E-commerce companies are very complex. Different sales channels and movements of goods need to be looked at. The demands of the customers are increasing and the environment of the companies is becoming increasingly fast-paced. Efficient planning of resources and the rapid provision of information can often provide competitive advantages over competitors. To ensure this, ERP systems prove to be the solution. The benefits of a holistic system of resource planning and management are undeniable, but the choice of such a system is difficult. In this article we look at the topic of Shopify ERP.
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You use Shopify or Shopify Plus and need support in linking Shopify with ERP systems? We are at your side with advice and assistance. Get in touch with us!
What is an ERP system?
An ERP system is a bundle of software solutions that help a company implement resource planning and management of business processes. ERP software is usually modular, allowing companies to combine individual software modules according to their individual needs.
The ERP program links all functions via a central database. With an ERP integration, you can use a single software to overview all areas of the company, from procurement to production and sales to finance and accounting. This enables efficient planning and control across all company levels and departments.
Advantages of the ERP system
The benefits of a holistic system for managing the company are indisputable. The main advantages are:
Process optimization thanks to central data storage
Better collaboration thanks to a single data base
Consistency and transparency in information flows
Time and cost savings due to shorter turnaround times
Minimizing errors through better work organisation
For Shopify retailers, a combination of Shopify and an ERP system offers, above all, valuable work facilitation and time savings, which will benefit customers.
Types of ERP systems
ERP integrations are no longer just something for corporations. More and more providers are also targeting small and medium-sized enterprises (SMEs) with their solutions. Leaner and more scalable software makes the use of ERP programs relevant for smaller companies as well. Over time, two variants of ERP solutions have developed.
1. On-premise software
An on-premise software is a computer program that works server-based. This variant of ERP systems includes the provision of licenses for locally installed programs. This means that the use of this solution is proprietary hardware in the sense of. Company computers and servers necessary.
Reading tip: The decision on-premise or cloud also affects the choice of shop system. In this article you will find out what the main differences are.
On-premise ERP systems are usually suitable for large companies and corporations. Due to the complexity of these companies, the set-up takes a long time and costs are high, but the requirements can be well mapped.
| Advantages | Disadvantages |
|---|---|
| No dependency on ERP providers | Own IT infrastructure required |
| One-time purchase of the licence | High effort for employee training and qualification |
| Data backup in your own hands | Sole responsibility for commissioning as well as maintenance etc. |
| Adjustments are possible at any time | Sufficient budget necessary |
2. Cloud-ERP-Systeme
Cloud ERP is a software-as-a-service (SaaS) solution that allows users to access the ERP software package online via a web browser. An installation on a company computer does not have to be done. ERP cloud providers usually use a rental model, which means that you as a retailer get all the components you need for a monthly flat rate and do not have to worry about maintenance, repairs and updates.
This variant is particularly suitable for SMEs, as the set-up is much faster and there is no need to set up an IT department. These solutions are also scalable and grow with the company’s requirements.
| Advantages | Disadvantages |
|---|---|
| No need for your own IT infrastructure | Dependence on external cloud ERP providers |
| Planned costs thanks to lump-sum rental | Company data is stored on external servers |
| Low effort for commissioning | Internet connection required for access |
| Unrestricted access across multiple devices and mobile |
Advantages of a Shopify ERP system in e-commerce
The use of enterprise resource planning systems is now firmly established in e-commerce, regardless of the size of a company. ERP systems facilitate numerous work steps and organization. Some systems have a wide range of functions and also include warehouse logistics, for example.
In short, the use of ERP systems is cost-saving, time-saving and minimizes the workload. The following advantages stand out in particular:
With an ERP integration, you can establish efficient warehousing, reduce inventory, shorten lead times and increase delivery capacity.
With an ERP system, you can make production planning and control more efficient using bills of materials and centralized data management.
By linking Shopify and ERP, you create an effective controlling system that optimizes your financial flows and budget planning. Due to the uniform data basis, you will no longer lose any data and reporting will be simplified.
With an ERP system, comprehensive information is available to you in bundled form, enabling you to manage staff optimally and make strategic decisions.
ERP systems unify processes - you no longer need several individual tools, everything is combined.
In addition to the general clarity, information silos disappear thanks to central document management and existing documents are archived appropriately.
