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What Is an ERP Inventory Management System: Essential Guide
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What Is an ERP Inventory Management System: Essential Guide

Published 28 Nov 2022

Essential Guide to ERP Inventory Management

The ERP inventory system gives businesses a solid competitive advantage, and its growing adoption is proof! By 2030, the global ERP market will grow at a CAGR of 10.7%.

But before investing in ERP inventory management, it's crucial to understand its functioning in-depth. So let's learn about ERP inventory management, its benefits, and ways to integrate an ERP inventory system. 

Customer satisfaction is the primary key to a successful business. An ERP inventory management system ensures that your company retains customers and boosts sales. With an efficient ERP system, companies can manage and store all the data in one centralized place. To learn about an ERP inventory management system, read below.

What is ERP Inventory Management?

ERP Inventory Management

Enterprise Resource Planning(ERP) inventory management is a software that centralizes and integrates several crucial business activities and resources. 

Businesses can manage their business activities from a single platform using ERP inventory management solutions. For example, organizations can manage inventory, finances, operations, planning, and logistics.

With an ERP management system, the entire organization receives real-time inventory information. It acts as a central platform and is an essential part of companies that plan to :

  • Widen their base

  • Incorporate advanced automation 

  • Develop complex workflows

  • Maximize investments in inventory

  • Sell many products

The aim behind the centralization and integration of ERP systems is to provide a comprehensive approach to business where one workflow informs the other. 

While all ERP modules share a common foundation, each function operates as a separate piece of software. The advantage of this is that data can be exchanged between modules to enable accurate calculations.

Some typical ERP inventory systems functions include:

  • Barcoding and tagging

  • Logistics planning

  • Product tagging

  • Reporting

  • Inventory forecasting

  • Supply chain management

Essential Features of an ERP Inventory Management System

Essential Features of ERP Inventory Management

The features in-built into an ERP system are designed to streamline business operations. As every business need is unique, ERP systems will have different parts.

But, most ERP systems will cover the following features:

  1. Data management and reporting

  2. Single System

  3. Automation

  4. Customer relationship management (CRM)

  5. Supply chain management (SCM)

  6. Manufacturing management

  7. Accounting and financial management

Let’s have a closer look at each of these features.

Data Management and Reporting 

ERP systems organize data and provide valuable insights to improve decision-making. Accurate real-time reporting enables cost reductions, operational optimization, and enhanced services. An ERP system compiles data into charts, graphs, and visual reports.

Single System

Eliminating unnecessary data silos and integrating operations across departments are some of the primary functions of an ERP. The ERP systems gather information from many business sources and create a picture of operational, financial, business, and customer data. As a result, it fuels accurate insights and better decision-making and reporting.


ERP systems save time and reduce errors by automating time-consuming and redundant tasks like data entry. This works because when users enter information into an ERP system, it becomes accessible to the entire organization. So, with the automation of ERP, companies save a lot of time and money. But, a system admin must code and develop automation rules in an ERP system. 

Customer Relationship Management (CRM)

Integrating ERP systems with CRMs can help incorporate customer data into decision-making and reporting. For example, ERPs will organize information like contact details, serial numbers, and order histories to create an accessible prospect database.

The marketing and sales team can then focus on leads that are likely to convert, develop better campaigns and optimize lead times.

Supply Chain Management (SCM)

Supply chain management is an essential feature of ERP systems. SCM includes manufacturing processes, logistics, distribution management, demand, and inventory tracking. ERPs gather the supply chain data to recommend optimal transfer and buy orders.

Manufacturing Management 

ERP systems assist firms in improving their manufacturing processes by production monitoring, raw material sourcing, and product planning.

To manage your inventory planning operations, an ERP gathers and stores precise information on your product tracking, distribution planning, shop floor controls, bills of materials, and others. 

Accounting and Financial Management

An ERP provides financial data tracking, budgeting, forecasting needs, and analysis of all business accounts. 

Some ERP systems may offer extra features such as tax and asset management. An ERP system helps businesses organize and optimize their decision-making, financial planning, and spending.

