What is ERP, and does a small shop need it?

ERP (Enterprise Resource Planning) sounds like something for large companies. The idea itself is simple: all buying, selling, stock and money are recorded in one system, each event once, and everything else updates from it.

A day in a shop without ERP

Picture a shop that sells parts:

• Sales: the till prints a receipt for the customer.
• Stock: a spreadsheet holds the remaining quantities, updated at closing time if there is time.
• Purchasing: orders go to suppliers by e-mail.
• Money: someone else re-enters receipts and bank statements into the books.

Each part works, but the same figure is typed several times in several places. When a customer asks “do you have it in stock?”, the answer depends on whether the spreadsheet is up to date.

The same day with ERP

• Recording a sale reduces stock immediately.
• When stock falls below a level set in advance, the person in charge can see that more needs ordering.
• Purchase orders, goods receipts and supplier invoices are linked, so you know what has arrived and what is still unpaid.
• Sales and purchase figures flow straight into the books, with no re-entry.

There is no magic: people still have to record things correctly and completely. The difference is that each event is recorded only once.

Does a small shop need it?

ERP may be worth the effort if at least one of these is true:

• You have too many items to keep the stock in your head.
• Goods are kept in more than one place (a shop and a storeroom, or two shops).
• Reconciling the stock spreadsheet with the books takes time every month.
• You have sold something that was not there, or found shortages at stocktaking.

If the shop has few items, one point of sale, and the till plus a spreadsheet are enough, there is no need to switch yet. The article “When not to use ERPNext yet” in the same group covers this in more detail.

The cost is not only the software

Whichever ERP you choose, you need time to enter your items and opening stock, agree how things are recorded, and get staff used to it. For a small shop this part is often bigger than the software itself. It helps to start with one area, such as stock and sales, and widen from there.

About M&C ERP for small shops

M&C ERP is built on ERPNext, an open-source ERP. Information for small shops in Japan is in preparation. If you are interested, you can register through the inquiry form on this site, and we will contact you when it is ready.