taken in-house, and will be by definition unable to work on revenue generating activities.

Yes, you could argue that they are indirectly generating increased revenue and aiding customer retention by building a system that makes other team members more productive, less likely to make errors, and by extension, creates raving fans.

But that argument doesn’t hold water - many organizations trust that to a vendor, and use the resources for customer facing applications, and are growing just as fast as you are.

Investment in technology

This also means that over a few years, your investment in technology instead of core competencies will increase.

Most merchants aren’t technology companies - for a good reason. They are totally different business models, and few of the skills overlap from one to another.

The longer it goes on, the higher the investment outside of core functions will be.

Every change requires upkeep by the original team

Unless the original programmer has written code in a very easy to understand way that is accessible to new team members or agencies, you’ll need to get the original team to maintain or add to the system.

If founders leave or change roles, this can be a huge challenge.

And if you’ve used a third party agency to build the system, this could be very expensive (especially if their prices increase over time).

SkuNexus vs Homegrown Order Management Systems

SkuNexus is a fully customizable order management system, and enterprise customers get access to the source code behind the platform.

This allows technology oriented individuals access to a pre-built best in class system, with the opportunity to customize functionality and features. It’s not exaggerating to say that this combines the best of both worlds.

You'll still get the same amount of customization and flexibility, without becoming a technology company.

Using SkuNexus, you can build on top of the successes of a platform built for order management.

The system is fully customizable - the same way that a proprietary system is - and uses the latest technology, programming languages, and clean interfaces to make improving your system a bit easier.

Making improvements and additions to the system happens at the same speed it would with a proprietary system - since you can still have someone internally edit the code.

It requires far less time, since they aren’t responsible for the architecture or maintenance, and they have access to support 24/7 if they need it.

This frees up time for staff to contribute to revenue generation, and allocates resources to activities that will satisfy customers.

Most importantly, you’ll never have to become a technology company. SkuNexus provides a robust set of tools and a framework to enable a small part of your team to maintain or improve the system, without the startup time to initially build it.

Instead of 6-9 months of work, you can start with our system and immediately begin filling orders through it.

While some businesses used to proprietary systems might balk at the idea of giving up some level of control, it may be in their best interest to do so, since SkuNexus comes fully loaded with the core functions of an order management system.

If you’re looking for a system like that, schedule a demo with a member of our team to uncover what you’re really looking for in an order management system.

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