3 reasons a buy-and-sell (trading) business should have an ERP system

A buy-and-sell (trading) business is one where a shop owner or business owner orders goods from manufacturers or large agents to resell.

A trading business is an organisation that acts as an intermediary. It is not the small retail shop you see everywhere, but operates at the wholesale level and above.

For example, department stores with many branches across the country, businesses importing food raw materials or car spare parts, as well as the kind of online shops that often take goods from factories to sell while competing to undercut prices.

For a trading business, the more sales there are, the more complex management becomes.

Some organisations sell so well they go bankrupt—a sight that is far from rare. This is the reason organisation management systems, known to everyone as “ERP systems,” came in to make back-office operations more efficient.

This article discusses 3 reasons a trading business should have an ERP system.

There are 3 topics to be discussed, as follows:

1. The reason concerning calling up real-time report data
2. The reason concerning inventory management problems
3. The reason concerning profit-and-loss management

The details of each topic are as follows:

1. The reason concerning calling up real-time report data

In the past, going back some 20-30 years, doing business probably used the definition “big fish eat small fish,” meaning those with capital tended to have the advantage, or those who acted first would succeed in business more.

But today, doing business has begun to change—everything competes on data.

Whoever can find data more accurately and quickly tends to have a clear advantage over competitors.

Most trading businesses inevitably compete on price, and getting good product prices comes from finding enough manufacturers or large agents.

Without an ERP system, there is no escaping the manual method (entering data by hand) for recording vendor (supplier) data.

And when it comes to pricing for customers, it becomes even slower, because by the time you calculate each vendor’s goods to find the best price to offer the customer, you may not be in time to beat the competition.

Therefore, having an ERP system helps make calling up data and sales reports, as well as reports in other areas, easier and faster, and also more accurate than the manual system.

So it can be said that doing business today is the era of “fast fish eat slow fish”—whoever’s data is faster tends to have the advantage over competitors.

2. The reason concerning inventory management problems

The origin of the phrase “sell so well you go bankrupt” usually comes from organisations that manage their stock poorly, resulting in overstock. If left for a long time without fixing it, it leads to continuous losses.

Overstock, explained, means the company has more cost in its warehouse than its sales by several times, resulting in some organisations having high sales but profit that ends up smaller than reality.

Part of this comes from poor stock arrangement and unsystematic storage—old goods are not yet sold but new goods are brought in to replace them.

Without an ERP system to manage stock, viewing inventory is not real-time, affecting the business in many ways.

“Cost management that cannot be controlled.”

A trading business usually has inventory coming in and going out all the time according to the company’s sales.

If inventory management is not systematic, then no matter how good and efficient the ERP system is, it cannot solve the overstock problem. The warehouse must be organised more systematically.

3. The reason concerning profit-and-loss management

Managing profit and loss is not just about buying and selling and looking at the profit obtained.

But in management there are many hidden costs—employee wages, transport costs, necessary expenses within the organisation, and so on.

From the content the author has described above, many people may think that just using an accounting system is enough to manage the organisation well. But accounting data may not be able to analyse costs to the point of reducing costs and increasing profit efficiently.

There needs to be an ERP system to help manage things comprehensively,

from the sales, purchasing, warehouse, and accounting departments, by being able to link all the data together, so accounting can close the books quickly and accurately, because the data is in the same system.

Furthermore, management can call up reports to analyse immediately, to see performance and analyse the business from the data in the ERP system.

From the article above, it can be seen that all 3 reasons a trading business should have an ERP system—the reason concerning calling up real-time report data, the reason concerning inventory management problems, and the reason concerning profit-and-loss management—all require an ERP system to come in and manage them.

Because an ERP system is an important tool for every organisation.

The more a provider’s ERP system has every working function complete, and can link together across every unit of the organisation, the better it is for management,

because they will be able to analyse the overall picture of the business efficiently, leading the organisation to growth in the future.

If anyone is looking for a highly efficient ERP system that covers every working function, can deduct stock and call up reports in real time, we recommend PlanetOne ERP, developed by Thais. If interested, you can view the Package here.