Only a central database enables intensive relationships with customers without losing the overview, analyzing past processes and submitting precisely fitting offers.
In summary, with an ERP system you will be able to provide more transparency, efficiency, better communication and optimized customer care.
Functions of ERP systems
Modern ERP systems cover all areas and business processes of a company. With ERP software, all business divisions have access to a common data base, so that functional boundaries are abolished. ERP programs include various basic modules as well as add-on modules that can be added as required.
Commodity management and logistics
The term material covers everything from raw materials to finished products. An ERP system allows you to keep track of all material movements – from procurement to storage to dispatching. The combination of Shopify and ERP allows fulfillment automation, which can be a valuable competitive advantage in fast-paced online business.
Production
Production is the core area of many industrial companies and is an important building block in the ExRP software. Production planning and control (PPS for short) is an extensive component and requires interfaces to many other business areas.
Reading tip: A so-called PIM is very important for the growth of an e-commerce company. In this post you will learn everything you need to know.
It must be clear, for example, which and how much material is needed for production. As a result, the production area is closely linked to procurement and sales.
Finance and accounting
The recording and monitoring of cash and benefits flows by finance and accounting are simplified by an ERP system. While internal accounting focuses on controlling and cost management, external accounting is responsible for clean accounting and reporting to the outside world.
Solutions are available for both internal and external processes that automate tasks such as payments, reminders or depreciation, etc.
Human Resources
Human Resources is responsible for personnel management and all related tasks. This module brings together personnel planning, recruitment and development as well as operational tasks such as payroll accounting.
Time recording systems can also be used to record all working, personnel and machine hours.
Customer-Relationship-Management (CRM)
Extensive opportunities in the areas of marketing and sales are bundled in a CRM module. Today, products and services are often sold through multiple channels. You therefore particularly benefit from linking Shopify with ERP. Centralized data management is essential to build an intensive customer relationship.
Reading tip: In this post, we will explain how to win back lost customers.
This creates the opportunity to offer first-class customer service and carry out coordinated marketing activities.
Master data management
Central master data management is the heart of an ERP system. This ensures smooth operations based on consistent data records. Not only different systems for the same data, but also additional information from individual departments or employees can inhibit the flow of information in the company.Advantages: Centralized data maintenance greatly improves the quality of data in the company. Inconsistencies and redundancies disappear, multiple entries and manual data updates are eliminated, resulting in time and cost savings.
Document management
Similar to the management of (customer) data, various workflows and documents are created in individual departments. Paper documents such as invoices and digital documents such as e-mails are captured by document management and centrally organized.
The database can be searched according to any criteria, allowing all areas of the company to access documents and workflows. With the link Shopify and ERP, you no longer get lost in the paper economy.
Interfaces
Due to the complexity of enterprises, the number of data sources is increasing. A modern ERP system offers further interfaces to e-commerce solutions, for example, to ensure a holistic view of the company.
Reading tip: In this article we explain how to build multichannel with Shopify.
As an e-commerce company, these interfaces are extremely important to ensure a smooth process across all important channels and not to lose track.
New Shopify ERP Integration
A big innovation has started in the last few weeks at Shopify. In addition to the global ERP program with partners such as NetSuite or MS Dynamics D365, a new local, European ERP program is now being developed. In the future, European retailers will be able to seamlessly connect local ERP systems to their Shopify shops, as announced by Linda Hoffmann, Sr. Business Development Manager at Shopify.
With this program, local ERP vendors now have the chance to integrate their systems directly with Shopify, providing merchants with a direct solution through the Shopify app store. Shopify apps are now directly available for ERP integration. This means that ERPs no longer have to be connected via API or through their own vendor solutions, and merchants in Germany, Austria and Switzerland benefit.
Current German ERP partners with their own app in the App Store include JTL, plentymarkets and Xentral.
How to choose the right ERP system
Industry-specific requirements
An ERP system should be precisely tailored to the specific requirements of the e-commerce sector, as the industry relies heavily on the smooth and efficient handling of business processes. In addition to inventory management, which ensures that there are always enough goods in stock, shipping logistics and returns managementmust also be optimally integrated. Especially in e-commerce companies, where orders need to be processed quickly and returns handled efficiently, automated and seamless process control is crucial in order to save time and resources. Another key feature of an industry-specific ERP system is support for multichannel sales. As many e-commerce retailers are active on different platforms such as Shopify, Amazon or eBay, the ERP system should be able to centrally manage and synchronise orders and data from these channels.
