Retail business owners have never had so much data. It’s both a competitive advantage and a challenge: while technology can track every part of the inventory management process, the problem lies in finding the most important metrics, making sure the data is accurate, and benchmarking it against other business processes.
Enterprise resource planning (ERP) systems can solve these inventory management challenges for retailers. They let you move inventory data into a centralized dashboard that houses other business information. You can also automate tedious processes to run a more efficient and cost-effective retail store. This guide explains how to use them.
What is ERP for inventory management?
An enterprise resource planning (ERP) system helps retailers manage their inventory. You can use it to bring different software, tools, and apps under one roof. This is especially useful for inventory management because you can centralize inventory data, communicate with suppliers, and fulfill orders more efficiently, all from one ERP dashboard.
When should you upgrade to an ERP inventory system?
Growing an ecommerce business means juggling multiple channels, locations, and customer types. When you’re selling direct-to-consumer (DTC), business-to-business (B2B), brick-and-mortor retail, and in marketplaces, a weak tech stack can easily ruin your plan.
Any disconnect between your systems can lead to fragmented data and financial loss. When your team is drowning in spreadsheets and fixing IT issues, with no clear view of inventory or profitability, you’ve hit the classic tipping point where an ERP becomes non-negotiable.
But when, exactly, is the best time to make the move? In many cases, it’s when you answer yes to most of these questions:
- Do you run three or more channels and struggle to get a single view of your orders, inventory, and customers?
- Is your finance team demanding faster, more reliable closes and board-ready insights?
- Are you expanding internationally or adding new business entities that need to manage multiple currencies, tax regimes, and audit-ready consolidations?
- Does your data live in fragmented silos?
- Do your current tools require brittle middleware or block automation, forcing teams into manual reconciliations just to keep systems in sync?
If this sounds familiar, the good news is that this upgrade is faster and more valuable than ever. Average ERP project timelines have dropped to just nine months, down from 15.5, according to Panorama Consulting Group’s 2025 ERP Report, thanks to adoption of modern software-as-a-service (SaaS) platforms.
Organizations are prioritizing these commerce-centric upgrades because they deliver tangible, immediate value to revenue and customer experience. Upgrading an ERP doesn’t have to mean pausing your commerce innovation.
Shopify’s unified commerce platform is built to act as the single source of truth for your entire commerce operation, pushing a single, real-time data model across online, enterprise point of sale (POS), and B2B. A 2024 study found 85% of mid-market retailers rely on multiple platforms to grow, creating the same fragmentation risk you're trying to solve.
Shopify, in particular, has its own Global ERP Program that allows ERP partners to integrate their software with apps in the Shopify App Store. Simply install the ERP, integrate the ecommerce apps you use, and see all of your data in one central location.
How ERP inventory management works
An ERP system acts as a centralized database for all of your retail business operations. It lets you combine inventory information with data from multiple sources, such as accounting, finance, supply chain, logistics, and marketing channels. Every downstream movement and financial decision relies on this centralized data.
The ERP controls the full lifecycle of physical inventory. It begins with inbound purchasing, where purchase orders (POs) originate—then the system manages the receipt of goods, updating on-hand stock, quality status, and complex landed cost components.
Every movement—whether a receipt, transfer, pick, adjustment, or customer return—is posted in real time to a perpetual inventory ledger. Each transaction simultaneously posts to the company's general ledger using a standard costing method like first in, first out (FIFO) or moving average, providing finance with a fully auditable trail for cost of goods sold (COGS) and inventory valuation by location.
Overall, this system of record tracks what you have and what you do with it:
- Calculates real-time availability: The system computes available-to-promise (ATP) by continuously factoring on-hand stock against open purchase orders, safety stock levels, and existing reservations.
- Automates planning and replenishment: Demand forecasts and actual sales orders feed into planning systems like material requirements planning (MRP) and master production scheduling (MPS) to automatically generate new purchase orders, transfers, or work orders.
- Manages warehouse processes: The ERP manages or integrates with a warehouse management system (WMS) for all floor-level tasks, including pick/pack/ship waves, cycle counting, and slotting.
- Controls returns and compliance: ERP manages the complete return merchandise authorization (RMA) workflow, including assigning proper dispositions (like resellable, rework, or scrap) and prompting the correct financial reversals or write-downs.
The ERP maintains a clean separation of concerns with the commerce platform. It’s the financial and operational system of record, while a unified commerce layer, like Shopify, manages order capture, customer context, promotions, and routing logic.
As your business adds new regions, SKUs, or warehouse nodes, this model scales. The unified commerce layer absorbs the front-end complexity like multiple catalogs, price lists, and checkout flows. At the same time, the retail ERP scales the same core inventory, planning, and accounting model on the back end.
Benefits of ERP inventory management
Centralized data and real-time accuracy
The initial outlay of an ERP system is a small price to pay for the money it can save you in the long run. Because the dashboard lets you automate inventory-related processes like ordering new stock, you’ll save resources you’d otherwise spend doing these tasks manually.
