The small difference: ERP and merchandise management

Although software for merchandise management and ERP software are sometimes still used as synonyms, they refer to different system solutions. But what is the difference between an enterprise resource planning system (ERP) and an ERP solution? While ERP focuses on goods, their storage and related warehousing, ERP software has the task of utilising all resources (goods, capital and personnel) efficiently and thus improving business processes. The difference is best recognised in the areas of responsibility:

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merchandise management

The focus is on the flow of materials. Therefore, tasks such as procurement, demand assessment, logisticsstorage, the transport within the company and the production as well as disposal and recycling into the field of merchandise management.
The combination of warehouse management and distribution is also part of an inventory management system. Furthermore, merchandise management has the task of precisely differentiating between recorded materials. A distinction is made between the following material and substance groups:

Raw materials
Auxiliary materials
Semi-finished products
Operating supplies
Finished components for assembly
Components and end products in production
Spare parts
End products
Waste and wear materials
By-products
Intermediate products of pure trade

ERP

ERP systems rely on overall resource planning from the outset and are therefore often very complex. The software solutions are customised to the size of the company and its structures. A wide variety of programming languages are used, databases or operating systems are used.
An ERP system also integrates customers and suppliers and thus thinks beyond the company. Other subsidiaries or Subsidiary are integrated.
This means that, in addition to merchandise management, an ERP also records production, Finance and accounting, controllinghuman resources, research and development, and sale and marketing. Here there are usually interfaces to CRM systems. It is to be expected that ERP and CRM functions will be merged even more within one software in the future.

ERP reaches more industries than an enterprise resource planning system

The very word "merchandise management" implies that a merchandise management system deals with the management of goods. However, this approach no longer meets the needs of many companies. Industry sectors. Value creation in many companies no longer takes place exclusively via the sale of goods. Instead, the importance of services is constantly growing.

There are companies that only offer services. These companies from the Service industry have different demands on business software than what a merchandise management system can provide. For a long time, attempts were made to map services within the merchandise management system. However, this attempt was often just a crutch that largely "misused" an ERP system.
ERP software can free itself from these constraints. For example, there are ERP systems that also deeply integrate the management of projects, contracts and services. A ERP system for service providers often has little to do with the original merchandise management approach. But also ERP solutions for plant engineering are far removed from the approach of a pure merchandise management system.

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