Placing Inventory — Not Accounting — At The Crux Of The ERP

While working from home has become a key driver of enterprise digitization amid the pandemic, it’s not the only coronavirus-related market impact forcing companies into the cloud.

The unfortunate wave of layoffs and furloughs has firms large and small exploring how to do more with less, and automated technologies are empowering business managers to promote operational continuity even when departments are short-staffed.

For small- to medium-sized business (SMB) manufacturers and distributors, limited staff levels are driving companies into the cloud, according to My Office Apps CEO Mariam Komeili. As a result, she told PYMNTS, there is growing demand for software solutions catered specifically to this market, with the enterprise resource planning (ERP) system particularly well-positioned to empower smaller operations with multitasking technology.

But in order to address the specific requirements of SMBs in the manufacturing and distribution sector, the ERP must take a more nuanced approach to adoption, she explained.

An Inventory-Led Approach

The ERP has historically been viewed as the cornerstone of operations, a consolidated portal in which to manage a variety of functions from sales to payments. Traditionally, financial workflows are at the heart of these systems, housing data that plays a key role in transacting, accounting and financial reporting.

Although they hold the same need for a streamlined, holistic approach to operations, small manufacturers and distributors may not necessarily need accounting at the heart of their ERPs, according to Komeili.

“Most ERPs are built around accounting systems that add in other features,” she said, noting that inventory management is a particularly important focus for this sector.

While ERP technologies can integrate inventory management functionality, SMBs in this space typically need more sophisticated features around their warehousing and procurement workflows, including lot number tracing, expiration date visibility and multi-warehouse management, noted Komeili.

For My Office Apps, this meant building out an ERP solution with inventory, not accounting, at the crux of the solution. The technology, dubbed Kechie, builds its functionality around those complex inventory management needs, with material requirements planning (MRP) tools that integrate into procurement and supply-and-demand forecasting.

“This functionality isn’t available in simple software solutions,” Komeili said, pointing to the MRP calculator offering as having the capability of offering a 53-week view of operations that can provide insights around whether purchase orders should be canceled, which items need to be restocked, and other factors based on supply and demand. “It’s not something simple inventory management tools handle.”

Scalable Technology

Despite the need for more complex inventory management capabilities than SMBs in other markets, SMBs in the manufacturing and distribution space face the challenge of navigating an ERP market that often shuts them out.

Leading ERP systems are often designed for large-scale, multinational organizations. Not only are these tools usually beyond an SMBs’ price-point, said Komeili, they also often come with functionality that is so sophisticated, it becomes an insurmountable hurdle to implement and integrate such a tool within the back office.

The alternative is for these SMBs to adopt a range of individual FinTech platforms that suit their unique operational requirements, but this, too, creates a data connectivity headache.

In addition to meeting the inventory management needs of manufacturing and distribution SMBs, Komeili said these firms also need scalable technologies that can be more flexible in the add-on features they offer. Companies should be able to choose which modules and feature sets they can add or take away to a centralized ERP system, while also ensuring that those additions will be automatically streamlined within each other.

At a time when resources and human talent are tight, SMBs need technologies that can address their biggest pain points, scale as they grow, and promote business continuity. As Komeili noted, in the manufacturing and distribution arena, the cloud is becoming increasingly important for SMBs, so long as software solutions can fit the criteria.

“Cloud solutions are needed now more than ever before,” she said. “Things have changed with this pandemic. People are realizing that having a cloud solution, and access to your business from anywhere, really has helped them. They don’t have to necessarily be in the warehouse to see what’s going on.”