Top benefits of ERP inventory management


Inventory management is central to getting the results you need from your ERP. At the same time, your ERP inventory management should provide an easy solution to organizing your products and stock.

Managing your inventory using ERP is a top priority for most businesses; luckily ERP inventory functions are extremely capable of managing stock providing reports, processes, tracking, and even smart stocking locations to improve picking and packing.

How does ERP help in inventory management?

ERP helps businesses make better decisions by providing accurate inventory data. ERP inventory management systems enable businesses to control their logistics, operations, finance, and inventory from a singular system reducing errors and improving efficiency. For most businesses comparing ERP systems, the inventory capabilities and features will be a number one concern. 

Planning replenishment orders

Inventory management allows you to properly plan your replenishment orders. Your inventory quantity must be accurate so when the signal to buy or make more is received, you have confidence that you need to take action. Your ERP inventory management system allows you to categorize parts which helps easily order the right quantity. One item is ordered only when there is a specific demand in exactly the quantity to meet the demand. Another item is ordered when at a lower cost and easily procured. Your goal here is fewer transactions so you order enough to satisfy all the demands seen in the next three months. Optimizing replenishments means fewer transactions and that leads to better inventory accuracy.


Covering the key issues faced by businesses selecting and implementing ERP.


Surplus inventory management

You can quickly see and react to surplus inventory. Whether the surplus is caused by a decrease in some demand or you learn that the economy of a good buy wasn’t so economical, your ERP inventory management system will spotlight the surplus immediately. Should you return the item? Can you contact the customer and ask for another order to use up the surplus? There are options you have when the surplus is quickly found and reaction is immediate. Delay might mean you move the surplus to the trash pile and disposition costs money instead of earning money.

Guide: ERP Distribution Comparison

Inventory tracking turnover 

You can track turnover of inventory by segments and not just overall. ERP inventory management systems allow you to categorize your inventory in many ways and to analyze whether your inventory assumptions are true.

Are your A parts turning over much more rapidly than your C parts? They should. Are parts for one customer gathering dust on your shelves? Maybe it is time to rethink your relationship with that customer. Are your shelf-life items turning over before they are outdated? Can you buy is smaller quantities? Can you increase the shelf life by storing in a better environment? Your accountant might say your inventory is turning over ten times a year. You know some items turn over daily and others might never move.

Business savings

You save time and money through better inventory organization using your ERP inventory management software. Better organization can lead to improved customer satisfaction. Organization might mean moving your items with the most transactions to locations at the front of the stock room and near each other. It could mean combining the parts used for a particular order in nearby bins. ERP is easily used to improve inventory organization and the results can be much improved efficiency and better productivity in your stock room. Your employee satisfaction goes up and your profits right along with it.

Benefits of inventory management for retail businesses

Merchandise management is what sets retail ERP systems apart from ERP designed for any other environment. Merchandise is the inventory a business has right now for sale to customers desiring those items. To have exactly the color and size a customer wants immediately available it the goal for any retail business. Further, it just arrived minutes ahead of that customer and can be priced at an amount that begs that customer to buy immediately and yield a profit at the same time. Is this possible? Yes, much of the time and the right retail ERP system can help make it reality.

Retail today goes beyond a physical store front. E-commerce is a major part of retail these days. Merchandise management is largely the same, you need the right item on hand and available for sale when the customer is online or present in the store. If your retail business trades online then it is essential that your centralized inventory module is fully integrated with your e-commerce system.

Cost and price management

Cost of any SKU is closely related to the supply chain component of retail ERP. A successful retailer works closely with current suppliers to stock merchandise that a customer wants at the lowest possible total cost. Supply chain systems also connect to new suppliers who might have products even more desirable at lower still prices. Low initial cost is the first target. Total cost includes the ability to easily and quickly make returns to the supplier at little or no penalty. Cost can also include financial terms such as payment due after sale. If the supplier can monitor sales and inventory levels using an inventory module, they can replenish fast-selling items without the need for a purchase order.

Recommended reading: find retail ERP with suitable inventory modules using our completely up-to-date ERP vendor directory.

In addition, price management might mean a supplier can provide special, lower-prices for seasonal or promotional merchandise. These cost and price management tools should be sought in any retail ERP.

Retail stock ledger

An accurate count of each SKU on hand with separation by every size, color, and other distinctions is an important part of retail ERP. As customers pay for their purchases and leave the store, that stock ledger should be automatically updated. Return merchandise that can still be sold should be added to the ledger right away. Shrinkage, or other unexplained loss of inventory is an unfortunate reality in retail and each SKU should have a reasonable rate used to adjust the ledger.

An accurate ledger helps determine when to replace replenishment order. An accurate ledger also is a tool to monitor those items that do not sell so that they can be returned or moved to a store where a sale is more likely. An accurate ledger is a critical component in determining expenses and profit or loss over time.

Forecasting and planning

Retail has a strong seasonal element to it, so accurate forecasting activities are essential. ERP is a valuable tool to ensure optimal profit in any season. How many footballs were sold last year in the weeks before the start of the season? What was the weather like last year and what is the weather forecast this year? ERP doesn’t maintain all these data, but in retail, an ERP can match the data it has with external data to predict how much to order and when to accept delivery. A supplier might make those footballs over months and make several deliveries to a warehouse to match your requirements against their ability to produce. Those early-delivered footballs are a part of the stock ledger but also a liability as payment will not be made until the season begins.

These are key features of any good centralized inventory module. Know which ones are important in your particular business and be sure the ERP you select has the ones you need.

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Tom Miller

About the author…

Tom completed implementations of Epicor, SAP, QAD, and Micro MRP. He works as a logistics and supply chain manager and he always looks for processes to improve. He lives near San Francisco Bay in California and can be found on the water in his kayak or on the road riding his motorcycle. Contact Tom at

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Tom Miller

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