You Haven't Integrated ERP And POS Yet?

Manufacturing learned it early on, and now retail is learning it, too. ERP (enterprise resource planning) is not the be-all and end-all for addressing supply and demand problems. It's the integration with other retail systems that solves problems.

If your ERP software and your POS software are not integrated (and by most counts as many as 50% of retailers fall in here), you're either doing redundant work or you're missing the boat completely. Let's assume the former and identify some problems.

Your ERP software is happily humming along, managing your production, distribution, and store delivery. When the store receives a shipment of new SKUs (stock keeping units), they're entered into the POS system. Then they sit on the shelf until sold, at which time they leave the POS system, one by one. The POS system generates a sales report, maybe daily, but probably weekly, and someone (I pity that someone) enters the data from the sales report into the ERP software. Hopefully, that pitied someone enters the data correctly. The ERP software works its magic and generates forecasts and production orders, and the cycle, albeit an inefficient one, begins anew.

Now let's suppose your ERP and POS software have been integrated. Let's assume it's the poor soul who was entering all that data who helped your IT staff realize the benefits of this integration. Now, when SKUs are shipped to a store, your ERP software tells the store's POS software all about them. No more data entry at this point. Then, when a SKU sells, the store's POS software tells your ERP software about it the second it happens. The ERP software automatically digests that sale and updates production and replenishment forecasts instantly. No more data entry here, either. That's nice.

How Can I Integrate My POS And ERP Software?
"Hmmm," you say. "That does sound nice, but it's certainly not describing my enterprise. How do I make it happen that way?" According to Dave Lakhani, VP of VersaPOS (Rutherford, NJ), you have three basic options. You could bag your current POS software and purchase POS software that's designed to integrate with your ERP software. Those of you who are shopping for a new POS system, take note. Smart POS software providers have aligned themselves with the J.D. Edwards, SAPs, and Oracles of the world to accommodate this integration for their clients. For their part, ERP software vendors are increasingly adopting the open standards necessary to accommodate this integration.

You could also hire a person who speaks in code and charges several hundred dollars per hour to modify your existing POS and ERP software, allowing it to integrate. This may or may not be possible. Maybe, as was the case for Mikasa (the subject of this month's feature story, which appears on p. 36), you have some people on staff who also speak this code and can help out for less than several hundred dollars per hour. I would suggest rewarding them with a nice dinner, at the very least.

Finally, you could start anew and custom develop a POS system that makes use of all the functionality of your ERP package. That sounds like fun, doesn't it? I'm sure you've got the IT resources to devote to building a new POS software package. Long live homegrown applications!

At any rate, and however you choose to achieve it, you surely must concur with Lakhani. "If your ERP software and your POS software are not integrated, you've probably got serious redundancy issues. This is a huge waste of time, with potential for inaccuracy and all the loss associated with it," he says. ERP alone will help, but for many retailers, it's the integration of ERP and POS software that's the real answer to supply and demand problems.