To choose the right tool to manage your business operations, it is essential to understand the differences between an ERP (enterprise resource planning) and a point of sale (POS). Although these two types of systems seem similar at first glance, they meet very different needs depending on the nature and complexity of the business.
In this blog post, let's explore 9 differences between an ERP and a point of sale:
- The usefulness of these systems.
- The users.
- The target industries.
- The features.
- The inventory management.
- The analysis and reporting.
- The complexity of implementation.
- The accessibility.
- The associated costs.
Difference #1: The Usefulness of These Systems
The first difference between an ERP and a POS is their usefulness. Indeed, these two solutions meet specific and complementary needs.
The Usefulness of an ERP
An ERP is a system that centralizes all of a company's business processes: accounting, human resources, inventory, production, and much more.
There are several advantages to using an ERP:
- Task automation.
- Increased productivity.
- Error reduction.
- Improved decision-making.
It is therefore a feature-rich system that is useful for many departments within an organization.
The Usefulness of a POS
Although a point of sale software also offers numerous features, its use is more targeted than that of an ERP. Indeed, the POS system is specialized for managing transactions in retail.
However, a good point of sale software also offers additional features beyond transaction management. Retailers can therefore centralize their business operations for better store management.
Here are some benefits of using a POS:
- Better inventory management.
- Simplified invoicing.
- Improved customer experience.
- Improved security.
- Reduced expenses.
For a complete list of all the benefits of a point of sale software, see our comprehensive guide on the subject: 27 Advantages of a POS System.
Difference #2: Users
The second difference between an ERP and a POS is their users. They use these tools to assist them in their daily tasks.
ERP Users
As mentioned previously, an ERP is used in several departments within a company. This means that the users of this technology are just as diverse!
Management Teams
Thanks to the ERP, management members have access to a wealth of valuable information to make strategic decisions.
Indeed, access to dashboards gives them a consolidated view of the company's various departments: sales, production, finance, and HR. Management members also analyze KPIs to see the company's progress in real time.
Also, using the information gathered in the ERP, management members can strategically plan the company's operations to achieve their financial goals and minimize losses.
Finance Team
Using an ERP is very useful for the finance team. Indeed, its members maintain accounts, manage automated invoicing and payment tracking, and manage cash flow, among other things.
The ERP also allows the finance team to produce financial reports and manage budgeting and budget variance tracking.
The Sales Team
An ERP is very useful for the sales team because it enables optimal sales management and helps foster good customer relations.
The sales team uses the ERP to track opportunities, access real-time information on products, inventory, and delivery times, and create quotes and customer orders.
The ERP automates repetitive tasks to allow sales employees to optimize their work. The system also generates very useful sales reports for evaluating performance.
The Production Team
The ERP is a very important tool for production teams! Indeed, they plan manufacturing according to priorities, optimize supply chains, and track production costs, among other things.
The ERP also allows production teams to accurately track inventories to reduce errors and costs and facilitate product traceability.
The Human Resources Team
The administrative and personnel management features of ERP systems greatly assist human resources teams. They can track employees, manage payroll, and track timesheets, absences, and leave.
Human resources team members also use ERP for recruitment, training, and performance reviews.
POS Users
Although the features of a point of sale software are more targeted than those of an ERP, POS users are still diverse.
Store Owners and Managers
A POS software is a very useful tool for store owners and managers. Indeed, the point of sale software centralizes management operations to increase efficiency and reduce waste.
Owners and managers have access to comprehensive reports on sales, inventory, and more, which helps them make better decisions.
The POS software therefore allows owners and managers to optimize store operations.
Store Associates
Store associates always use the point of sale software. Indeed, it is with this software that they complete transactions with customers! A POS software allows for a variety of secure payment methods, invoice generation, and inventory tracking.
This technology allows store associates to view inventory counts to more easily respond to customer requests. The POS is also where associates take orders and process returns.
Inventory Managers
A Good POS software is essential for accurate inventory control. Inventory managers use this tool to receive orders and update product quantities.
Furthermore, a good POS solution indicates minimum order quantities, allowing inventory managers to know when to reorder products so they never run out of stock.
Difference #3: Target Industries
The third difference between an ERP and a POS software is the industries that use these technologies.
ERP’s Target Industries
One of the characteristics of ERPs is their ability to standardize, automate, and centralize processes that companies in several sectors share. This is why ERPs target diverse industries:
- Manufacturing (automotive, aerospace, food, electronics).
- Logistics and distribution (wholesalers, carriers).
- Retail and e-commerce.
- Healthcare and pharmaceutical industries.
- Construction and engineering industries.
- Education and the public sector.
- Technology and professional services industries.
- Energy and mining industries.
POS’s Target Industries
Unlike the ERP, the POS software targets more specific industries.
In this blog post, we focus on point of sale software for retail. However, some POS software targets other industries such as restaurants and hospitality.
In the case of retail solutions, their features can further narrow down their target audience. Indeed, not all retail industries have the same needs. For example, here are some industries targeted by Alice POS:
- Garden centers;
- Video game stores;
- Pet stores;
- Hardware stores;
- Hunting and fishing stores.
These stores can therefore have a POS solution tailored to their needs!
Difference #4: Features
The fourth difference between an ERP and a POS is their features. An ERP offers a much wider range of features than a POS, while the latter has more targeted features.
ERP Features
Since an ERP is a comprehensive, integrated solution, its features spans multiple departments within the company:
- Accounting and finance.
- Operations and production.
- Inventory and procurement.
- Human resources.