A 2024 Forrester Total Economic Impact (TEI) study on Dynamics 365 found a 106% return on investment (ROI), driven by $8.9 million in productivity gains from unified data access, streamlined processes, and automated workflows.
Plus, when your toolstack communicates with other technology in your ERP, you can improve inventory accuracy. There’s no risk of manual copy and pasting wreaking havoc on your stock levels. The ERP is a centralized source of information that’s always accurate and updated in real time based on your inventory data sources.
And the studies show it works. A peer-reviewed study of retailers implementing real-time inventory systems found that stockout rates fell from 12% to 7%, a 42% reduction. The same study reported that time spent on manual stock-check tasks dropped by 35%, freeing staff from manual counts.
Increased operational efficiency
Manual inventory management takes time. You need to comb through inventory and do manual stock checks for every warehouse or storage location, then compare that with data from other systems (like your accounting software). By the time your data is up to date, it’s time to do it all over again, leaving little time for actually turning your inventory data into actionable insights.
Let’s say that real-time data pulled from your inventory management software (IMS) shows your inventory will run out in six weeks. The ERP integration with your vendor management software shows the lead time for a restock is four weeks. You’ve picked up on this insight with two weeks to spare—enough time to place another order with your wholesaler and prevent stockouts.
Enhanced scalability for growth
Growing businesses have more stock than they did the month before. You can compile inventory levels inside an ERP and benchmark them against other metrics (such as carrying costs and supplier lead times) to optimize inventory levels.
ERP systems can also take care of the financial and compliance aspects of operating a larger business. You’ll be able to track shipments, supplier contracts, inventory records, and receipts all in a single dashboard. A 2025 IDC study documented cloud ERP estates supporting an average of 31 warehouses and 44 branches or stores, all running on a single, consistent platform integrated with an average of 21 other business applications.
Key features to look for in an ERP inventory management system
Supply chain management
Knowing the location of your inventory isn’t enough. As your retail business grows, you’ll need end-to-end visibility into your entire supply chain, starting with the purchase orders you’ve placed with suppliers and ending with product sales.
Check that your ERP inventory management system can integrate with your digital supply chain tools. This might include supplier relationship management (SRM) software, shipment tracking tools, and e-signature apps.
Automation
Automations occur when tasks happen automatically without requiring manual intervention. Check that your ERP system allows you to set up these automations to save resources—notably the time and money you’d spend doing them manually.
Let’s put that into practice and say your IMS shows the quantity of a particular SKU has dropped below your predetermined safety stock level. Create an automation inside your ERP that generates a purchase order and contacts your suppliers once the quantity drops below your threshold. There’s no need for you to manually check the stock and email your supplier to restock it—the ERP does it all for you.
Analytics and reporting
Retail isn’t the only sales channel you can use to sell products. Most brands blend offline sales with their own website, marketplace listings, and social media storefronts to sell to customers on the channels they prefer to use.
Without an ERP, that’s incredibly hard to manage. You might sell a product to a customer in-store, only for an online shopper to buy the unit online. You only realize the product is out of stock after you’ve taken their payment. Then what?
Instead of disappointing either customer, an ERP inventory management system shows real-time inventory levels as soon as products leave your shelves. When the product sells out in-store and there are no remaining units, an ERP integration can update your online store to show the product as unavailable. It can also send you a notification to reorder the inventory once the quantity drops below a certain level for accurate reporting.
Accounting
You’ll need inventory data to keep accurate financial records. This includes purchases, sales revenue, cost of goods sold, inventory valuations, and adjustments—all of which appear on important financial documents such as your balance sheet and tax returns.
Accounting ERP integrations help ensure this data is accurate based on the inventory data you’ve collected. It also helps with compliance since you can clearly show where your money (and inventory) comes in and goes out.
Customer relationship management (CRM)
Customer service can make or break any business. It may result in you losing loyal customers for life—17% of people say they would stop shopping with a brand after just one bad experience.
Customer relationship management (CRM) software is any marketer’s secret weapon. It stores data about each customer, including their previous purchases, customer service interactions, and customer lifetime value (CLV), so you can personalize any future interaction with them.
If your ERP system offers CRM integration, anyone who’s handling customer service can access these profiles while also looking for other data to handle their request.
Let’s say a customer complains about a missing order, for example. You can look at their order history and analyze the shipment tracking to locate it. Before offering to send a replacement, you can find products to cross-sell and include in the next shipment as an apology. Before you do so, use the inventory management ERP to check whether you have enough units in stock.
Warehouse management
There’s a lot that goes into managing a warehouse, from organizing inventory to picking and packing orders. Your ERP should provide visibility into all of these processes so you can accurately locate inventory, confirm stock levels remain accurate, and highlight inventory issues (such as stockout risks for popular products).
If you’ve outsourced this aspect of your retail business to a third-party logistics company (3PL), check that their warehouse management technology integrates with your ERP. This will give you greater visibility into how your stock is managed in the warehouse without asking the 3PL for regular updates.
Barcoding and scanning
Instead of manually counting and recording inventory, barcode systems allow you to use handheld scanners or mobile devices to update inventory details and find product data quickly.