Reading tip: How to sell successfully on online marketplaces.
Scalability
Retailers should take care to choose an ERP system that not only meets their current needs, but is also flexible and scalable in the long term. A growing company will have to cope with greater challenges over time, such as a greatly expanded product range, an increasing number of orders or the connection of additional sales channels. The ERP system should be able to cope with these increased requirements without causing performance bottlenecks.
Integration with existing systems
An ERP system must not only be seamlessly integrated with the platforms and tools already in use, such as the Shopify shop, CRM software or accounting programmes, but also have flexible interfaces to enable future extensions or changes. Simple and smooth integration saves companies valuable time during implementation and prevents common errors that can occur during manual data synchronisation. In addition, deep integration ensures that real-time data flows between systems, improving decision-making processes and increasing efficiency.
User-friendliness
An ERP system should not only be easy to understand and intuitive to use, but also offer a customisable user interface that meets the specific needs of different departments. A high level of user-friendliness minimises the amount of training required and ensures that employees can familiarise themselves with the system more quickly, which significantly increases efficiency in day-to-day operations. A user-friendly structure also minimises the risk of operator errors, resulting in more accurate data entry and smoother processes.
Costs
When choosing an ERP system, the total costs over the entire life cycle should be taken into account. This includes not only the initial cost of the system, but also the cost of implementation, staff training and ongoing maintenance. It is crucial that these costs are clearly defined and transparently itemised to enable realistic budget planning. Companies should also take into account hidden costs such as possible customisations, support contracts or updates. This is the only way to ensure that the ERP system fits into the company budget in the long term and that no unexpected financial burdens arise.
Cloud-based vs. on-premise
When choosing an ERP system, companies need to carefully consider whether they want to opt for a cloud-based solution or an on-premise version. Cloud-based ERP systems offer a high degree of flexibility and enable access to the system from anywhere, which is particularly advantageous for decentralised teams or international companies. In addition, the upfront costs are usually lower, as no expensive hardware infrastructure is required on site, and regular updates and maintenance are taken care of by the provider.
On the other hand, on-premise solutions offer more control, as the data is stored locally on the company's servers, which can be a major advantage in sensitive industries with strict data protection guidelines.
Reading tip: Cloud-based or on-premise - this decision is also important for your e-commerce platform! Read why here.
Automations
An ERP system should be able to fully automate essential business processes such as inventory management, invoicing or the creation of reports in order to significantly reduce manual effort. This not only saves time and resources, but also minimises the susceptibility to errors in recurring tasks. This allows organisations to focus more on strategic activities, increase operational efficiency and make decisions based on accurate, automatically generated data. In addition, automation leads to a faster response to changes in the market or in order volumes.
Reading tip: Change online shopfirst or ERP first? We explain what makes more sense!
Our recommendation: 6 Top ERP systems for Shopify
As a Shopify merchant, you have a number of ERP programs at your disposal. We'll show you a selection of 6 Shopify ERP integrations that will give you a powerful link.
Xentral
The Xentral ERP Business Software bundles all business areas in one place and automates workflows. With the lean ERP system, you can keep track of everything from logistics to all e-commerce activities to accounting. The cloud-based Xentral ERP covers all important functions.
Via API interfaces, many third-party tools can be integrated into Xentral’s ERP software with just a few clicks. In this way, individual processes can be automated step by step. The Cloud ERP from Xentral is available in different price packages in the subscription.
Working closely with COEUR DE LION, we have established Shopify Plus and Xentral’s ERP in the company to enable the company to continue to grow. The Xentral ERP system can now also be integrated directly via an app in the Shopify App Store. This was programmed by Latori in collaboration with Xentral.
Reading tip: Learn more about how we successfully supported COEUR DE LION in the transition to Shopify and the integration of Xentral ERP.
