Anyone working in trade or warehousing hears both terms all the time. Some vendors now call their inventory system an ERP, others sell ERP modules one by one like an inventory system. Here is a short overview of what the terms mean.
What an inventory management system does
An inventory management system - in German-speaking countries simply “Warenwirtschaft” - tracks the path of the goods: from purchasing through the warehouse to sales. Typical tasks include:
- maintaining items and prices
- placing orders with suppliers and booking goods receipts
- keeping stock levels and running stocktakes
- writing orders, delivery notes and invoices
- supplying online shops and marketplaces with stock and orders
What an ERP adds
ERP stands for enterprise resource planning. An ERP aims to cover the whole company in one system. Depending on the vendor, it adds to inventory management:
- financial accounting and controlling
- production and material planning
- projects and time recording
- service and maintenance
- human resources
- reports across all areas
The difference at a glance
| Inventory management | ERP | |
|---|---|---|
| Focus | the goods: purchasing, warehouse, sales | the whole company |
| Accounting | usually handed over to a separate program, often DATEV | often included |
| Production | rarely | depending on the vendor |
| Rollout | manageable | a project across several departments |
| Suits | retail, online retail, smaller businesses | businesses with production, several sites or many departments |
When inventory management is enough
An inventory system is enough as long as the business revolves mainly around goods and the other areas run well in their own programs: accounting with the tax adviser, payroll in a payroll program, quotes in Office. Many businesses do well like this for a long time.
How to tell it is no longer enough
- Figures from warehouse, sales and accounting are merged by hand every month.
- There are areas the system does not know at all, such as installation, service or projects, which therefore run in Excel.
- Several sites or warehouses can only be mapped with tricks.
- The same customer data is maintained in three places.
- Every report needs someone to put it together.
The gap between the two
Between inventory management and ERP there is often a gap that no system closes: the Excel list for installation planning, the Access database for complaints, the mailbox in which orders are coordinated. This gap is rarely a reason to replace the whole system. Often it is a reason to add the missing piece properly.
Switch or extend?
Introducing an ERP is a big project. Every department changes over, data has to be migrated, and it takes time before the new system runs as smoothly as the old one. Before you switch, it is worth asking whether a smaller step would do:
- Connect: link inventory system, shop, shipping and accounting through interfaces so nothing is retyped.
- Extend: build the missing workflow as a separate application that works with your inventory system.
- Replace step by step: if the old system really has reached its end, move area by area rather than on a cut-over date.
To extend, we use ElbDesk, the foundation we build on. Your inventory system or ERP stays where it does its job well - ElbDesk takes on the workflow that is missing. Whether to customise your ERP for this or extend it alongside is covered in our ERP guide.
Questions before you decide
- Which workflows run outside the system today?
- Where is data entered twice?
- Which figures do you lack for decisions?
- Is the existing system technically at its end, or is only one part missing?
If the answers give a clear picture, the decision is usually easy. If not, a look at the actual workflow helps before you ask for quotes.
