How Can A Retail ERP System Streamline Your Supply Chain?
A store’s supply chain process may sound simple — find out how much inventory is needed, decide where to get it from and stock the shelves with those items.
But the nuts and bolts behind these objectives consist of forecasting data, managing vendors, processing purchase orders, calculating lead time and much more.
An integrated system can streamline this process, eliminating the guesswork or manual data transfer, giving retailers more control in managing costs.
For example, a retail ERP system can automatically select a vendor or give alternatives based on a product’s inventory level and pricing. Retailers can set up their ERP system to automatically create a purchase order at a certain inventory level. Or at least, the system can make a purchase order calculation and recommend it to the appropriate buyer.
An ERP system can also facilitate organizations that have a central buying philosophy. That means the system will need to aggregate inventory requirements from each retail location in order to purchase enough inventory for the central warehouse. The system can schedule an automatic warehouse transfer to a store location when replenishment is necessary.
The ERP system has an audit trail mechanism in place to create a detailed electronic trail of when the inventory was ordered and is expected to arrive or was received.
The effectiveness of a streamlined supply chain depends on the accuracy of data. The ERP system uses historical information to create rich functionality, such as forecasting demand, calculating lead time between the purchase order and product arrival, and projecting future quantity on hand based on outstanding purchases orders, sales orders and forecast information.
For example, an ERP system can calculate when a purchase order should occur by tracking current quantity on hand and factoring in expected sales. Essentially, retailers can replenish their stores just in time to meet customers’ demand and also to maintain company costs.
A recent article on Forbes.com explains how inventory management often is overlooked when companies seek to streamline their supply chain. O’Neill, a California-based surfwear company, was using as many as 50 different platforms to manage its 34 different distributors in Europe. Among the challenges it faced was the struggle to forecast products and shipping times, resulting in lost sales. However, after switching to a centralized system, the company was able to accurately track inventory, quickly catch delivery mistakes and keep customers informed.
A centralized system also benefits businesses with inventory that rotates quickly, such as food supply. As the same Forbes.com article notes, Texas-based food supplier Chung’s Gourmet Foods used centralized inventory software to track the shelf life of specific items, saving thousands of dollars by properly rotating those items.
Again, the effectiveness of a streamlined supply chain will depend on the accuracy of information in the system. It’s a “you will get quality results based on the quality of information you give it” proposition. But the good news is that the ERP system can do the heavy lifting for you. It can give you the information you need, in a way that is easy to assimilate, so that you can make quality decisions. And, at the same time, it’s giving you the tools to execute your business processes efficiently and effectively.