ERP Inventory Management System vs. IMS: Know the Difference

When it comes to selling products online, having reliable and scalable inventory management software is a must.

When you are tasked with growing and scaling your online business, there are many things to consider. You have to make decisions about the right systems and processes, which is no easy task. Your goal is not only to make the right decision for today, but to make the right decision for tomorrow. And next quarter, and next year. You need the ability to remain efficient as business increases and operations get more complex.

The search for new technologies and processes is challenging. The biggest cost of the “investment” is not even the actual software or application itself. Oftentimes, the implementation is the most costly part. And if the rest of your company doesn’t buy in, you have an even bigger issue that will cost you even more.

Inventory management software is one of the most important pieces of selling online, and the market gives you a choice between two main types of software.

In this post, we examine those options and how they differ in terms of being able to scale for quick growth.

The Choice: ERP vs. Inventory Management System

When you go to research inventory management software online, you will likely end up on a site that aggregates a list of providers like Capterra or a comparison site like GetApp that helps you compare benefits, features, and price.

What you are likely to find is that you can usually group your options into two main categories:

• An All-In-One platform like a Supply Chain Management Platform or an ERP.
• A dedicated inventory and warehouse management software.

An All-In-One solution can sound enticing because it offers the “full stack” in one place and the ability to manage multiple systems and processes using just one software.

A dedicated inventory management platform specializes in just that function and integrates with a wide range of other softwares.

This means that the choice really comes down to either using a software that does everything, but doesn’t specialize in one area, or using a stack of specialized softwares with integrations to one another.

If you’re still interested in learning more about ERP systems see our blog post on 21 ERP system examples available on the market today.

The Dangers of Using An ERP

All-in-one solutions like ERPs tend to have certain limitations because they try to manage everything at once. But they often lack the detailed settings that you truly need.

With an all-in-one, you risk losing the ability to manage settings by channel account, quantities, pick lists and location routing, just to name a few. As a result, you will notice an uptick in mis-picks, mis-ships or inventory inaccuracies.

Customizable reporting is another feature that usually isn’t available with an ERP. You get the data that the provider thinks you need, and oftentimes it’s one-size-fits all and service-level dependent.

When you think about what this could mean for your business, you begin to realize the potential shortcomings.

That is why most companies grow out of them and move on to a stack that better suits their needs.

The Benefits of an Inventory Management System

If you use a true IMS, you can feel more confidant that you are equipped with the features your business truly needs.

You gain more control with a dedicated software that specializes in inventory management. You’re able to adjust settings at the channel-level, create pick-lists, and get valuable reporting insights. This ensures that you you never run out of stock. It also reduces mis-picks, mis-ships and other inventory inaccuracies.

You also have more control over the integrations you choose to complete your stack. With an all-in-one, you’re stuck with what is offered in your package.

An integration stack ensures that each piece is specifically tailored to your business. The added value is that each integration handles one aspect really well. Businesses often find this more ideal than the all-in-one model which offers features that work, but not very well.

The Importance of an Integration Stack

Businesses who build an integration stack tend to see positive ROI sooner.

This is because set-up is customized for their particular needs and integrations are more streamlined. This level of granularity isn’t always possible with larger one-size-fits-all software.

When you realize your specific needs, and are familiar enough to know what you need, it becomes less challenging to piece an integration stack together.

By just looking at the sticker price, it may seem counterintuitive to spend the time and money piecing together systems to create an integration stack. But don’t let that fool you. Remember those hidden costs of implementation.

With an integration stack, you’re only paying for the functionality you need and NOT paying for what you don’t need. This saves you money just with up-front cost. It can save you even more in the long run because of the reduction in costly errors that can arise from using something that doesn’t offer you the level of detail.

Conclusion

Businesses often choose to use an All-in-one or ERP because it seems to offer everything you need managed in one place. But because all-in-ones are so focused on managing so many things at once, they are often lacking in the level of granularity needed to fully manage inventory and warehouse processes, and be nimble enough to adapt as you scale up.