Do you need an ERP to Manage your Inventory?

Do you need an Inventory to Manage your ERP?

Deciding whether an ERP is the right choice for your business depends on the core features you need to manage your inventory levels. Also, ERP systems have their own set of merits and demerits. 

ERP inventory management systems are a good choice for inventory optimization, data-led reporting, supply chain transparency, quality checks, and more accurate counts.

But, implementing an ERP inventory system is critical, and you may end up complicating your business operations. So, some firms find implementing an ERP across the entire company challenging.

ERP systems work on a one-size-fits-all approach. The systems are more complex than standalone retail-specific operating systems or inventory management systems. Also, ERP tools need more specific functionalities than your e-commerce business needs. ERP systems don't offer pre-built integrations with e-commerce marketplaces and platforms.

Due to ERP implementation and management complexity, businesses need to hire specialists. The specialists customize and maintain the system incurring extra costs.

But you can avoid this with FirstBit'sscalable software that offers great flexibility, straightforward implementation, and configuration rather than customization. 

How Can an ERP Inventory Management System Benefit E-commerce Companies?

ERP inventory management companies can benefit e-commerce companies in various ways. Let's look at some of the crucial benefits.

Integrate Logistics and Supply Chain Functions 

Logistics planning and supply chain are two different practices. But both rely on each other to be effective. Supply chain management oversees the inventory life cycle from creating products from raw materials to ending when customers receive orders. Logistics coordinates the movement of finished goods, raw materials, and data within the supply chain. 

Integrating both processes is necessary for order fulfillment, which can impact how customers perceive your brand. For example, a company must coordinate deliveries to complete an order. But with complete information on the supply chain, you can blend the logistics of last-mile delivery.

For example, a customer orders a customized coffee mug from an online seller. To provide accurate delivery information, planners need exact details about the entire supply chain. It includes information on what materials the manufacturer will order and the time it'll take to create the coffee mug.

Improve Analytics and Data Accessibility

Even minor data inaccuracies may have high repercussions for businesses. Inaccurate data can cause problems like messed up order fulfillment schedules, distorted inventory predictions, and missed reorder points. Many ERP systems are built to gather data. It helps businesses to a great extent as it saves time and reduces the chances of errors. As the ERP inventory system integrates with many tools, it can collect data from various aspects of your business. Your business analytics will improve with quantifiable data, and you can forecast your business needs. 

Ensure Scalability 

As your business grows, so does your customer base! And a large customer base means more extensive inventories and higher sales. But with a bigger list, you'll have more products to track. It becomes complex with a larger inventory as your workflow also becomes complex.

ERP inventory system automates the tasks that get more intricate and complex as your organization expands. For example, with an ERP, you can keep track of inventory levels and place replenishment orders when you have fewer products.

Using an ERP System for Inventory Control

ERP System for Inventory Control

An ERP system for inventory management ensures that it automates crucial functions so that stock acquisition, sorting, and transferring are in sync. Besides, the system incorporates personnel, customers, and suppliers' inventory requirements to maintain appropriate stock levels.

The ERP is the centralized space for inventory operations. For example, employees use human resources, inventory reporting, analytics, and optimizing applications. But all these systems need to be in coordination with each other. The ERP system is the central hub and interface where all systems can communicate. Every specific software system has a point where it merges with an ERP. 

You need a network of systems and individuals to use an ERP system for inventory control. You need to start early and gather a team of internal experts who can assist you:

  • Keep a record of your inventory procedures

  • Make realistic financial plans.

  • Establish objectives 

  • Help training, user acceptance, testing, and other implementation processes

Final Words

With ERP systems, companies can run their business more efficiently. An ERP system with robust features can transform inventory management from an essential process to a competitive differentiator.

If you are looking for ERP systems, ensure to look for built-in business intelligence that combines data and visual analytics to help managers make decisions. With customizable designs, your business can grow. So, keep adding features and resources as needed to leverage the maximum out of your ERP system!

Need more information? Let’s connect for a quick discussion!

First Bit Team
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