ERP – Enterprise Resource Planning
A central system for managing all business activity: finance, procurement, inventory, HR, production. Synced with the eCommerce platform. Examples: SAP, NetSuite, Priority.
In practice
An ERP is the backbone of a mature business. Without one: accounting runs in a spreadsheet, the warehouse uses a separate WMS, marketing uses a separate CRM — and nothing talks to anything else. With one: every department sees real data in real time.
Common misconception
'Every serious business needs an ERP.' A traditional ERP (SAP, NetSuite) costs $3,000-28,000/year plus implementation. Stores under $1.5M annually are fine with Shopify plus QuickBooks plus an inventory tool. An ERP is a scaling tool, not a starting point.
How to fix it
ERP not performing as expected? (1) Check whether the store integration works correctly (Shopify/WooCommerce connector), (2) check whether data syncs in real time, (3) check whether the team was trained — an ERP without training is an underused tool.
Example
A sports retail chain grew from $2.2M to $9.7M a year, with 3 warehouses, 5 marketplace sellers, and 200+ suppliers. Managing it in spreadsheets became chaos. Implementing NetSuite took 6 months and cost $50K. Result: inventory errors fell 95%, and closing the books went from 2 weeks to 2 days.
Priority
Consider an ERP once you exceed $1.5M+ in annual sales with operational complexity. Before that: Shopify plus QuickBooks/Xero plus an inventory tool. ERP implementation takes 6-18 months — plan ahead.
Related terms
Keep learning. Metrics that touch the same area:
- Cash FlowFinanceThe movement of cash in the business. 'Profitable on paper, broke in the bank' — a common problem in growing stores.
- SKU – Stock Keeping UnitOperationsA unique identifier for each product variation. The basis for precise inventory management.
- Inventory ManagementOperationsTracking, ordering, and maintaining inventory. Too much means cash tied up. Too little means stockouts.
- StockoutOperationsA product unavailable for shipping. Immediate lost sales plus damaged trust.
- DropshippingOperationsSelling without holding inventory — a supplier ships directly to the customer. Low margin (5-20%), no quality control.
- FulfillmentOperationsThe entire process from receiving an order to delivery: pick, pack, label, ship.
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