Skip to main content

The role of ERP in supply chain management is the efficient management of supply and demand through handling supply aspects (storage and transportation) and market aspects. For businesses at scale, ERP adds value to the entire supply chain, starting from raw material procurement to product delivery to customers. Meanwhile, SME retailers can choose a flexible ERP solution like Magento ERP to integrate 3 main flows: material flow, information flow, and financial flow. As a result, you can achieve operational efficiency, improve productivity, grow profit, and adapt to changes. So, what is ERP in supply chain and its roles for retailers? Read on to find out!

What is a supply chain planning system?

What is a supply chain planning system?

Supply chain management (SCM) includes planning, executing, controlling, and monitoring supply activities from procuring raw materials to delivering the product to customers. A supply chain management system provides a match between supply and demand to make the greatest ROI. There are 3 main flows in the SCM:

  • Material flow: The product movement from suppliers to customers and product movement from customers to suppliers in case of maintenance and repair
  • Information flow: The ability to track orders and delivery progress
  • Financial flow: The credit terms, invoices, and other ownership agreements. This flow requires the highest level of cooperation between the members of the supply chain.

Thus, the role of supply chain management is enhancing cooperation and trust among supply chain partners, including suppliers, manufacturers, distributors, retailers, and customers. So, it plays an essential part in the overall success of a retailer. However, according to the 2021’s state of manufacturing report, 97% of retailers admit supply chain management consumes a significant amount of their time. Supply chain management is a long and cumbersome process if you don’t manage it effectively. It limits productivity, causes delays, affects service quality, and leads to unnecessary costs and lost profits.

So, the next section will discuss how ERP in supply chain management can simplify and optimize your supply chain management process for more profitable results.

What is ERP in supply chain?

What is ERP in supply chain?

ERP in the supply chain creates and executes a more efficient SCM process. As previously mentioned, the cross-departmental and multi-organizational nature of the supply chain makes it difficult for retailers to manage SCM effectively. However, an ERP system performs all the business functions such as human resources, finance, and accounting so you can easily access centralized information such as finance, logistics, sales, manufacturing, and distribution. As a result, ERP and SCM integration helps you deliver your products and services to customers with incredible speed, efficiency, and overall quality.

Thus, the benefits of ERP in supply chain management are:

  • Consolidate supply chain operations in a single dashboard
  • Provide more streamlined visibility and coordination with suppliers
  • Automate supply chain processes to improve productivity
  • Eliminate human error and data entry
  • Provide valuable reports to make sound decisions

Role of ERP in supply chain management

Role of ERP in supply chain management

The role of ERP in the supply chain is to streamline SCM operations for retailers. In addition, ERP addresses the multifaceted challenges of managing complex and constantly changing global supply chains, including production planning, warehouse management, and cross-border trade compliance. Below are 6 key roles of combining supply chain management and ERP:

1. Supply chain planning

ERP provides a more accessible and flexible way to set and change the supply chain’s parameters in supply chain planning, including:

  • Determining required stock and inventory levels
  • Optimizing warehouse resource management and automating inventory handling
  • Creating efficient work schedules
  • Ensuring replenishment can keep up with demand
  • Planning product delivery date

As a result, ERP vs SCM in combination ensures that production matches demand and makes just-in-time replenishment.

2. Purchase, procurement, and fulfillment

Purchase, procurement, and fulfillment of ERP in supply chain management

ERP in supply chain management provides a more efficient way to handle the procurement and delivery of goods and services in the supply chain. From purchasing to order fulfillment, ERP systems provide cross-platform visibility across all aspects of the supply chain. As the market expands and globalization becomes more intense, the connection of ERP vs SCM provides a more efficient way to manage service procurement by:

  • Automating communication with suppliers
  • Managing fulfillment processes
  • Eliminating errors caused by manual work

With the help of ERP, retailers can resolve resource conflicts in a supply chain task list.

3. Inventory management

ERP and SCM integration enhances inventory management

Inventory management is the top concern of omnichannel retailers. An inventory error can disrupt the entire supply chain, cause delays, and make customers dissatisfied. Furthermore, the accumulation of excess inventory increases inventory holding costs and wastes warehouse space. Thus, integrating ERP into SCM provides cross-platform access to online to offline inventory information to maintain lean inventory. For example, supply chain supervisors can know precisely what production line resources are being used and for which shipment in real time.

In addition, integrated ERP and SCM solutions enable retailers to manage supply and demand better with more accurate forecasting.

4. Delivery and customer service

ERP and SCM integrated system improves delivery and customer service

When shipping products, ERP also determines the most suitable packaging method and specifies the criteria for quality control. Furthermore, the ERP system maintains a central repository for customer shipments and all delivery details. You can:

  • Log and track shipping processes
  • Update and store all this information automatically

Furthermore, your employees and customers can easily track orders and deliveries. For example, ERP automatically generates and sends an invoice to the customer when shipping an order. ERP in supply chain management facilitates more flexibility and personalization in customer experience. It includes the production of made-to-order and configurable products. Integrated ERP and SCM solutions lead to faster production of higher quality products and customer service. It means improving on-time delivery, strengthening customer loyalty, and ultimately leading to repeat orders.