Before choosing your system, confirm the ERP integrates with the barcode technology you’re using. Consider all points of the product’s lifecycle. The barcode system needs to show data in your ERP as soon as you’ve marked it as received from a supplier in your warehouse, all the way through to ringing up an order in your point of sale system at the checkout desk.
How to implement an ERP inventory system
1. Define your business requirements
An ERP implementation starts with a formal process to turn business goals into a blueprint.
Vendors run workshops like SAP’s Fit-To-Standard or Microsoft’s Solution blueprint to capture your end-to-end processes, identify gaps in software flows, and create a prioritized configuration backlog.
After completing one of these workshops, you’ll have explicit project goals and an integration strategy with the entities, volumes, tools, and roles involved, ready to go.
2. Select the right ERP partner
Your implementation partner is as critical to your success as the software itself. Shortlist partners based on:
- Deep industry experience.
- An implementation method that aligns with your plan
Vet their ability to handle the specific workstreams you defined in Step 1, especially data migration, change management, testing, and post-launch support.
💡Pro tip: Prioritize partners within ecosystems offering supported connectors to your core commerce stack. Shopify’s Global ERP Program, for instance, lists direct integrations for major platforms like NetSuite, Microsoft Dynamics 365 Business Central, Acumatica, and Infor.
3. Plan for data migration
Data migration is consistently one of the highest-risk phases of an ERP project.
Treat your migration data as two distinct buckets:
- Masters, like items/SKUs, locations, vendors, and customers
- Open activity, like open sales orders, open purchase orders, and stock on hand
Profile your source data for nulls, duplicates, and referential integrity, and then cleanse, de-duplicate, and right-size your history before you attempt to load it.
Once your data is clean, map each object to your platform’s native migration mechanism. Do not build custom loaders when standard, supported tools exist.
💡Pro tip: Rehearse the entire migration process twice. Include a mock cutover to validate your sequencing, tools, and timelines.
Post-migration, reconcile the data. Prove that every single account (known as a trial balance) in the new ERP exactly equals the balance of your legacy accounts at the moment of cutover. This confirms your migration was successful, and your financial starting point in the new system is correct and auditable.
4. Manage the change and train your team
Even a technically perfect ERP implementation will fail if your team doesn't adopt it. Scope your audiences and design role-based learning paths, meaning different courses for a store manager versus a financial analyst. Define the modality for each, such as e-learning, hands-on labs, or instructor-led sessions.
Training remains ongoing when you implement an ERP inventory system. Cloud ERPs ship new features and updates quarterly, so you’ll want to create an ongoing release and adoption cadence. Include a monthly refresh of training content and a quarterly "what changed" session tied to vendor release plans.
5. Go live and measure performance
Include a formal "Prepare to go live" phase with explicit gates for environment readiness and operational monitoring. Once you cut over, you enter a 30–90-day hypercare window.
During hypercare, focus on monitoring system performance and user adoption, gathering feedback, addressing issues promptly, and providing ongoing training as needed. Track your core ERP inventory KPIs from day one. Your project plan should already define how you will measure metrics like inventory accuracy, order cycle time, fill rate, and days of supply.
What are the limitations of ERP inventory management?
Despite the benefits that efficient inventory management systems offer, some retailers are discouraged because of:
- Complexity: ERP software is typically reserved for large businesses with dedicated tech teams, making it difficult for smaller or midsize retailers to set one up.
- Extra costs: The benefit is that it’s highly customizable, but remember to factor in the cost of each individual app or software you’re integrating into your ERP. This can be considerably more than the ERP’s subscription fee.
- Cybersecurity risks: Any time you’re moving data from one place to another, there’s a risk of hackers intercepting the connection and accessing your sensitive data. The integrations between your ERP and other software need to be encrypted and secure.
- Technology changes. You’re dependent on the integrations between vendors and the ERP platform. If a technology provider (such as an inventory management app) decides to pull its software from the ERP, you’ll have to find another. This can be complex and time-consuming to fix.
Connect your ERP inventory management solution to Shopify
Decided that an ERP system will help you better manage your inventory? Shopify’s Global ERP Program helps you connect your store and inventory data with popular ERPs like NetSuite, Acumatica, and Microsoft Dynamics 365 Business Central, so you can let data flow freely from your Shopify admin to your new ERP.
ERP inventory management FAQ
Is ERP the same as inventory management?
While both ERPs and inventory management systems help you track inventory, an ERP integrates with other business tools, including procurement, accounting, and CRM tools, so you can see the wider picture.
What are some examples of ERP systems?
- Brightpearl
- Acumatica
- Dynamics 365 Business Central
- Oracle NetSuite
- NetSuite
- Infor
How does ERP reduce inventory?
An ERP can help optimize inventory levels and reduce bloated stockrooms. It’ll help with demand forecasting so you can prioritize which units to replenish without overstocking and being forced to write off unsold inventory.
How does ERP increase efficiency?
ERP helps retailers become more efficient because you can automate manual inventory processes and reduce human error. Inventory management systems can also help analyze sell-through rates, forecast future demand, and prepare purchase orders for suppliers—without switching between multiple apps.
