July 21, 2021

Integrated Operations in a Retail Context: Using Advanced ERP Solutions

By Rob Drover, Vice President of Business Solutions, Marcum Technology

Integrated Operations in a Retail Context: Using Advanced ERP Solutions ERP Automation

The retail supply chain starts with the customer-facing operations and moves backward through point of sale, warehousing, distribution and manufacturing. As a retailer, you may be involved in all facets of the supply chain or only one. Regardless, every commercial transaction you execute has a financial impact. Sales or billing generates revenue, purchases create liabilities and payroll, utilities and rent generate expenses.

Historically, these separate activities would be recorded on paper or in disparate systems and then accumulated and transferred into the financial books and records at month-end. With the development of Enterprise Resource Planning (“ERP”) systems in the early ’90s, the promise of end-to-end integration was upon us. At the time, however, only Fortune-sized companies could afford an SAP-like product to run their operations.

Today, that has all changed. With the wide adoption of cloud-based platforms like Acumatica, even small to medium-sized retail operations can implement a fully-integrated environment that is surprisingly cost effective. Covering virtually every area of the business operation, Acumatica offers online modules that can scale and grow with your business from the front office through the back office, including manufacturing and distribution operations. Functionality is delivered in modules or capabilities that can be licensed and enabled quickly and easily within the same platform. Because each module like CRM (Customer Relationship Management), sales and warehousing are available together, moving data from one function to the next, and recording the financial impact of the transaction is seamless and immediate.

Although many commercial ERP solutions can provide a one-stop shop for your operation, you should carefully evaluate the key components of your business model and ensure that the functionality delivered meets or exceeds your requirements. For instance, the core of a retail operation is your physical or online presence in front of potential customers. Your storefront is your best opportunity to display, promote, and sell the products and services that you offer. Selling business–to-consumer (B2C) is fundamentally different than selling business-to-business (B2B). B2C is typically higher volume with a lower dollar value per transaction. The number of distinct clients is typically greater than B2B and the payment methods are primarily cash and credit card.

In B2C environments, retailers should focus heavily on front-end platforms that are focused on that space to maximize the flexibility and functionality in marketing and design, transaction volume, credit card integration, point of sale (POS), etc. Many of the top ERP platforms, including Acumatica, have recognized that they cannot be experts in every element of the business transaction and have built tight integrations with platforms like Shopify or Big Commerce. The integrations are critical. You want to ensure that whatever platform you choose can easily integrate with your e-commerce system and capture the transactions right through to your financial ledger without human intervention. That means no manual uploads of files or once-per-day batch processing. Insist on a fully integrated environment or look elsewhere.

While choosing to implement several software solutions using a best of breed approach is perfectly acceptable, try to avoid the temptation to pick separate platforms for every function. In many cases, the embedded functionality within your ERP platform will contain all of the other functions that you need to operate. Acumatica offers inventory and warehousing capabilities that may be well suited to your needs without any further investment. Maintaining fewer, separate systems reduces implementation and licensing costs and greatly increases your chance for a successful implementation.

Retailers serving both the B2C and B2B markets should consider which platform is optimal for conducting business. For B2B, you may want to consider the sales order functionality embedded within your ERP, due to the preferred use of invoicing, shipment, and collection processes used on this side of your business.

With Sales Comes Compliance

Retailers must deal with many compliance and regulatory requirements including safety, warranty, and, of course, taxes. With the Supreme Court’s Wayfair vs. South Dakota decision, states won the right to tax interstate internet commerce. Now numerous retailers are required to collect and remit sales tax for out-of-state sales based either on the origin or destination state of sale. The number of tax rates (local and state) that must be tracked is so extensive that most retailers with multi-state sales will use a calculation engine built into their e-commerce platforms to calculate the correct tax rate. E-commerce platforms like Shopify offer this service as part of the transaction fee charged on every order.

After the sale is complete and the tax is collected, the tax filings and payments must be made to the appropriate states. Marcum now offers an automated solution for filing sales and use tax returns that can be linked directly to your ERP platform. When the month-end is complete, you can automatically generate a sales tax file, and the Marcum automation platform will use bot technology to file each of your returns. Marcum has partnered with Acumatica to eliminate the need for a manual hand-off of this data.

Managing the Operation

Regardless of the combination of software solutions you choose, it is essential that your owners and managers have full visibility into the operational and financial health of your organization. Utilizing dashboards that display key performance indicators (KPIs) is a great way to consolidate all of your critical reporting. Using graphs, charts, tables and color-coding, you can easily keep staff updated on the health of your business. One of the benefits of an integrated system is to be able to click through a dashboard and drill down to the source transaction(s) that make up the results that you are reviewing. Many clients will also add large screen monitors on the shop floor displaying these important KPIs in real-time all driven from their ERP solution. Ensure that your ERP platform provides this functionality out-of-the-box across all facets of your business.

Making the Transition from Disparate On-premise Systems to a Cloud-based Solution

A cloud-based, software-as-a-service (“SaaS”) solution like Acumatica is fully functioning out of the box and available the minute your license is activated. You’ll be online and up and running right away. Of course you will need to load data, configure options, and familiarize yourself with the software operation, but you will have eliminated any need for physical hardware and software installation. If you choose third party add-ons that are fully compatible with your choice of ERP, then you further simplify the start-up process.

Successful and fully integrated environments will achieve the ultimate goal of any business. Drive your sales higher, while maintaining or reducing your marginal cost for the next sale. Selecting an ERP system that will scale as your business grows will ensure long-term success.