Remember as a kid how we kept wondering about two similar terms or games or foods and for me, it was even people. Both used to look so similar yet so different. But it took more understanding and information to know the difference. For example, I remember being so confused about hockey and ice hockey, tennis and table tennis. For me, both were the same and I kept interchanging both when I used to talk to peers. But later, when the actual specifics about the game were known, it was a moment to think and realize. One such common confusion for business owners in the current scenario is understanding the difference between POS and ERP.
Is it not the same? Did you just think of this at the top of your mind? Exactly! More than 90% believe so. But the difference between ERP and POS is a vast topic for discussion, and both serve different needs. It looks like the classic maze puzzle where you keep ending up in the same place. Don’t worry. I will help you find the door out.
So, what is POS?
The Point-of-Sale (POS) is an integral part of the point of purchase and refers to the place/location at which a customer makes a payment. But the Point-of-Sale software is not merely a cash register anymore. It has come a long way and has become a business booster. Thanks to rapid innovations happening in business every day. A POS software is not just the digital version of a cash register. Still, it has turned out to be a one-stop solution that addresses all the diverse business needs and helps automate the process, simplify the operations, and service customers well. POS helps streamline the operations right from purchasing, inventory management, sales, customer management, and accounts by integrating with hardware devices like payment terminals, weighing scales, barcode scanner, and printer, acting as a powerful tool for running a business successfully.
Then, what is ERP?
ERP stands for Enterprise resource planning. ERP is a software widely used by organizations to manage day-to-day business activities, including accounting, human resources, procurement, project management, risk management, compliance management, supply chain operations, ordering, delivery, and reporting. A robust ERP system integrates all the core functions into a unified system that helps plan, budget, predict and report on an organization’s results. Businesses need an ERP system that can bind all the functions into a single software to help them connect and collaborate with their employees, manage their everyday functions, and make data-driven decisions with the help of technology. Using an ERP system also helps in improving the overall efficiency, productivity, and accuracy of every critical business process.
So, the definitions are clear. But what is the actual difference? I did not understand that yet. Relax! We’re jumping right into that now. Let’s take an example of quick lunch and full meals (Or Thaali). Both are appetizing to eat but based on your hunger pangs, you will decide to order either one. You will love to have a quick lunch if you want to eat adequately, just to make sure you don’t feel hungry anymore. Whereas, when you have uncontrollable hunger and want to treat yourself with choices, you will go for a sumptuous full meals (Or Thaali). That’s the difference between POS and ERP.
ERP software often talks about an all-in-one business management solution with end-to-end features for inventory management, order entry and processing, accounting, warehouse management, contact management, purchasing, sales and financials, and more. Many ERP systems are often customizable based on a business’s requirements and provide optional industry-specific components – for example, point-of-sale functionality and eCommerce tools. Implementing an ERP software’s purpose is to replace all existing software packages and manage company data from a single database.
How does an ERP differ from a POS?
Identifying the resource needs is generally considered a task for those in managing businesses. Money, material, method, and manpower are the Four Ms, the traditional framework for viewing the resources available to a business. In Retail, Restaurant, and Distribution, money refers to accounts, material to inventory, methods to processes, and manpower to employees. And in today’s world, Data is the new oil, and that cannot be ignored too when we talk about resources. The major difference between an ERP Vs. POS is in the way the respective systems handle these resources.
A POS system helps you with transactions related to all these resources. For example, you can see your employee’s performance, check inventory from anywhere, manage data, and create your sales return criteria. But all these are simple transaction-oriented mechanisms. It’s the computerization of Data, and it cannot be ignored as well. You might be making notes and registering receipts in ledgers and notepads. With POS software in place, you have all these data in your system and use them as and when needed. We’ve established the working of a POS for your business. Is everyone in agreement with us? Yes! Now, how does an ERP different from a POS?
An ERP not only helps you with all these resources but helps you plan and grow. It is not about Computerization but Digitisation. With an ERP system, you don’t just feed in Data to your business. But let those Data drive decisions for you. For example, in Inventory management, you can let your purchase happen in auto-pilot mode based on sales and previous sales history. At the same time, you can decide on the delivery person for your delivery based on their location and availability. With an ERP, the system drives your business and builds productivity effortlessly.
POS Vs. ERP, which should I choose?
So, which is better, POS or ERP? Let’s go back to the quick lunch and full meals. Sorry, readers. Looks like your author is a bit hungry. It is based on your needs. If you want to start computerizing your Data and transactions, then a POS system will serve your purpose. On the other hand, if you’re looking for software to help you grow your business and drive your decisions, ERP is the right fit for you.
POS and ERP: The Perfect Pair
So, what do we do when we are in the mood to eat something nice and extravagant? I would definitely, order the special meals (Or special Thaali) where I get the extra Gulab Jamun and Vanilla ice cream. Yum! Such are the integrations of POS with an ERP.
An ERP integrated POS system offers immediate access to real-time information, including customer information and purchase history, which helps employees make better recommendations. This improves cross-sells and upsells. With an ERP integrated POS system, you can enjoy the following,
- Managing omnichannel sales is easy. You are empowered to fulfill demand from various touch-points, avoiding delays, reducing returns, and increasing sales, all at the same time.
- You can identify ledger balances and determine the cash flow for your business with ease.
- You ensure that the data entered into both systems is accurate, thus decreasing data mismatch chances. The integration ensures real-time upload and download of data giving you information from a single pane of glass.
- Enjoy a holistic view of business that helps you determine the sales, inventory, and revenues. This, in a way, helps to accurately plan and maintain adequate stock level, shunning situations of over-stock and under-stock.
Before you decide to integrate your ERP with another ERP or POS, make sure the ERP/POS service provider fulfills a
- Seamless integration with SAP, Microsoft Dynamics, Oracle, Orion and other ERP
- Universal ERP adaptor that lets quicker and quality integration without writing code, supporting all methodologies from flat file to restful services
- Freedom to innovate by building your own IP, bring your ideas faster to production with the Developer platform
- Open APIs lets you retain 3rd party integration eco-system for loyalty, payment, POS peripherals, etc.
Good that you’ve reached the end of the blog because we are going to reveal an interesting news. If you’re looking for POS or ERP or seamless integration of your ERP with a POS, Gofrugal has it all. Sit back and relax. Our team will serve you the best meal to not only satisfy your appetite but also enrich your taste buds!