MATERIAL MANAGEMENT: ERP INVENTORY MANAGEMENT SYSTEM VS. INVENTORY MANAGEMENT SYSTEM (IMS):

With the growth of your business, inventory management grows exponentially complex. You’re not just tracking a few products anymore; you’re dealing with thousands of SKUs, multiple warehouses, backorders, and the list goes on.

Getting it wrong can lead to stock outs, overselling, and a poor customer experience, which could impact your brand’s reputation and bottom line.

As your E2E supply chain grows, so does the need for a robust system to manage your inventory. You’re likely faced with a significant decision: do you opt for an ERP inventory management system or a standalone Inventory Management System (IMS)?

The aim of this blog post is to help you, the ecommerce store owner, navigate this important decision. We will explore what ERP inventory management systems and standalone IMSs are, their key features, benefits, and how they stack up against each other.

My goal is to arm you with the information you need to make an informed decision that best suits your business needs.        

##. Overview of Inventory Management Systems (IMS):

• An Inventory Management System (IMS) is a tool that allows businesses to manage and control their inventory levels.
• It’s essentially a technological solution to keep track of every item in your inventory, from the moment it enters your warehouse to the time it’s shipped out to a customer.

For ecommerce businesses, an IMS like SkuVault plays a critical role in maintaining accurate stock counts, preventing overselling, and ensuring that your inventory is an asset for your business, not a liability.

#. Common features of an inventory management system:

• An Inventory Management System (IMS) is not just about keeping tabs on stock levels. It’s about managing multiple facets of inventory operations.

• The most powerful IMS solutions, like SkuVault, come with a host of features designed to maximize inventory efficiency and minimize errors.

Real-Time Inventory Tracking

• One of the most critical features of a robust IMS is real-time inventory tracking.

This feature allows you to maintain accurate stock counts across all your sales channels, whether you’re selling on your ecommerce store, a marketplace like Amazon or eBay, or even a physical retail location.

• With real-time inventory tracking, the moment a product is sold or restocked, the IMS automatically updates the inventory levels across all sales channels.
• This synchronization prevents overselling or underselling situations, which could potentially hurt customer satisfaction and lost sales.
• In addition, this feature is beneficial when managing multiple warehouses.
• You can quickly locate items and direct order fulfillment from the most appropriate warehouse based on factors like proximity to the customer, stock levels, and shipping costs.

Order management

• Another key feature of an IMS is order management. This goes beyond just processing orders.
• It streamlines the entire order fulfillment process, from picking and packing the products to shipping and tracking the orders.
• An IMS like SkuVault simplifies these steps by generating pick lists, identifying optimal pick routes in the warehouse, and automating shipping label generation.

Comprehensive reporting

The third key feature we’ll discuss is comprehensive reporting. It’s not enough to just know what’s in stock; to make informed business decisions, you need deep insights into your inventory turnover.

• A robust IMS provides comprehensive reports on various aspects of your inventory.
• For instance, sales reports can help identify best-selling products, slow-moving items, and seasonal trends.
• Stock reports can reveal patterns in stock levels, alerting you to potential overstock or stock out situations before they become problematic.
• Some systems offer forecasting tools, using historical sales data to predict future inventory needs. These insights can guide purchasing decisions, ensuring that you have the right amount of stock at the right time.

##. Overview of ERP Inventory Management Systems:

An Enterprise Resource Planning (ERP) system is a suite of software applications that help manage various aspects of a business, including:

1. Finance,
2. Human resources,
3. Procurement,
4. And, of course, inventory.

• It’s like the central nervous system of your business, integrating all your operations into a single, unified system.
• When it comes to inventory and supply chain management, an ERP inventory management system plays a vital role by providing a comprehensive overview of your stock levels, purchase orders, sales orders, and more, across all business units.

##. Common features of ERP inventory management software:

• Your average ERP inventory management solution will include features that go beyond traditional inventory management.
• They offer seamless integration with other business processes, allowing you to manage inventory in the context of a unified view of all your operations.
• Advanced analytics capabilities enable businesses to dig deeper into their inventory data, reveal patterns, and forecast future needs.
• Additionally, an ERP inventory management system is typically scalable, meaning it can grow alongside your business and be a viable choice for growing ecommerce enterprises.

##. Benefits of using Enterprise Resource Planning (ERP) Software for any kind of company:

• The biggest benefit of using an ERP system is having one consolidated software platform for all your business processes.
• Integrating various business functions into one platform provides a holistic view of the operations, leading to improved decision-making and fewer “siloed” business systems.
• The advanced analytics can aid in forecasting, helping to avoid overstocking or understocking situations. And with its scalability, an ERP inventory management system can support your business growth without missing a beat.
• However, one problem is that ERP inventory software often goes well beyond the scope of what modern ecommerce sellers need or want. And, as you may have guessed, they’re quite expensive.
• Let’s look at a side-by-side comparison of a dedicated inventory management system and ERP inventory management software.

##. Comparing IMS and ERP Inventory Management Systems:

• While both IMS and ERP systems aim to improve your inventory management, they do so in slightly different ways.
• An IMS focuses solely on inventory levels and stock management, offering specialized tools for this specific task.
• ERP systems, on the other hand, provide a more comprehensive solution that includes inventory management as one of their many functionalities.
• However, this comprehensiveness comes at a cost.

