One of the biggest reasons businesses consider an ERP purchase is the need for inventory management. Unfortunately, many businesses put off this decision and overextend their accounting software instead.
Startups initially tend to manage their inventory manually, entering inventory data into Xero or MYOB to integrate it with financials. But, as a company grows and starts adding sales channels, this method becomes time-consuming and more prone to errors. The next step is often adding a complementary inventory management solution.
There are a variety of inventory management solutions in the Xero and MYOB partner ecosystem like Unleashed, Dear Inventory, Cin7, or TradeGecko. They are typically easy to set up, and many claim to sync easily with the respective accounting software. One of the primary benefits of add-on inventory solutions is that you can keep your accounting software, reducing training and avoiding disruption to the business. However, they do have significant drawbacks. Much of the fault lies with inventory solutions that lack real-time integrations. These integrations require constant vigilance; sometimes an update to the accounting or inventory system can stop or alter the flow of data. Bridging the gaps across those solutions requires spreadsheets, email, and manual work, all in an attempt to create logical functionality out of a hodgepodge of systems.
For example, a company might launch using Xero for accounting and Shopify for eCommerce and then fulfill orders with a 3PL. If the company starts selling through an online marketplace, it then needs another system to manage inventory information for the new channel. All of these systems then need to be synced with the 3PL, and staff has to monitor all systems for errors.
Many companies operate like this, adding workarounds to their current systems and hiring more people to manage the manual processes that continue to pile up, compounding the inefficiency. It’s hard to track how much time they’re wasting on manual processes, how many data entry errors they’re making, and just how severely a lack of operational visibility is impacting the bottom line.
The best way to avoid these pitfalls is to consolidate systems on a unified platform, eliminating as many connection points as possible. The big difference between ERP systems and accounting software is that the latter isn’t built to handle complex inventory. There is no information on what inventory is available to sell, what has been ordered, and what is en route. If inventory positions are reconciled at month’s end in Xero, there’s no real-time snapshot of what teams can sell and what’s been promised to which customer.
ERP software is no longer only for large businesses. The introduction of a cloud-delivery model and a phased implementation approach has made it very easy for small businesses to switch from small business accounting software to a powerful finance module. They can then add more modules according to need and budget.
The option of starting small and growing at your own pace also allows ambitious businesses to put in place a much more scalable foundation. Additionally, switching costs rise as a company grows; moving earlier can save a lot of pain later on.
Learn more about NetSuite SuiteSuccess here, and give us a call to discuss if NetSuite is suitable for your business.
