Is It Time to Upgrade Your Retail ERP System?
Some retailers may have the if-it-isn’t-broke-don’t-fix-it attitude when it comes to upgrading their ERP or point-of-sale (POS) system. However, the latest ERP and POS systems offer more advanced reporting, data tracking and other important functions. Upgrading your current software could provide the much-needed boost that increases your store’s profits and efficiency.
How do you know if it’s time to upgrade your retail ERP or POS system? Ask yourself these three questions to assess the effectiveness of your current software.
Can you acquire drill-down data? Take a look at your sales volume or profit margins. If you are starting to lose market share, it’s possible that your competitors have implemented a number of strategies to seize consumer dollars. Those strategies could include starting a customer loyalty program or improving their omni-channel presence across multiple shopping mediums. Or it’s possible that your competitors have streamlined their supply chain to where it incurs fewer costs, making you less competitive to fulfill orders at a lower price.
Dwindling sales margins could be the result of not stocking the right items or having high inventory expense. It could also be related to your hit-and-miss promotional events; sometimes they improve sales, but most of time, such promotions are ineffective at improving the company’s bottom line.
If your business is heading in this downhill direction, it means that you lack visibility into company data to make strategic business decisions. An effective ERP system provides insight into your store operations, such as inventory levels or sales trends. When evaluating your business operations, take a look at your ERP system’s ability to extract information. Can you find out what was sold between 4 p.m. and 5 p.m. yesterday, or can you only get total sales dollars for the store from a couple of days ago?
- Can you assess customer trends? Retailers must be able to capture, manage and analyze customer information and trends. A customer loyalty program is an efficient way to execute these actions, which could be controlled via an ERP system and executed at your POS. For example, a store employee scans the customer loyalty card at the POS system upon checkout, the customer uses a kiosk at the store or your website to enter their information and demographics (motivated by the special deals and promotions they will receive), and then the ERP system provides insight into customer demographics and buying habits.
- Can you distinguish effective ways to track and analyze data? ERP or POS systems can handle all types of data, but an effective system knows which information to track in real time and what to track over time.
For example, having real-time data doesn’t always offer a complete picture of a store’s operations. It’s not enough to know the types of products that are purchased during a specific block of time. Only after analyzing historical trends can a retailer create a strategic product display — such as placing two high-selling items near each other — that can increase store sales.
But some store functions are very important to communicate as close to real time as possible. Gift card transactions, for example, must be received in real time. Theoretically, if a store’s central database cannot track a purchase made with a gift card in real time, a customer could empty a gift card balance at one store and use it again at another location.
These questions highlight the minimum features that an effective ERP and POS system should offer. It’s worth taking a look at your current management software to ensure that it still meets your business needs.