Plan your resources

Enterprise Resource Planning (ERP), an IT package has nowadays becoming a necessary tool for fast paced management of business operations. This IT application is also gradually becoming popular among retailers, especially those who have the tag called ‘organised’, for its manifold features. ERP is basically implemented to integrate the data resources of a business organization in order to automate business operations.  This IT system, more or less, covers all the fundamental tasks of an enterprise. In retail, it generally takes care of POS (Point of Sale), CRM (Customer Relation Management) and Inventory Management. The versatility of an ERP package can be construed from the statement of Naresh Ahuja, Managing Director, ETP International Pvt. Ltd. Speaking on the functions of the ERP package developed by ETP he informs, “ETP offers an end-to-end retail solution called ETP V5. The ETP V5 retail management software is seamlessly integrated through POS, Online Sales, CRM, Sales, Merchandise Planning, Promotions Planning, Procurement, Distribution, Warehousing and Analytics”.   

Applications of ERP

Point-of-Sales:

The Point of Sale (POS), where business transaction takes place, is a crucial point for integrated accounting, Customer Relationship Management (CRM) and inventory management. The hardware components for POS system consist of a bar code scanner, credit card swipe machine, invoice printer, etc. The function of the software component comprises integration of the hardware components during a sales transaction. The invoicing features of POS application, apart from generating bills and invoices, take care of taxes, voids and various payment options including credit card processing.

Since the system generates extensive reports on inventory and purchase orders, it enables the user to track inventory, forecast sales trends, etc., thereby reducing shrinkage and wastage of inventory and improving customer services through targeted marketing, promotions, reward points, discount coupons, etc. Overall, it helps increase sales and speeds up the process of checking of items by the bar code scanner.

CRM applications:

For Customer Relationship Management (CRM) to function the system entails managing and storing customer related information, both sales and service related, which in turn help companies to provide better services to them. CRM solutions enable companies to create and maintain relationships with customers by tracking their interests, requirements and buying patterns.

The ERP package for CRM stores data for every transaction and interaction with a customer. This helps the retailer at a later stage to increase revenue by maintaining customer satisfaction. It provides better understanding of customers, based on their purchasing patterns, demographics, etc., thereby helping in designing targeted marketing campaigns, forecasting trends and also in product evaluation and development. 

Inventory management application:

An inventory management system keeps track of the stock of goods procured from manufacturers or wholesalers. The effective inventory management system ensures reduced wastage or shrinkage of goods, thereby reducing cost. It projects the latest consumer trends. It monitors all the processes across the supply chain, maintaining steady movement of goods against the demand. This also results in reduced cost and shorter lead times.

Some exclusive features that ERP provides for inventory management are creating reports on item pricing, stock status and turnover, etc. The system helps forecast sales trends, formulate purchasing and sales policies and pricing methods.

Major players in the sector

SAP is one of the foremost ERP solutions providers servicing corporate houses. Its retail packages cater to a wide range of enterprises, starting from small business houses to mid-size enterprises to larger ones, with multiple functions. The package, mySAP Business Suite is especially designed to cater to large enterprises; SAP for Retail is perfect for mid-size enterprises; and for the small business enterprises, SAP Business One is the perfect ERP solution. Oracle Retail from IT giant Oracle is a compact ERP package that caters to key verticals like fashion and grocery, apart from hardlines that require further integration with more insight. Polaris is another company that has an ERP package for retail, Retail Excel. The package is ideal for verticals like fashion & lifestyle, grocery, food & fresh, consumer durable & IT, agri-retail, books & music and hypermarkets, reveals Mohit Oberoi, Senior VP & Business Head- Retail, Polaris Software Lab Limited. ETP V5 of ETP International is suited for sectors like fashion, mobile phone, home electronics, home furnishings, furniture, jewellery and books retail.

Cost of implementation

Though the purpose of ERP is to reduce the running cost of a company, its implementation costs a large sum of money. Ahuja informs that for the implementation of ETP V5, the cost ranges between $ 50,000 – 5 million, depending upon the size of the enterprise. ETP V5 focuses on mid-size to large size enterprises. Mukesh Mathur, Retail Sales Director, Oracle India reiterates, “The implementation costs depend on factors like the size of business, number of stores, scope of implementation, etc”. Pantaloon Retail, which implemented ERP system of SAP, spent about $10 million on the process.

Generally, it is not a one time payment which consists of licence fee, service fee and annual maintenance fee apart from implementation fee. Oberoi confirms that Polaris charges an annual licence fee plus the fee for implementation, whereas ETP International charges an annual maintenance charge in addition. For Oracle, the licence fee involves a one time upfront payment and the solution is supported by Oracle on an annual fees basis. Implementation is mostly done by a third party. The global IT solution provider, Infogain, works on Oracle retail solutions and charges for the implementation on a fixed bid, informs Pramod Kapoor, Head - Retail Delivery Services, Infogain.

Scalability of the package

It is good to go for those ERP packages which meet the specifications of the retail industry instead of those with generic features. Some companies prefer in-house development of the package or outsourcing the project to a third party, but care has to be taken to make it scalable enough so that with the growth of the business, the package can be conveniently customised. ERP packages also need constant support and maintenance. In this respect, Oberoi says, “Since Retail Excel follows the best industry practice, in most of the cases it goes with the standard retail process. In some cases, there are specific business requirements, which we handle through configurations & customisations”. “Oracle Retail typically provides an array of optional processes for the retailer and therefore facilitates improvements and does not constrain the business”, informs Mathur. Speaking about ETP V5, Ahuja says, “This is a scaleable and modular solution that can fit any retail company.” According to Kapoor of Infogain, “Retailers should use this product’s out-of-the-box functionality in the beginning, and then based on their experience, go for business specific customisation”.

Note of caution

To stay in tune with modern retail operations, ERP technology is indispensable. However, it is going to be a testing time for the companies while the implementation of ERP is underway. The toughest task to handle during this period is the transformation of unorganised data into organised data. Also, the implementation does not ensure immediate ROI (Return on Investment) since the benefits can only be felt in the long run. So, finances coupled with patience can give you the best of ERP.