- Sales.
- CRM.
- Advanced reporting.
- E-commerce and POS (for some ERPs).
As you can see, an ERP is a powerful software that centralizes operations and goes beyond what a POS software can offer.
POS Features
A point of sale software has several features targeted at in-store or online sales operations.
Available features vary depending on the provider. The most important features are:
- Invoicing.
- Inventory management.
- Customer orders.
- Supplier purchase tracking.
- Advanced reporting.
- Multi-store management.
For more information on each of these features, see our detailed blog post on the subject.
Difference #5: Inventory Management
Both ERP and POS systems provide effective inventory management. However, there are differences in this feature between the two types of systems.
Inventory Management with an ERP
Since an ERP allows for complete management of a company's operations, it's no surprise that it also allows for comprehensive inventory management.
Indeed, the ERP enables advanced inventory management across the entire company. This advanced management allows for product traceability as well as in-depth order planning.
Inventory Management with a POS
Inventory management is one of the most important features for a POS software. It helps prevent stockouts or even dead stock.
Inventory management in a POS allows you to track a store's (or chain's) inventory in real time. A good point of sale software updates inventory with every sale and when orders are received.
Looking for the best way to track inventory for your store? Discover 17 inventory management methods and their benefits right here.
Difference #6: Analytics and Reports
Just like inventory management, both ERP and POS systems provide access to reports. However, the types of reports generated are not the same, which constitutes the sixth difference between an ERP and a POS.
Analysis and Reporting in an ERP
Since an ERP is a powerful solution that centralizes the operations of multiple departments, the reports generated are varied:
- Financial reports.
- Sales reports.
- Purchasing and procurement reports.
- Inventory reports.
- HR reports.
- Personalized reports.
These reports are very useful for managers and project managers to gain an overview of operations and key performance indicators (KPIs).
Analytics and Reports in a POS
The reports generated by a point of sale software provide an overview of store operations. Available reports vary depending on the solution, but a good point of sale software should provide information on:
- Sales.
- Returns and exchanges.
- Inventory.
- Losses (if relevant to the industry, such as grocery stores).
- Taxes.
- Promotions.
- Pricing.
Difference #7: Implementation Complexity
It's no secret that implementing new technology in a company is often complex! Several factors influence this level of complexity for both ERP and POS implementations. The seventh difference lies in the complexity of the implementation.
ERP Implementation
Because an ERP is a powerful software solution used by multiple departments, the ERP implementation process is long and complex.
Indeed, implementing a new ERP requires adaptations to the company's processes so that the solution effectively meets the organization's needs. Fortunately, ERP providers work with the company to facilitate the implementation and train employees.
The implementation time for a new ERP varies between 6 months and 1 year, but it can be shorter or longer depending on the circumstances. Companies implementing a new ERP must therefore factor these timeframes into their transition planning.
POS Implementation
Implementing a point of sale software in a store is less complex than implementing an ERP. However, getting started with a new solution always requires some initial effort!
Implementation time also depends on the complexity of the solution. Some software is more turnkey, which makes the startup process faster. For more customized solutions, this step takes longer to adapt the solution to the store's needs. POS software implementation time can vary between 1 and 6 months.
When choosing a POS software, it is important to learn about the implementation process. Some providers, like Alice POS, are known for their excellent after-sales service and allow you to get started much faster!
Difference #8: Accessibility
The accessibility of an ERP or a POS system corresponds to how the software is hosted and operated. The preferred type differs for these two solutions.
ERP Accessibility
Depending on a company's needs, budget, and technical resources, there are several ways to access an ERP:
- On premises.
- Cloud-based.
- Hybrid.
Most often, companies opt for on premises access to gain complete control over data and customization.
POS Accessibility
While many point of sale softwares are still available for on premise deployment, more and more POS solutions are being offered in the cloud, accessible from anywhere.
There are many benefits to having cloud-based POS software: discover 8 reasons to choose a cloud-based system here.
Difference #9: Associated Costs
The ninth and final difference between an ERP and a POS lies in the associated costs. While some types of costs are similar, they are generally higher for an ERP than for a POS.
ERP Costs
Deploying an ERP involves much more than the purchase or subscription price. Here are all the types of costs associated with using an ERP:
- License or subscription costs (higher initial cost for on-premises deployments).
- Implementation costs (needs analysis, configuration and customization, custom development, data migration).
- Training costs.
- Maintenance and support costs.
- Integrating costs with other tools, if necessary.
- Infrastructure costs (for on-premises deployments, such as servers).
POS Costs
Because it's less complex than an ERP, a point of sale software is often more affordable. Here's a list of costs associated with a POS system:
- Software costs (to learn more: Your New POS System Does Not Have to Be So Expensive).
- Hardware costs (computer, receipt printer, cash drawer, barcode scanner, payment terminal).
- Payment processing fees (to learn more: How Much Are Point of Sale Transaction Fees?).
- Implementation and support costs;
- Maintenance costs (to learn more: How Much Are POS Maintenance Fees?).
Generally speaking, cloud-based POS solutions are less expensive because the cost of the servers is included in the POS software subscription fee. For on-premises solutions, infrastructure costs must also be added. Understanding the differences between an ERP and a point of sale is essential to making an informed choice that truly meets your business needs. While a POS is a practical tool, often used on the front lines to facilitate transactions and manage retail sales, an ERP acts more in the background as an integrated solution that supports all operations.
Looking for a powerful point of sale solution for your store? Request your Alice POS demo! [dub_vc_book_demo]
