A Quick Guide to Inventory Management vs ERP:

If you’re starting a warehouse for the first time, you’ll eventually come face-to-face with the dilemma of how to organize it. You’ll already have some back-end tools, like Shopify, that does a great job helping you sell your stuff, but you’ll have no idea where that inventory lives, what’s going out when, etc. Your first impulse may be to go with a big-name brand enterprise resource planning system that combines a hundred business features into a giant platform – but that might not be your smartest option. In this quick blog, we’ll review the differences between ERP (enterprise resource planning) systems and inventory management systems – and by the end, you may be surprised enough to change your mind.

What is ERP?

Enterprise Resource Planning systems are typically used by companies to do supply chain planning from start to finish. Because they are all-encompassing, they are usually massive in size and scope. If you go with something like Oracle or Netsuite, you’ll often need multiple server rooms to handle all of the data, plus you’ll have to install the software on every single computer, and you may be stuck with a ton of features you don’t need. For example, if you do white label product shipping, what do you care where your manufacturer gets their raw materials from? ERP systems are usually reserved for large businesses that encompass multiple unique verticals. If you’re a small to medium size business that just makes and sells a particular product line, you may not need to go with a full-stack system; it may be better for you to integrate multiple, smaller options and build a custom setup that works for your operational flow.

Outline of ERP features. Source: http://ndimensionz.com/kb/enterprise-resource-planning-why-we-need-it-and-which-is-the-best/

What is an Inventory Management System?

Inventory Management software tracks how much stuff you have and where it is. Every warehouse operation requires an inventory tracking software to keep a meticulously detailed account of exactly where your goods are located, where they came from, and where they’re supposed to go. When companies choose to keep manual records instead of inventory management that syncs accurately across channels, they tend to be at risk for stockouts, overstocks, and incorrect picking/shipping.

Ideal inventory management systems will synchronize with digital stores to help warehouse personnel keep track of what inventory has been scheduled to ship out, as well as any inventory which is to be received for returns processing.

Advantage of Inventory Management Systems Over ERP Systems

How often has this happened to you: you sell something on one e-commerce channel, but there’s nothing to automatically decrement that inventory from another e-commerce channel, and then you forget all about it, resulting in a sudden stockout and delays in service? Worst of all, that sync button that some inventory management systems claim to have down perfectly is terrible IRL. And then there are the unlikely but logical worries: theft, accidents…

One thing is for certain: although there are always bound to be problems you can’t control, your software must not make the problem worse – so look for a system that adjusts omnichannel inventory in real time. Ensure there are safety, security, and ergonomics precautions taken to prevent workplace/retail breakage or stealing. And finally, use predictive analytics and continuously updating business insights to see stockouts way before they hit you – and double check everything’s on track in case you get hit by surprise.

Bottom line: unless you’re a large enterprise that takes meticulous counts of raw materials and tracks costs across the entire supply chain, you probably don’t need an integrated ERP system. It can save you tens or even hundreds of thousands of dollars in the long run to work with some IT-minded individuals and develop a lean system of software that only does what you need it to. Feel free to reach out if you have any questions; our CommerceBlitz OMNI Warehouse Inventory Management System starts at $199.95 a month, and no, that rate doesn’t go up after a month!

-The LFH Team