ERP vs CRM: Do Distributors Need Both?

Think of an ERP as a wide-casted net. It is a single system that takes all of your customer data and streamlines it so that business processes across many departments can be integrated into one platform. An ERP can take finance, supply chain, distribution, and even HR data and automate processes typically done manually in disjointed places.

For example, a common use case of ERP is with automating purchase orders. With the software in place, you can have your POs sent to stakeholders for approval and then automatically forwarded to vendors once approval is received. No more back and forth or traditional paper POs.

Optimization is the key here. All of your data is stored in a single database which can then be accessed by any employee. Implementation of an ERP means centralizing all parts of your company and ensuring everyone is working congruently.

If ERP is a wide-casted net, CRM is the careful care you take of each animal you catch. Well, it’s not a perfect analogy. Nonetheless, a CRM is an integral component of how you organize, manage, and build your relationships with your customers. CRMs are centered around relationships.

With a CRM, you will never need to wonder which of your contacts work at what companies or what messages have been sent about your work with each customer. It will identify who on your team last contacted each customer, fill you in on what to talk about at your next meeting, and even send follow-up messages to help you nurture your leads.

The benefits of ERP software include 4 major points:

1. ERPs can automate financial reporting, inventory management, and distribution planning. All of this automation means that your business will be running much more productively.
2. Cost-savings. By streamlining your operations, your team can spend more time contributing to critical tasks and less time worrying about busy work. This means you don’t need to pay somebody to do manual data analysis or processes.
3. Decision-making. Using an ERP allows your business to see all of your data in one place. Using that centralized data you can build reports, measure performance, and ultimately make strategic choices based on the data.
4. Using disconnected spreadsheets is a headache many growing businesses face at one time or another. With an ERP, you don’t need to worry about organizing your data no matter how much your operations grow.

The benefits of ERP software also include 4 main points:

1. Higher customer satisfaction. CRM is best at managing relationships. Keep track of customer interactions and preferences so it’s easier to resolve customer issues or unique needs. Never walk into a meeting with a customer blind again.
2. Sales and Revenue. In addition to your existing customers, CRM will help you build your relationship with potential customers. Track your leads and opportunities and make converting prospects into cashflow easier.
3. Smooth business operations. CRMs allow you to automate tasks related to lead generation and management. Have your CRM track contact management so you can focus on customer service.
4. A good CRM should show you reports on your sales pipeline, customer activities, and even marketing campaign performance. Using this data, your business can make better decisions about your sales strategies.

The main similarities between CRM vs ERP come down to optimization, data, and analysis.

1. Both software are designed to automate some key business processes. Streamlining workflows leads to improved efficiency all around.
2. They are both driven by data. They take data from your business and centralize the insights in one place.
3. Both systems generate reports and analyses of the centralized data so that you can make informed business decisions.

As mentioned at the beginning of this article, the main difference between ERP vs CRM is in their focus.

1. CRM focuses on managing customers while ERP covers a broader range of functions like inventory, financials, and supply chain.
2. As a result of their foci, CRM is more typically used by sales reps and marketing teams while ERP encompasses the needs of a variety of departments.
3. While both software increase visibility into your data, CRM increases visibility into customer data while ERP increases visibility into all administrative and operational business data.

Simply put, nearly all growing businesses will eventually need both an ERP and a CRM system. It will no longer be a question of ERP vs CRM, but a question of which ERP and CRM. Whether you need one or the other to start comes down to your most immediate business needs.

If you struggle with customer relationships but run smoothly elsewhere, perhaps a CRM is a good place to start. If the opposite is true, maybe an ERP is a better fit right now.

If you’re expecting to scale your business, it’s a good idea to plan for the eventual integration of both systems. In that case, you’ll want to make sure that you’re purchasing an ERP that is compatible with your CRM and vice-versa.

When choosing an ERP, consider preparing yourself for a future of scalability. Why stop at CRM? If you want to leverage your business data to the greatest extent (and give yourself the biggest competitive advantage), you’ll need to incorporate Business Intelligence (BI) software and Pricing software.

In that case, you need to make sure that you’re buying into a system that will be play-friendly and integrate seamlessly. Luckily, White Cup offers a comprehensive platform of CRM, BI, and Pricing technology laser-focused on growing your revenue and helping you beat the competition.