The most popular and reputable ERP system is probably SAP S/4 HANA Oracle Fusion Cloud. While Oracle obscures its pricing information, most online reports claim the system starts at a breathtaking $700 per user per month, and only goes up from there.

• There are cheaper alternatives, but let’s be realistic.
• If you’re reading this, you’re probably a small to mid-sized ecommerce business looking to upgrade your inventory management to something besides an Excel spreadsheet.
• An ERP inventory management tool would most likely be overkill.

##.Just-in-time vs. Just-in-case thinking:

• When deciding between IMS and ERP systems, the just-in-time vs. just-in-case mindset comes into play.
• A just-in-case approach might lead you to implement ERP inventory system, a comprehensive solution that can handle not only your current needs but also any future challenges that might arise.
• However, just-in-case solutions often come with complexity and cost that might not be justified by your current needs.
• In contrast, a just-in-time solution like an IMS addresses your immediate needs efficiently and effectively, without the overhead of unneeded features.
• Moreover, with today’s technology, the distinction between IMS and ERP inventory management is blurring.
• Modern IMS solutions, like SkuVault, integrate smoothly with other business applications, providing much of the functionality of ERP systems without the complexity.

Instead of implementing a complex ERP system “just in case” you might need its additional features in the future, consider a robust IMS that meets your current needs and can integrate with other systems as your needs evolve.

• And if your business scales to the point where an ERP system becomes beneficial, you can upgrade to one then – in a just-in-time manner to ensure customer satisfaction.
• In other words, instead of preparing for problems that may never materialize, focus on solving the challenges you’re facing now – things like inventory turnover, supply chain transparency, and dealing with excess inventory.

##. Factors to consider when choosing between IMS and ERP Inventory Management:

• I don’t just want to tell you what to do or what to buy – I want you to come to that conclusion yourself.
• Therefore, let’s walk through some criteria you should evaluate when deciding between

##. Assess your current and future business needs and growth projections:

• When choosing between an IMS and an ERP system, start by assessing your current needs and future growth projections.
• Is your biggest challenge inventory management or dealing with excess inventory? Or is it something else, like hiring employees or customer relationship management?
• Do you plan to scale your operations significantly in the coming years? Answering these questions can help guide your decision.

##. Evaluate the integration capabilities with existing systems and platforms:

• Consider the compatibility of the system with your existing platforms.
• Does the system easily integrate with your ecommerce platform, accounting software, shipping providers, and other systems you currently use?
• The ability to smoothly integrate with your existing infrastructure is a critical factor in choosing the right solution.

##.Consider the cost and return on investment (ROI) of each system:

While it’s essential to consider the upfront cost of each system, the true measure of value is the return on investment (ROI) the system can deliver. A standalone IMS, like SkuVault Core, often has a lower upfront cost compared to an ERP system.

But cost should not be the only determining factor.        

• Consider also how the system will improve operational efficiency, reduce errors, and ultimately save your business money in the long run.
• For instance, an IMS may prevent overstocks and stockouts, streamline order fulfillment, and reduce labor costs, all of which can significantly boost your ROI.
• And to be fair, a robust ERP system (while usually more expensive up front) can also offer a high ROI if its broader range of features aligns with your business needs. In essence, don’t just look at the price tag; consider how the system will impact your business’s bottom line over time.

##. COSIDER IMPLIMENTATION PROJECT:

• Finally, consider the implementation process and the required training for each system. A system that is complex to implement and requires extensive training might lead to significant downtime and impact your operations.
• That’s why we built SkuVault Core to be easy to implement and get up and running without disturbing your daily operations.
• We understand that as an ecommerce business, any disruption can impact your customer experience and, consequently, your bottom line.
• With SkuVault, you get a user-friendly interface that’s intuitive and easy to navigate, minimizing the learning curve for your team.
• From the moment you choose SkuVault, our dedicated implementation team works closely with you to ensure a smooth transition.
• We handle the bulk of the setup process, including integration with your existing ecommerce platforms and systems, data migration, and initial configuration.
• In addition, we offer comprehensive training resources, including detailed guides, video tutorials, and direct support from our team.
• My goal is to get your team comfortable with the system as quickly as possible.
• Perhaps most importantly, we’ve designed SkuVault to seamlessly integrate with your current processes.
• You can switch to SkuVault without needing to overhaul your existing workflows, minimizing disruption to your operations.

##. My Final thoughts:

I have covered covered a lot of ground in this post, comparing ERP inventory management platforms and standalone IMS solutions.

Both offer unique advantages: IMS solutions, like SkuVault, provide specialized tools for managing inventory, whereas ERP systems offer a comprehensive business solution. This includes advanced analytics and integrations with other business operations, such as supply chain management.

For your company your choice between an IMS and ERP software should ultimately depend on your specific business needs and growth projections.

Yet, in my experience, ERP systems go far beyond the necessary scope and budget of the average ecommerce business. However, if one comprehensive solution is what your business needs, more power to you.

Don’t just take our word for it, see firsthand how SkuVault can revolutionize your inventory management functionality and overall business operations.