Five retail ERP vendor red flags

You want a new retail ERP system and today you have an appointment to meet with a representative for one of the most well-known platforms. You have a small store in a nice retail neighborhood. The person shows up on time and begins telling you about the POS (Point of Sale) devices they have and how much it will help your business.

1. They talk before listening

However, your business is primarily on-line sales and you want an ERP that will integrate with your existing web store software.  When the sales rep begins selling before listening, this is a red flag.  You want someone who has seen your website and who will listen to what you have in mind.

2. Hidden constraints

Your real interest is improved payment processing integrated with your financials. The vendor shows you how payments flow perfectly in their ERP using a major payment-processing partner. The systems seem to work together just as you had in mind.  

Nevertheless, you do a little reference checking first and find that you need to subscribe to only that particular payment processor and specifically through the ERP vendor. While this might not rule out using the system in your business, it is a red flag because you have a restriction now that could be a server limit someday.

3. Lack of supply chain functionality

The sales representative shows you how well the ERP helps manage inventory. Moreover, it does seem to have the power to manage your showroom shelf and stockroom inventory quite well.  

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Your business is retail and your supply chain has a lot of variation. You order today for seasonal merchandise to be delivered months in the future.  Your suppliers offer credit terms that essentially consign inventory with payment due only upon your sale with guaranteed return terms when the item does not sell.  Some of your suppliers watch for sales recorded by you and automatically replenish your inventory based on an agreement.

If the ERP system cannot manage all the supply chain requirements, that red flag is waving in the breeze.

4. Missed deadlines

You and the ERP vendor reach an agreement to implement their ERP. You list deliverables from both sides that lead to the end of the process. After a short time, you realize they missed or were late on some early deadlines. Unfortunately, there are people and organizations that are all hat and no cattle. Missed deadlines are another red flag.

5. The vendor is new in business

You like an ERP vendor and strongly consider doing business. You get some background on the vendor and learn they only started their business a few months ago and their financial status is OK but not particularly strong. Red Flag!  

You want a vendor that will be with you for years to come.  Being a new vendor might not necessarily rule them out of a partnership with you but you certainly should be aware of the risk.