Who Needs an ERP?
Shippers & Manufacturers
Production & materials flow
What is an ERP System?
Enterprise Resource Planning (ERP) is integrated software that manages core business processes across an organization. ERP systems serve as the central nervous system of a company, connecting finance, human resources, manufacturing, supply chain, procurement, and customer management into a unified platform with a single source of truth.
For supply chain professionals, ERP systems provide the foundation for planning, execution, and financial settlement. Modern ERP platforms have evolved from back-office accounting systems to comprehensive business platforms with real-time analytics, AI capabilities, and cloud delivery.
ERP in the Supply Chain Context
Within supply chain operations, ERP systems typically manage:
- Procurement & Sourcing: Purchase orders, vendor management, and spending analysis
- Inventory Management: Stock levels, warehouse locations, and inventory valuation
- Manufacturing: Production planning, work orders, and shop floor control
- Order Management: Customer orders, pricing, and fulfillment orchestration
- Financial Settlement: Accounts payable, receivable, and cost accounting
ERP systems typically integrate with specialized supply chain execution systems (TMS, WMS) to provide end-to-end visibility and control.
Who Needs ERP?
Manufacturers
Manufacturing organizations need ERP to manage bill of materials, production scheduling, capacity planning, and quality control. Industry-specific ERP modules address discrete, process, and mixed-mode manufacturing requirements.
Distributors
Wholesale distributors use ERP for inventory management, pricing, order processing, and supplier management. Multi-location inventory visibility and demand planning are critical capabilities.
Retailers
Retail operations require ERP for merchandise planning, inventory allocation, store operations, and omnichannel order management. Integration with e-commerce platforms and POS systems is essential.
3PLs & Supply Chain Services
Third-party logistics providers need ERP for financial management, customer billing, and operational reporting. Multi-client accounting and activity-based costing are important considerations.
Core ERP Modules
Financial Management
- General ledger and chart of accounts
- Accounts payable and receivable
- Fixed asset management
- Financial reporting and consolidation
- Budgeting and forecasting
Supply Chain Management
- Procurement and purchasing
- Inventory and warehouse management
- Demand planning and forecasting
- Supplier relationship management
- Transportation management (basic)
Manufacturing
- Bill of materials management
- Production planning and scheduling
- Shop floor control
- Quality management
- Maintenance management
Sales & Customer Management
- Order management and pricing
- Customer relationship management (CRM)
- Sales forecasting
- Service management
- E-commerce integration
ERP Deployment Models
Cloud ERP (SaaS)
Cloud-native ERP platforms offer subscription pricing, automatic updates, and reduced IT burden. Leading cloud ERPs include Oracle NetSuite, SAP S/4HANA Cloud, and Microsoft Dynamics 365. Best for organizations seeking agility and lower upfront costs.
On-Premise ERP
Traditional deployments on company-owned infrastructure offer maximum control and customization. Higher upfront costs but predictable long-term expenses. Preferred by organizations with strict data residency requirements or extensive customization needs.
Hybrid Approaches
Some organizations run core financials on-premise while deploying specialized modules in the cloud. This approach can ease migration while maintaining control of sensitive data.
Major ERP Platforms
Enterprise Tier
- SAP S/4HANA: Market leader for large enterprises, especially manufacturing and distribution
- Oracle ERP Cloud: Comprehensive suite with strong financials and supply chain
- Microsoft Dynamics 365: Flexible platform with strong Office 365 integration
Mid-Market
- Oracle NetSuite: Leading cloud ERP for growing companies
- Infor CloudSuites: Industry-specific solutions for manufacturing, distribution, and hospitality
- Epicor: Strong in manufacturing and distribution verticals
SMB Focused
- SAP Business One: Entry-level SAP for small businesses
- Acumatica: Flexible cloud ERP with consumption-based pricing
- Sage Intacct: Financial management with industry-specific capabilities
ERP Selection Criteria
1. Industry Fit
ERP platforms vary significantly in industry capabilities. Evaluate vendors with deep experience in your vertical—manufacturing ERP differs substantially from retail or services ERP.
2. Scalability
Consider growth projections: transaction volumes, user counts, entities, and geographic expansion. Ensure the platform can scale without major re-implementation.
3. Integration Ecosystem
Modern ERP must integrate with specialized systems: TMS, WMS, CRM, e-commerce, and industry-specific applications. Assess pre-built connectors and API capabilities.
4. Total Cost of Ownership
Look beyond license fees to include implementation, customization, training, integrations, and ongoing support. Cloud ERP typically has lower upfront costs but higher recurring fees.
5. Implementation Partner Ecosystem
ERP success depends heavily on implementation quality. Evaluate the vendor's partner network and their experience with similar projects.
ERP Implementation Considerations
ERP implementations are significant undertakings typically spanning 6-24 months depending on scope and complexity.
Critical Success Factors
- Executive sponsorship and organizational commitment
- Clear scope definition and change management
- Data cleansing and migration planning
- Adequate training and user adoption support
- Phased rollout approach with pilot validation
Common Pitfalls
- Excessive customization that complicates upgrades
- Underestimating change management requirements
- Poor data quality from legacy systems
- Insufficient training and support resources
ERP and Best-of-Breed Strategy
Organizations face a fundamental choice: comprehensive ERP suites vs. specialized best-of-breed applications. Many successful companies combine both approaches:
- ERP for core financials, procurement, and order management
- Best-of-breed TMS for transportation optimization
- Specialized WMS for complex warehouse operations
- Industry-specific applications for unique requirements
Modern integration platforms make this hybrid approach increasingly practical, enabling organizations to leverage best capabilities across vendors.
Getting Started
Explore ERP options in our ERP comparison tool to find platforms that match your industry and organizational requirements.