How to Choose the Best ERP for Your Retail Company
Enterprise resource planning (ERP) solutions in a retail environment allow for the automatic, real-time recording of transactions across your business. As a single source of data, ERP software facilitates improved inter-departmental communication and optimised retail functions.
In spite of the massive benefits that ERP implementations bring to retail organisation (outlined below), many business owners are put off by some large scale implementation failures in the sector. Well-known sports retailer, Nike famously invested $400 million for an integrated ERP, supply chain management and CRM solution, only to lose $100 million in sales due to implementation failure, compounded by a 20% stock dip and an assortment of lawsuits.
ERP’s Critical Role in Retail
ERP solutions in the retail sector provide crucial functionality that serves to maximise profits, largely due to it’s stock and supply management capabilities. The ability to match stock to demand is a critical factor in any successful retail company. According to findings cited by the Centre for Economics and Business Research (CEBR), retail companies without ERP systems lost $240 million over the 2012 Christmas period.
Retail-Specific ERP Functionality
It goes without saying that the efficacy of any ERP solution depends largely on its inbuilt capabilities and on the ERP implementation partner’s ability to optimise it for your business. Here is a list of the typical functionality included in cloud-based ERP systems.
- Retail Planning. ERP systems that have been setup for retail companies allow retailers to plan their activities according to demand in order to increase sales turnover.
- Store Operations. Effective management of retail chains depends largely on access to data around shopper basket analysis, merchandising, inventory management, workforce management and much more. ERP solutions make this data available to decision-makers quickly and accurately.
- Inventory Management. A high portion of many business’s working capital is locked up in their inventory as raw materials, WIP, and finished goods. Effective management requires clarity into these levels. This module empowers retailers of all sizes and verticals to manage their inventory levels and track goods efficiently.
- Supply Chain Management. ERP effectively consolidates the end-to-end supply chain flow of data for retailers, be it multi-location, multi-currency Supplier management, logistics, finance, and stock movement. Modern ERP solutions like Sage X3 ensures information stays interconnected and is easily accessible by all authorised stakeholders.
- Demand Forecasting. A critical ability for businesses to accurately prepare for future demands – ERP software tracks past trends and forecasts future cyclic demands. This ensures customers are satisfied, sales are optimised, and warehouses are not bloated with non-moving stock.
- Vendor Management. Stored and updated on one system, vendor details, lead time, performance, pricing, and other important details are accessible to decision-makers.
- Customer Management. ERP stores and automatically analyses customer data, tracking preferences, activity, shopping trends, and other important details. When utilised correctly, this can serve to increase customer satisfaction, target marketing efforts, increase basket spend, and keep your customers engaged with your brand and products.
- Finance Management. Cloud-connected ERP with strong finance capabilities, like Sage X3, provides comprehensive core finance functionality to retailers. This ensures retailers remain compliant, gives business-owners access to powerful, real-time financial reporting and decision-making information, and reduces the heavy admin and data-capture burden typically associated with multi-system, spreadsheet-driven accounting.
- Database Integration and Optimised Reporting. ERP solutions provide a single source of business information for the entire business. This real-time data is accessible to business stakeholders and removes issues synonymous with patchwork, non-communicative solutions, such as version control issues, human error, and manual data manipulation. Reports are instantaneous, automated, real-time, and accurate, saving retail businesses days of work with a few simple clicks.
- Returns Management. A customer’s right to return items is fundamental in modern retail, and modern ERP needs to facilitate this process. Depending on the nature of the return, the ERP solution should allow for resale, repair, and refunds for customers.
- Integrated point of sale (POS). This depends largely on how flexible your ERP solution is, and how capable your ERP implementation partner is, and their level of development and configuration skills. This functionality is supported by Sage X3 and T3T, and enables your POS system to automatically update your ERP with in-store transactions, enhancing day-to-day functionality.
What are the Benefits of ERP Software for Your Retail Business?
ERP solutions bring real value to retailers of every size and type. Here are some of them:
- Easy to use. The graphic user interphase (GUI) makes complex, robust technology easy enough for everyone in the business to use, regardless of their technical capabilities. It also helps guide users to carry out business processes for desired outcomes.
- Quick response. Time is money and ERP software significantly speeds up admin and transactional processes, and gives stakeholders insight into staff and machine productivity. This means customer queries are resolved quickly, production bottlenecks are cleared up, and the business can respond quickly to market changes.
- Resource optimisation. ERP functionality takes over most of a business’s admin heavy-lifting. This means the business no longer requires a large admin team, allowing resources to be deployed in more profit-producing activities.
- Reduced overheads. When ERP systems are implemented effectively, they serve to reduce overheads, thereby boosting profits.
- Improved decision-making. In retail, ERP systems give business owners and leaders real-time insight into all aspects of the business and operations. This reduces stress levels and improves decision-making processes tremendously.
- Scalability. Investing in a good ERP mitigates the need to undergo multiple, disruptive ERP implementation projects, as it grows with your retail company. Even better if your ERP can integrate with other best-of-breed applications for further integrated functionality as you grow.
How to Choose the Right ERP Software and Implementation Partner
It is abundantly clear that the right ERP solution, coupled with the right implementation partner, can bring untold benefits to your business. However, the right software is nothing if not placed in the hands of the right implementation partner.
Here is what to do when choosing both:
- Take the time to map out exactly what you want from your ERP solution
- Identify the leading ERP software solutions that have the functionality and features you require
- Request and review customer feedback on the ERP software and implementation partner
- Find out if the implementation partner is able to configure as well as customise the solution to meet your exact requirements
- Check if they have a clearly-defined, tried and tested implementation methodology, or if they change tactics with every customer (the latter is shown to end in implementation failure)
- Ask if they provide training during and after deployment
- Find out what kind of support they offer, if any
- Find out if the implementation partner has experience in providing ERP solutions for retail
Take your time making this decision as it is a costly investment, and the right implementation partner can make all the difference.
Need Retail ERP? Ask the Advisors at T3T. We’re experts in Retail ERP Deployment.