Article

Shashin Shah
Shashin Shah 4 September 2020

PIM vs ERP: Describing the Difference Between the Two

Product managers need to orchestrate the development of the product roadmap and go-to-market strategies to exploit these opportunities. This means that your product data, in addition to being well maintained, needs maximum integration across the entire value chain. After all, business success banks on real-time visibility of data and communication. In data, we trust; but more importantly, in the practice of “One organization. One dataset.”

While marketers need all kinds of data — demographic, industry benchmarking, performance, and product — other business units rely on niche data sets that contribute to operational efficiency. For instance, supply chain decision-makers require real-time information on the inbound and outbound resources, such as procurement, vendors, logistics, inventory, material management, and product data. This overlapping of business data and the interdependency between the various functions is crucial for an efficient and effective product delivery strategy. Integration is key. A highly integrated setup of PIM and ERP systems can ensure there is no redundancy or information mismatch, and decision-makers draw data from a collated pool.

What is Product Information Management (PIM)?

A repository of all product-related data, product information management (PIM) helps businesses to gather, enrich, manage, and distribute product information digitally. There is more to a product than its name and price, i.e., metadata such as its form factor, dimensions, material, color, model number, care instructions, and category that needs to be documented before disseminating to distribution channels like websites, catalogs, etc. A PIM system drives time-to-market efficiency in today’s ecommerce retail experiences.

  • Stakeholders involved: Product managers, engineers, R&D, product design, CRM, sales & marketing
  • Data feed: Product description and metadata
  • Output: Catalogs for distribution channels

What is ERP?

Enterprise resource planning (ERP) is an integrated system that connects procurement, manufacturing, warehouse management, order processing, and logistics. ERP is used to track and monitor the various moving parts of production and distribution; for instance, the material management team can forecast and replenish their stocks from vendors.

  • Stakeholders involved: Procurement, inventory managers, supply chain, finance, CRM, manufacturing, HR, sales, and marketing
  • Data feed: Resource, financial, ecommerce, and product data
  • Output: Centralized interface for the integrated data sets

The Clear Distinction Between the Two:

The overlapping nature between a PIM and ERP often poses questions like “If my business already has an ERP, then why should I invest in a PIM?” To answer such questions, let us see how different these two are from each other. An ERP goes higher up in the business function hierarchy as it deals with both inbound and outbound resources, which is the product itself. Although a PIM system explores use cases of bidirectional communication, such as when integrated with CRM tools for customer feedback and the subsequent alterations to products, it is typically used by internal customers. By function, PIM is also more functional by itself, whereas, an ERP is more of an underlying backbone for several critical functions. What an ERP lacks is the ability to be applied to niche areas such as product enhancement. On the other hand, while a PIM has more emphasis on product data, it has lesser visibility into the overall operations. Therefore, a PIM-ERP integration helps you realize the benefits of each and explore how they complement each other by playing to each other’s strengths.

The Overlap Between the Two:

Integrating your PIM and ERP systems allows you to bring the best out of a streamlined and consistent business process workflow. While it ensures smoother and more transparent customer communication, there are other benefits to this integration, such as optimizing costs and go-to-market strategies.

The Benefits of This “Overlap”:

  • Stock Optimization:

Demand forecasting data pertaining to those products that demonstrate better traction in the market based on ecommerce and ERP systems can be effectively used for inventory management. For instance, consider Product A is made of materials {x, y, z} and B of materials {p, q, r}; if A sells better in the market, it becomes easier to predict the required stocks of materials x, y, and z as the data is already there. Conversely, stock replenishment of perishables can incur huge losses for businesses. Tighter integration of PIM and ERP systems, coupled with demand forecasting data, helps enterprises procure only those items that are moving well in the market. Additionally, vendor selection for these also becomes much efficient for future production.

  • Better Customer Experience:

Coherent and unique data also helps in winning customer loyalty and retention. Imagine your CRM feedback loops being integrated with your design and engineering teams; this makes formulating or retrofitting your products with modified entities based on valuable feedback and reviews much efficient. With products that reflect customers’ precise needs and valuable opinions, they always tend to come back to your brands.

  • High integrity syndication of product data:

While your customers’ opinions matter, your distribution network, suppliers, and other merchants along the retail supply chain may also have experience-based recommendations or suggestions. Product data syndication (PDS) helps you broaden your engineering possibilities beyond the scope of your internal teams. Publishing product data among sell-side partners will help you identify gaps in product design, function, and development, thus enhancing your product’s efficacy through collaborative efforts.

  • Optimize cost, time, and quality:

Business success at its core boils down to optimizing costs, reducing time-to-market, and enhancing product quality. Integrating your ERP system with PIM completes the circle of data transactions and helps you avoid delays, enrich your product, and decrease your operational costs.

All these contribute to better decision making, and improved customer experiences with savings pocketed on many fronts. While investing in a PIM and ERP by itself could be overwhelming for some businesses, a laundry list of other challenges may crop up during the integration. Open source is the magic silver bullet that counters all these challenges of costs, vendor lock-ins, and simplified customization. At the end of the day, it all comes down to “One Organization. One Dataset.” and establishing transactional channels for communication.

Source: The article originally published on HubPages.

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