There are a lot of acronyms with three letters for selling online. Whether you’re a small business that’s just started selling online or a large multinational corporation with dozens of commerce websites, you need to know and measure these abbreviations in order to assess the state of your business. For some businesses, especially manufacturers and distributors with B2B and B2B2C business models, another three letter acronym is paramount to commerce success: ERP. Software and systems for enterprise resource planning (ERP) aid in the centralized management and storage of business data. ERP software is widespread, with ERP solutions making up 17% of global software spend and 5% of total IT spend – hundreds of millions of dollars in total.
Having a strong, reliable, and industry-friendly ERP integrated with your commerce tech stack enables businesses to operate more effectively and provide better customer experiences.
WHAT ARE ERPS
A comprehensive piece of software known as an Enterprise Resource Planning (ERP) system is used to manage a company’s core business processes across departments like finance, HR, procurement, manufacturing, supply chain, and customer relationship management (CRM). ERPs provide a unified source of real-time data that enables quick decision-making and boosts operational efficiency by combining these operations on a single platform. In fact, 50% of businesses achieve a return on investment (ROI) from ERP systems within two years, with 28% seeing it within just one year.
By centralizing operations and optimizing key processes like inventory management, production planning, and order fulfillment, an ERP can provide value to manufacturers and distributors. To avoid stockouts or excess inventory, manufacturers frequently deal with complex supply chains and require precise forecasting. ERPs make it possible for manufacturers to effectively manage resources and reduce waste by providing real-time visibility into inventory levels, demand trends, and production schedules. For distributors, it ensures smooth logistics and distribution, improving tracking of shipments, managing warehouses, and ensuring that products are delivered on time.
5 KEY FEATURES OF ERP SOFTWARE FOR E-COMMERCE
Invoicing
Your ERP can be configured to automate your invoicing process. This saves time and eliminates the risk of someone accidentally typing the wrong price, tax amount or customer information.
Automated invoicing also speeds things up: your invoices always go out on time, which means you have better control over your cash flow.
Customer relationship management (CRM)
CRM features in ERPs help you improve customer satisfaction and encourage repeat business. This is due to the fact that they consolidate all of your customer data into a single location. This makes it possible for you to provide individualized experiences, manage interactions with customers, and monitor customer behavior (such as order history) for specialized marketing campaigns.
Inventory management
ERPs provide you with real-time inventory levels visibility. They can also accurately forecast demand, lowering the likelihood of stockouts and lowering carrying costs. Additionally, this aids in ensuring that you deliver to customers without causing unnecessary delays.
Shipping labels
By automatically generating shipping labels, ERPs assist in streamlining your logistics. You can seamlessly track orders and manage your shipments by integrating carrier interfaces directly into it. You can use this to ensure that customers get their orders as quickly as possible.
Manufacturing information
If your e-commerce company specializes in manufacturing or product assembly, an ERP can offer tracking raw material inventory, managing work orders and monitoring production schedules.
ADVANTAGES
ERPs can offer some strong advantages for many e-commerce companies. The following are some of the main benefits of using it:
- Streamlined operations: Since ERPs create a smooth flow of information between teams, you avoid so-called “data silos” in which teams only have access to their own information, but there is no way to share with other teams. According to some e-commerce businesses, it also speed up workflows, reduce human error, and make administration simpler.
- Better oversight: Modern ERPs combine all of your organization’s data streams to provide you with real-time information. Additionally, this enables you to conduct data analysis, allowing you, for instance, to identify patterns, make decisions based on data, and better manage stock levels.
- Scalability: Every e-commerce retailer wants to see growth in their business. However, this expansion further complicates your operations. ERPs are generally a scalable solution, which means they are built to accommodate increased transaction volumes, larger product ranges and additional sales channels as your business continues to expand.
- Better customer experience: ERPs also enhance customer relations because they enable you to personalize customer communications, manage order fulfillment and provide better customer service.
DISADVANTAGES
While ERPs have a number of useful benefits, you should be aware of their drawbacks because not all e-commerce businesses can benefit from them. These are some:
- High cost: Software licensing, hardware infrastructure, and implementation fees are just a few of the upfront costs associated with implementing this system. Remember to also include ongoing maintenance costs when considering the total cost of owning it.
- Complexity: ERPs are complex systems that require careful planning, configuration and customization to align with your e-commerce business’s specific needs. To get their ERP up and running, businesses frequently need to hire IT consultants, which can cost a lot of money.
- Implementation Across the Board: ERPs are most effective when implemented across the board. Large businesses with multiple locations or subsidiaries may find this challenging. Ensuring consistent data and processes throughout the organization requires careful coordination and change management, which may also mean bringing in external consultants.
WHICH APPROACH IS RIGHT FOR YOU?
For some e-commerce brands, implementing an ERP system has numerous advantages. However, before choosing the best option for your business, it is essential to carefully consider its requirements.
Just remember that the best choice is always the one that aligns with your business’s goals and the needs of your employees and customers.