Why choose ERP over inventory software?
You have two choices when you search for inventory management software. One is dedicated inventory software and one is an inventory ERP system. Let's first discuss the major differences between them.
Inventory software can be described as a "point solution" - it handles only inventory management. It can be used to track inventory quantities and manage bins/warehouse locations. These are essential features for distribution companies to manage their biggest asset. But what about the rest?
An ERP system includes everything you can do with inventory software. ERP systems also include other areas of your business in the same system. This includes sales, purchasing, accounting, and many more.
If you are able to manage your inventory with standalone inventory software, why not choose an ERP inventory management program instead?
1. ERP provides more advanced inventory planning tools
Although most inventory software programs claim to offer advanced inventory planning tools and tracking, they are very basic. Although you can track the item quantities and set reorder points in order to avoid stockouts, there is nothing particularly advanced. These point solutions will not give you the ability to predict future trends, but they will provide you with some insight.
ERP can help you get ahead of the curve. Demand planning tools such as MRP (Materials Resource Planning), can be used to predict and calculate demand. This tool uses multiple factors like historical demand, open sales opportunities, and forecasts. These predictions can be made manually using best guesses, but data can help you optimize your inventory at another level.
2. ERP makes it easier to manage inventory data efficiently
It might seem that inventory software is designed to improve inventory management. Many solutions claim to automate all of these processes, from order management to customer management to payment collection to sales. But "How?" is the real question. Integrations are essential to achieve the level of automation that allows data to flow through all departments within your company. Although integrations are often viewed as a positive, because they allow for greater flexibility, the truth is that each integration adds complexity.
All departments can work in one system with an inventory ERP system. There is no need to configure multiple integrations between sales, inventory, and accounting systems. This is all done automatically by the system. The system allows for greater automation with less IT effort, thereby increasing efficiency throughout the company. Your team will have a better user experience if they only have one interface to learn from.
3. ERP provides greater visibility and business intelligence
An inventory system can provide reporting and analytics capabilities but it is limited to inventory. But what about the rest? To gain meaningful insight into your business, you will need to reconcile data from accounting software, inventory software, and other programs. This type of reporting is slow and takes a lot of time.
It is crucial to consolidate all your business data under one roof for business intelligence and reporting. ERP software provides greater insight into your data so that you can quickly make data-driven decisions. Consider what data your employees require to perform their jobs efficiently from a daily perspective. Your sales and customer service teams can quickly access inventory information, including where it is located, its status, and how fast they can get it to customers. This allows them to quickly respond to customers and offer a high-quality experience. Do you have an inventory system that can do this?
4. ERP allows you to grow
Inventory software may be a good option for small businesses that have a few SKUs and only a few customers. High-growth businesses will outgrow inventory software in a matter of years. These integration point solutions can add complexity to your IT stack and operational processes. A collection of integration points solutions may seem more cost-effective, but they can quickly add up.
For any business to grow, simplicity is essential. ERP is the best tool for that. It is important to take the right decision today that will support your business in five, ten, and even ten years. Most ERP systems today offer modular functionality that allows you to add the functionality you require as and when you need it. This allows you to adjust your system easily as your requirements change.
Many inventory software vendors will tell SMEs that ERP is too expensive. It's not. The top 20% of businesses that are growing use ERP to manage their business. This is how they have become top performers by using ERP to optimize their business and outperform the competition.