Enterprise Resource Planning (ERP) refers to software solutions implemented by companies to optimize their business operations. Such operations include accounting, inventory, purchasing, project management, compliance management, risk management, and more. Enterprise Resource Planning (ERP) commonly includes a built-in enterprise performance management solution. This tool helps to optimize operations, draw forecasts, and create exhaustive reports.

ERP systems integrate numerous business processes and provide information transfer between departments. By collecting and processing a company’s operational details from multiple different sources, ERP systems eliminate duplication and ensure data integrity with a single source of truth.

ERP systems for retail are real-time software solutions accurately customized to integrate business processes. With an ERP system, a retailer can streamline, automate and easily manage front-end and back-end activities. These include inventory, purchasing, store and warehouse management, payroll, accounting, risk management, supply chain and distribution. In addition, such tools cover reporting and analytics.

But why do distribution and retail need to implement Enterprise Resource Planning in their business routine? And what are the core functions of ERP in retail?

Find relevant information on the topic reviewed below.

Distinguishing CRM and ERP

People oftentimes confuse Customer Relationship Management and Enterprise Resource Planning, or consider these solutions to be the same. In today’s business world, both systems are vital for productivity and efficiency, but have significant differences when it comes to their complexity and application.

Sometimes CRM’s and ERP’s are integrated into one complex solution. Such a business approach has many significant benefits, especially for large enterprises.

The benefits of CRM and ERP integrated into one system:

• Eliminated data duplication
• Facilitated employee cooperation
• Better customer support
• Better sales overview

But what are CRM and ERP? Let’s dive deeper into the nuances.

Customer Relationship Management (CRM)

Customer Relationship Management (CRM) is a software solution, which helps manage interaction with clients. A CRM keeps track of both potential and existing customers, marketing campaigns, and sales.

A properly built CRM manages information, provides insights, and helps make better sales-related decisions. With such a tool a business can improve the performance of marketing and sales and increase its profitability.

CRM systems help retailers:

• Track customers (gender, age, demographics, preferences)
• Track customer order history
• Improve marketing
• Automate repeated daily routines
• Identify new business opportunities
• Identify new sales leads
• Learn what and when sells best
• Facilitate better customer support

Enterprise Resource Planning (ERP)

In contrast to CRM, an ERP is facilitating all processes, including manufacturing, vendors, employees, and more. An ERP helps control multiple departments, improve communication between those, streamline operations, and increase productivity and profitability.

An ERP notably simplifies and centralizes internal processes, which include supply chain, planning, and scheduling. By investing in an advanced tool, a business can obtain the opportunity to identify its most critical parts.

ERP systems help businesses:

• Integrate departments and improve the interaction between them
• Share data between departments without delay and duplication
• Track progress, productivity, and overall performance of employees
• Simplify accounting and payroll
• Standardize inventory and purchasing
• Automate analysis and reporting
• Improve the accuracy of data
• Manage employees and shifts
• Lower purchasing costs
• Eliminate purchasing errors
• Reduce inventory costs
• Reduce operational costs

What functions benefit from custom ERP for retail?

Commerce

Well-designed retail ERP software is a multi-channel solution that facilitates in-store and back-office activities. This means the business can focus on increasing its productivity while improving customer experience.

ERP systems provide the following advantages:

• Inventory and purchasing details are accessible anytime
• Simplified adjustments
• Order and return tracking
• Customer updates and reporting

Finance

Modern retail ERP systems optimize accounting, which helps business leaders direct resources more wisely. With the right platform, business owners can reduce the amount of daily paper bureaucracy, automate some routine tasks, and overview both expenses and income.

A custom ERP system can help you to:

• Manage emerging accounting needs

A custom enterprise solution provides for easy estimation, budget planning, vendor and wage management, and more thought-out allocation of resources for material, transportation, etc.

• Track capabilities

Tailor-made tools provide for simplified schedules, credit management, and seamless revenue tracking.

• Automate processes

Financial modules facilitate faster business growth by helping resolve cash flow problems, simplify operations related to accounts receivable and payable, create reports, and focus on core business processes.

• Reduce errors

A human mistake can be the reason for inaccurate accounting information, which can seriously affect the quality of regular financial analysis and reporting.

Human resources

Among many other things, a reason to implement ERP for retail business is optimized employee management. Advanced software helps simplify hiring and onboarding processes as well as monitor employee performance.

Smart solutions significantly improve:

• Hunting and interviewing activities
• Hiring and onboarding processes
• Employee cooperation
• Performance monitoring

Supply chain

Another reason to implement ERP for the retail industry and get the most out of your business is the supply chain management feature. Advanced technology (artificial intelligence, machine and deep learning, and blockchain) significantly optimize all internal supply chain management operations.

ERP tools help manage:

• Inventory
• Purchasing
• Multiple stores
• Large warehouses
• Distribution and sales activities
• Product demand

And more!

Why retailers need ERP to boost their business

Growing average life expectancy, emerging digitalization of many life areas as well as the global pandemic significantly increase customer expectations. And your customers’ expectations are the key factor when it comes to business growth.

No matter whether you’re B2B, B2C, or D2C, your goal is clear: to grow your business and increase your profits. However, when your business is evolving, so does the complexity of your operational processes.

Every manager sooner or later faces the problem of miscommunication between departments and inefficient data management. This leads to inefficient operational processes and significant financial loss.

But what are the main signs that something went wrong?

Here are the factors, which indicate that you need to optimize some business processes:

• Data is entered manually
• Communication between different departments is inefficient
• Reporting takes too long
• KPIs are not optimized

Among others, retail ERP should include the following core features:

• Integrated CRM for efficient customer management and support
• Integrated point-of-sales
• Materials and inventory management for accurate demand forecasting
• Multi-location management of warehouses and stores
• Retail & wholesale functionality
• Vendor management
• Accounting management for identification, measurement, analysis, and interpretation of important financial information
• Risk management
• Order and return management
• Advanced reporting and analytics for more accurate decision-making

With increasing business success, some managers begin questioning whether important internal operations work harmoniously. When there are some internal processes poorly configured, the company might suffer financial losses. For example, poor communication between departments leads to duplicated data and lost work hours. For a growing company, this can be a great obstacle to success.

Implementing an ERP solution might help solve problems related to poor management or miscommunication. Proper, well-designed ERP software optimizes operations, draws forecasts, and creates insightful reports.

Main advantages of implementing retail ERP

Managing multiple disjoint operations can be really challenging, especially when there’s miscommunication between departments, the reporting takes long, the KPIs aren’t optimized, and data is still entered manually. So how do you grow your retail business despite those many challenges?

A custom-built retail ERP can change the game.

ERP solutions help companies optimize their business operations, from accounting to proper customer service. These operations include accounting and payroll, inventory and purchasing activities, warehouse, store, employee and risk management, demand analysis and forecasting, customer relationships, and more.

ERP software integrates multiple business processes and ensures thought-out, reasonable resource direction. Modern solutions provide accurate, real-time data and smooth point-of-sale integration, automate navigation and rendering, eliminate duplication, and improve the omnichannel experience.