Microsoft Dynamics D365
With the expandable ERP, operations can be automated across departments. The ERP system offers a wealth of functions and the ability to integrate external data. The user interface is designed intuitively in line with other Microsoft products. Individual applications can be used independently, combined with each other or integrated into external tools. The Microsoft Dynamics offering is available as a software solution in the cloud or on-premise. In the past, we have already been able to support some customers with the integration of the MS Dynamics ERP system. Outdoorchef, the leading Swiss manufacturer of gas ball grills, relied on the service of Latori to connect a powerful ERP system with Shopify with Microsoft Dynamics D365. Mister Spex also relies on the know-how of Latori for the migration of its Norwegian contact lens shop Lensit to Shopify Plus and for the connection to the ERP system MS Dynamics.
Reading tip: Learn more about the background and details of the collaboration in our Lensit Case Study!
SAP
Probably the best known player on the market of ERP systems is SAP. For example, while Xentral’s ERP software is aimed at SMEs, SAP is also and above all suitable for large companies. SAP offers can be requested as an on-premise, i.e. local installation, as well as in the Software-as-a-Service model.
With this ERP all business areas can be automated. Due to the range of functions and the complex installation, both advice and onboarding from the expert are recommended. By the way, the Latori team can also help you here!
plentymarkets
The plentymarkets e-commerce ERP system simplifies the day-to-day work of e-commerce companies with numerous modules and linking all important channels.
The cloud-based ERP software provides comprehensive features and interfaces to automate the entire multichannel distribution for retailers. plentymarkets also offers its ERP subscription in different packages.
Shape Republic is one of the leading retailers in the area of feelgood food for women. Together with Latori, the company migrated from Magento to Shopify Plus. In addition to the general time pressure and customer-specific solutions for the online shop, we have integrated the cloud-based ERP system plentymarkets, the fulfilment solution odc and the Emarsys Customer Engagement Platform to create a seamless multi-channel solution.
Reading tip: In this post you will learn in detail how Shape Republic switched from Magento to Shopify with Latori.
JD Edwards
JD Edwards' ERP software suite provides a powerful, fully integrated system that can be used on-premise, cloud and hybrid. More than 80 application modules offer great flexibility for the automation of important business areas.
The wide range of functions and wide-ranging industry solutions make this ERP system particularly interesting for large companies.
Sennheiser, one of the best known manufacturers of headphones and soundbars, relies on Shopify Plus and uses the JD Edwards ERP system. For the technical implementation, the company relied on the service of Latori. The connection of JD Edwards to Shopify was based on EDIFACT.
Pickware
Pickware is a comprehensive ERP system that serves as an enterprise resource planning, warehouse management and checkout system. In addition, Pickware has integrated warehouse logistics and enables the processing of orders with barcode scanners and the automatic printing of shipping labels.
Thanks to the large functional scope of the ERP software, it is very well suited for an omnichannel strategy.
Conclusion
ERP systems offer you a comprehensive overview of your company. As an online retailer, you benefit from the connection between Shopify and ERP systems, above all by simplifying work and saving time. With ERP software, you have all important data centrally available and easily keep track of multiple sales channels, goods movements and customers.
As the first Shopify Plus agency in Germany, we have experience in integrating different systems. We are at your side with advice and assistance and will be happy to advise you! Make an appointment now!
Frequently asked questions about the link between Shopify and ERP
What is an ERP system?
ERP stands for enterprise resource planning. An ERP program helps you with resource planning and control of business processes. With the help of a central database, you integrate all business areas and have an overview of all processes within the company.
What is the difference between enterprise resource planning and ERP?
Enterprise resource planning systems only focus on the flow of goods (e.g. procurement, warehouse and logistics) and therefore only on one area of the company. An ERP system, on the other hand, maps the entire business processes of a company and thus helps to optimise them.
What are the benefits of linking Shopify to an ERP system?
As a Shopify merchant, you benefit from the link between Shopify and an enterprise resource planning/ERP, primarily through valuable workload reduction and time savings. Thanks to the central database, processes are optimized. The uniformity and transparency of information flows leads to error minimization and better work organization. All in all, you can devote more time to your customers and concentrate on customer relations.
Shopify ERP - when do I need an ERP program?
ERP software isn't just for corporations these days. Thanks to cloud solutions, small and medium-sized businesses can also build an effective link between Shopify and ERP. An ERP is especially worthwhile if you want to merge individual partial solutions and have a holistic view of your company.