5. Measurement and evaluation

Measurement and evaluation from ERP in supply chain management

For retailers who use multiple independent systems and workflows for supply chains, it may be impossible to compare actual performance to goals and targets. Thus, you can benefit from ERP and SCM integration as it provides cross-platform access to inventory, financial, and manufacturing information. ERP systems provide superior information organization and aggregation capabilities to ensure that you can quickly identify and resolve any unexpected discrepancies throughout the supply chain.

In addition, the information gathered from the ERP system gives you a macro view to build a more effective SCM process.

6. Monitoring and maintenance

ERP monitors, reviews, and changes supply chain efforts in real-time

According to Allied Market Research:

  • The post-COVID-19’s ERP market size increases from $44.737 million in 2020 and is expected to reach $86.303.00 million by 2027.
  • The CAGR of the global ERP market is 9.8%, which is higher than before COVID-19.

The pandemic has forced retailers across the globe to move physical offices to remote working facilities, so the demand for ERP software has skyrocketed. Facing disruption and uncertainty, retailers are increasingly eager to improve supply chain transparency and implement more efficient resource planning. Supply chain management and ERP are essential to ensuring your business can maintain its flexibility to stay competitive and ensure cost-effective operation. ERP can help you reduce the impact of unforeseen events by offering the ability to monitor, review, and change supply chain efforts and operations in real-time.

Final thoughts

Supply chain management is a cumbersome and challenging process for any retailer as you need to adjust your activity to ensure responsiveness. ERP solutions consolidate all activities into a single dashboard instead of managing SCM and other business operations on separate systems. In addition, the role of ERP in supply chain management is to achieve operational efficiency by automating the SCM process. From resource management to sales, ERP streamlines supply chain management by integrating workflows, finance, and information for your long-term business success.

Keenan Pham

Author Keenan Pham

More posts by Keenan Pham

Leave a Reply

Close Menu

Best POS (Point of Sale) System

A complete omnichannel POS for Magento retailers
Sell online or in your physical stores seamlessly with real-time data synchronization.

Explore Magestore POS

New: Try it yourself!

See Magestore POS in action

Fill out this form and book a time when you're available to test the POS yourself.

There is no need to spend time on a product that you don't need. Have first interactions and explore every feature of the POS to see if it fits your business requirements.

POS Demo

Admin/Backend Demo

There is no customization or advanced features on the demo version. Remember that Magestore POS is customizable for even complex business requirements. You can request a personalized demo with our consultants at any time.

What is Magento POS

A Magento POS (point of sale) system is software integrated with the Magento platform to synchronize data between your online and offline stores and facilitate retail operations. Magestore POS is a web-based and Magento-native POS which requires at least one Magento website to work.

Who needs Magento POS system

The Magento POS system is developed for retailers with both Magento eCommerce websites and physical stores, and want to use the Magento website as a centralized place to manage all sales data and sell both online and offline.

Some features of Magento POS system

A basic Magento POS can work as a cash register to create orders, add discounts and taxes, print receipts, and manage sales. But a complete Magento POS system can assist you with more advanced tasks, such as inventory control, supplier management, loyalty programs, etc.

Why use Magento POS

  • Magestore POS is native to Magento and is installed directly on your Magento backend without third-party plugins, to inherit all Magento's power.
  • You can use our Magento POS on multiple devices, web browsers and create unlimited accounts without extra fees.
  • All data stay safely on your side, and your POS doesn't have to rely on third-party servers to work.
  • You only need to pay once for the POS license and get full ownership of the solution.

45-minute Live Demo

Let us show you how it all works

After you complete the registration form & schedule a meeting with us, we'll contact to ask for your confirmation. This demo session is completely FREE & requires no commitments.

1. Where we'll discuss

We do screen sharing, so the demo will be conducted using Google Meet.

2. What we'll do

Our specialists will guide you through the POS solution and answer any questions you have. All to see if our POS system fits your business requirements.

3. What you'll get

  • A LIVE demo session to see how Magestore POS works
  • A FREE demo site to explore every product feature
  • A FREE consultation with our expert to discuss the best-fit solution for your business.

4. Additional information

  • A demo typically lasts for 45 minutes, but we can adjust the duration based on your needs
  • No preparation required but it's nice to have your requirements clear
  • Additional team members are welcome to join
  • If you want to see how Magestore POS works in reality, you can contact one of our customers and ask for their experience
  • Magestore doesn't do cold-calling, we only contact you on request.

Magestore | POS for Magento

"*" indicates required fields

Schedule a demo

Our solutions only work with Magento (incompatible with Shopify, WooCommerce, and other eCommerce website platforms).
Please enter a number less than or equal to 9999.

By providing your information you agree to our privacy policy.

This field is for validation purposes and should be left unchanged.

Magestore | POS for Magento

About the Magento platform

1. What is Magento?

Magento is an open-source platform that helps retailers create eCommerce websites, released on March 31, 2008, by Varien and developed on Zend Framework. In 2018, Adobe acquired Magento with a price of $1.68 billion. There are currently about 270,000 eCommerce websites running on Magento in 2022.

2. Why do retailers choose Magento?

Most of our customers say Magento is speedy and more customizable than others; it is suitable for medium and large enterprises or fast-growing businesses with complex requirements/customizations.

Not sure if you're using Magento, check your website here!

3. What to do next?

  • If you are new to Magento or searching for eCommerce platforms, you can explore more about Magento in this article.
  • If you are looking for Magento website development services, please reach our dedicated service team here.
  • If you've already had a Magento website and are searching for a POS system, please close this pop-up and continue exploring.