IT systems are essential in any modern retail operation and the two key platforms are point of sale (POS) and Enterprise Resource Planning (ERP). These two platforms each play a different, but equally crucial, role. They also offer today’s retailer an opportunity for true synergy – where the combination of the two gives a result that is more powerful than the sum of their individual contributions.

The roles of POS and ERP software

Retail POS and ERP are rulers of different domains. POS’ domain is front of house operations – enabling customer transactions, processing payments, and capturing real-time information about sales, returns and exchanges from multiple channels. 

Where ERPs rule the roost is the back of house operations – managing and integrating essential business processes, such as inventory management, supply chain management, financial management, marketing and human resources. The ERP system gives retailers oversight of their business, empowering them to manage resources effectively and make informed decisions.

The limitations of stand-alone systems

So, we have two systems within a retail business – each doing a great job, each essential. But that’s not the end of the story. The truth is that retailers who operate their POS and ERP software as stand-alone systems are missing out on opportunity. That’s because, whilst POS and ERP software systems are powerful tools on their own, they can only do so much when operating independently. 

A standalone POS system, for instance, is focused on sales transactions – and cannot provide insights into inventory levels or financial data. 

An ERP system provides strong financial and inventory management, but on its own has no view of real-time sales data. 

This lack of POS and ERP system integration restricts what retailers can achieve with their systems and data:

• Inventory management – No integration between inventory and sales can lead to stockouts or overstocking, resulting in reduced revenue, lost sales or increased holding costs. 
• Agility – Lack of real-time sales figures can result in inaccurate financial reporting, poor inventory management, and an overall lack of agility in responding to market changes.
• Omnichannel – Omnichannel retail operations rely on both sales and finance data – a lack of POS and ERP integration makes it difficult to offer an engaging omnichannel customer experience.
• Decision-making – Successful retail needs sharp, accurate, timely decision making – without data integration and insights from both the front and back of house systems, decisions are being made without the full picture.
• Process efficiency – retailers are always looking to streamline and optimise business operations. A holistic view of end to end operations helps to find and address inefficiencies.
• Governance and compliance – handling large volumes of data from non-integrated, disparate systems can present challenges when it comes to data privacy, security and compliance.

Better together – the importance of seamless POS and ERP integration

As we can see, continuing to run stand-alone systems simply doesn’t make sense in today’s retail technology world. Seamless integration between Point of Sale (POS) systems and Enterprise Resource Planning (ERP) shouldn’t therefore be seen as a luxury- it is essential. 

Seamless integration means real-time communication and visibility between the two platforms, with POS sales data automatically synchronized with the ERP system. Security and privacy rules are applied in line with the retailer’s governance requirements. Data is in the right format to be read by both systems. There is no need for manual intervention, no double handling of data, no delays, no inaccuracies or misalignments. Seamless POS and ERP integration saves time, requires no army of IT experts and reduces the workload on already busy staff.

Best practices for POS and ERP integration

The most efficient way to achieve seamless POS and ERP integration is to select a POS provider that has already done the work for you. Retailers are therefore turning to POS platforms that have built-in ERP integrations. Platforms like iVend, which has pre-built, deep integrations with all the leading ERPs used in retail – including Sage 300cloud, Sage X3, Microsoft Dynamics 365 Business Central, SAP Business One, SAP IS-Retail, SAP S/4 HANA and more.

Benefits of POS and ERP integration for retailers

By selecting a POS provider with built-in  POS and ERP integrations, retailers can reap the rewards of data integration, inventory visibility, advanced insights, engaging omnichannel operations, compliance, agility and business efficiency.

FAQs

What should I look for if I want to integrate POS and ERP?

It’s essential to choose a POS provider who has expertise not only in point of sale systems, but also in enterprise resource planning. They will have relationships with a wide range of ERP platform providers and will have worked with them to pre-build the integrations you need.

Also look for a provider with a strong network of partner organisations – they will add further expertise and will be able to manage the integration project and tailor the solution to your exact business requirements.

What other bottom line benefits can I expect from integrating POS and ERP?

Integrating your POS and ERP brings benefits in many areas across your retail operation, including:

• Real-time inventory updates during goods receiving, sales and returns
• Reduced workload — data automatically populates between systems
• A single stock pool across all websites and channels
• Data that automatically enables replenishment planning and forecasting
• End of day transaction reconciliation —cash, credit, or gift card
• Data from all areas together for more meaningful insights

Content Sources:

Sap

Mckinsey

Forbes

Deloitte