Inventory numbers don’t always match. Orders may need to be entered in more than one place. Purchasing decisions depend on spreadsheets or what someone remembers. And answering a seemingly simple question about margins, cash flow, or what you actually have on the shelf can mean pulling information from several different programs.
These are common growing pains for inventory-driven businesses that have reached the limits of accounting software and disconnected tools.
An ERP system brings sales, inventory, purchasing, financials, and other core parts of the business together so the same information can move throughout your operation. Instead of trying to keep separate programs and spreadsheets in sync, your team can work from a shared source of information.
That’s where many of the biggest benefits of ERP come from.
Read more: What is an ERP system?
Here are four ways the right ERP system can make a meaningful difference for a growing inventory-driven business.
1. Make Better Purchasing and Pricing Decisions With More Reliable Inventory Data
When inventory and financial information live in different places, it becomes difficult to know which numbers to trust.
Your accounting system may show one inventory value while a spreadsheet or separate inventory program shows another quantity on hand. Purchasing may be based on what someone thinks is available rather than what has actually been sold, received, committed to orders, or used in production.
That uncertainty can lead to expensive decisions, including:
- Buying inventory you already have enough of
- Running short on items customers need
- Carrying slow-moving stock longer than necessary
- Pricing products without a clear understanding of actual costs or margins
- Making purchasing decisions without knowing how much cash is already tied up on the shelf
An ERP connects inventory activity with sales, purchasing, and financials. As products are purchased, received, sold, built, or adjusted, those transactions can update the rest of the business rather than relying on separate records to be reconciled later.
That gives owners and managers a clearer basis for questions like:
- What do we actually have available to sell?
- What needs to be reordered?
- Which products are moving and which are sitting?
- How much money do we have tied up in inventory?
- Are our margins where we think they are?
ERP does not just give you more data. It helps make the operational numbers behind your decisions more dependable.
"EBMS is providing some crucial data for me as owner of the company in understanding what products we need to purchase, when we need to purchase them, and what our salesmen are achieving in the field."
Corey Zimmerman,
Zimmerman AutoBody Supplies
2. Keep Orders, Inventory, Purchasing, and Financials Working From the Same Information
In a growing business, one transaction often affects several people.
A salesperson enters an order. Someone needs to know whether the product is available. Purchasing may need to replenish it. The warehouse needs to pick or prepare it. Accounting eventually needs to invoice it and understand how the transaction affected inventory and the general ledger.
When each part of that process happens in a different program, information has to be passed from person to person or entered more than once.
That creates opportunities for things to get missed.
With an ERP, information entered during one part of the process can be available to the people responsible for the next step.
For example:
- Sales can see available inventory before promising an item to a customer.
- Purchasing can see demand from open orders when deciding what to buy.
- Employees fulfilling orders can work from the same order information sales entered.
- Accounting can see the financial impact of inventory and order activity without rebuilding the transaction in another system.
- Leadership can look at operational and financial information without first asking several people to reconcile their numbers.
The goal is not collaboration for collaboration’s sake. It is reducing the handoffs, duplicate entry, and information gaps that make everyday work harder as a business becomes more complex.
“Anything you can do to simplify and make things more efficient makes the overall workload easier for everyone. That’s the beautiful thing about Koble’s platform. It’s a way that we can streamline work across multiple levels with many different people involved.”
Tony Beachy,
Precision Hydraulics
3. Give Customers Faster, More Reliable Answers About Their Orders
Customers feel the effects of disconnected processes even when they never see the software behind them.
A customer calls asking whether an item is in stock, when an order will ship, what they purchased last time, or whether a particular part is available.
If answering those questions requires calling the warehouse, checking a spreadsheet, looking through an email thread, or asking another employee, service slows down.
An ERP gives employees access to the information connected to that customer and their order.
Depending on the business and ERP, that may include:
- Previous orders and purchasing history
- Current order status
- Inventory availability
- Pricing information
- Shipment or delivery information
- Service or equipment history
- Open balances or invoices
That makes it easier for employees to answer customers accurately without tracking information down across the business.
Connected information can also help prevent the mistakes that damage customer relationships: selling inventory that is not actually available, ordering the wrong item, missing a promised shipment, or discovering too late that information was entered incorrectly.
ERP cannot replace good customer service. It can give your people better information to provide it.
"Utilising all these processes and options has allowed our sales, service, and installation personnel to focus on the customer while reducing manual labor."
Glenn Wenger,
Coalway LLC
4. Spend Less Time on Duplicate Entry, Corrections, and Manual Reconciliation
For many small and medium-sized businesses, the cost of disconnected software does not show up as one obvious line item.
It shows up in hours.
An order gets entered into one program and then entered again somewhere else. Inventory adjustments have to be manually posted to the general ledger. Someone maintains a spreadsheet because the accounting system does not track the information operations needs. Reports have to be reconciled because the numbers coming from different places do not agree.
Individually, those workarounds may seem manageable. Over time, they add up.
An ERP can reduce that work by connecting processes that previously required separate entry or manual reconciliation.
That can mean:
- Entering information once instead of rekeying it into multiple programs
- Reducing errors caused by duplicate entry
- Keeping inventory transactions connected to the financials
- Automating routine steps in order, purchasing, receiving, and accounting workflows
- Spending less time determining which number is correct
- Giving employees more time to work on customers, production, purchasing, and other work that actually moves the business forward
For an inventory-driven company, there is another cost to consider: the inventory itself.
Better visibility into what is selling, what needs replenished, and what has been sitting can help purchasing make more informed decisions about how much inventory the business needs to carry. That matters when a significant amount of working capital may already be sitting on the shelf.
"EBMS helped us get rid of dual entry and costly human errors. And then you tack on the great inventory and financial features like the powerful reporting capabilities. Those things just added levels to our business."
Austin Johnson,
Metal Center
The Biggest Benefit of ERP: A Business That Is Easier to Understand
For a growing inventory-driven business, ERP is not simply about replacing several programs with one.
It is about creating a clearer connection between what is happening operationally and what is happening financially.
When sales, inventory, purchasing, orders, and financials are working from the same information, you spend less time reconciling the business and more time understanding it.
If your team is relying on spreadsheets, duplicate entry, disconnected programs, or manual workarounds to keep everything together, those may be signs that your business has reached the point where ERP is worth considering.
Read next: Are your systems supporting you? 6 signs its time to upgrade to ERP.
How do you know an ERP will help?
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Your ERP readiness level
Reactive
Operations depend too heavily on memory and heroics.
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Brian Esh is the Director of Professional Services at Koble. He is passionate about following Jesus and helping small businesses grow. Brian has spent nearly a decade working with numerous business leaders to facilitate growth by putting software to work. When not working, Brian enjoys competitive sports and spending time with his wonderful wife and four children.
