If you are trying to run subscriptions inside your ERP, you already know how this story goes

You launch a subscription or rental pilot for your consumer durable product. In the beginning, when you're just getting started, you're probably thinking:

“We already have an ERP. Let us just add the subscription workflow there.”

It sounds harmless. One more SKU. One more process. One more invoice type. But then subscriptions start breaking everything you thought was stable.

Operations that most commonly break when you add subscriptions to your existing ERP

• Recurring payments do not fit into one time invoicing.
• Returns break your outbound-only logistics flow.
• Asset lifecycle management has no place in a system built for sold products.
• Your team suddenly needs fraud checks, credit checks and customer verification.
• Your ERP cannot understand the subscription lifecycle and forces everything into a sales process that does not belong there.

If this feels familiar, you are not alone. Companies that tried this before you said the same thing:

"We stopped the first rental pilot because we tried to incorporate the rental business into our existing process of sales, finance and logistics, which was a huge mess and did not work out." - Bugaboo

This article explains exactly why that happens and what to do instead.

What is an ERP?

An ERP (Enterprise Resource Planning) system is the operational core of most established businesses. It centralises critical business functions such as:

• Finance and accounting
• Logistics and warehouse management
• Order and inventory management
• Procurement
• Supply chain processes
• Sales order processing
• Company-wide reporting

For a traditional product business that sells items once, ships them once and finishes the process, the ERP is the ideal system. It ensures standardisation, compliance, financial accuracy and efficient handling of purchase and sales orders.

This is precisely why companies launching subscriptions begin here. The ERP already exists. Leadership assumes that subscriptions are simply another type of order or another way to place orders. So the team tries to add them inside the existing structure.

Unfortunately, the subscription business model does not fit the linear processes ERPs are designed for, and many businesses that have launched and are running subscription models for physical products have experienced the same issue.

What role does an ERP play in a physical product subscription business?

Even though a subscription business operates very differently from a traditional sales business, the ERP still plays an essential role. In fact, for physical product subscription businesses, the ERP remains an important systems in the tech stack. However, its role is specific, focused, and fundamentally different from what many companies first assume when they begin exploring subscriptions.

An ERP was designed to create structure across finance, supply chain, procurement and operational planning. Those responsibilities do not disappear when a company introduces subscriptions. What changes is where the ERP sits within the overall architecture. Instead of acting as the engine that runs the business model, the ERP becomes the system of record that supports financial accuracy, operational governance and organisational visibility.

Understanding this distinction is critical. Many companies delay their subscription initiatives because they believe their ERP must handle every process. In reality, successful subscription businesses treat the ERP as a foundational layer rather than the operational core.

1. Financial system of record

At its heart, the ERP remains responsible for financial integrity. Subscription businesses introduce recurring revenue streams, deposits, asset depreciation and long-term contracts, all of which must ultimately be reflected in the company’s books.

2. Asset valuation and inventory control

Physical product subscriptions differ from digital subscriptions in one fundamental way: the product remains an owned asset. Instead of leaving the balance sheet after a sale, it continues to hold value and must be tracked over time.

3. Procurement and supply chain planning

Subscription models often increase pressure on supply chains because product availability directly impacts growth. If inventory runs out, subscriber acquisition slows. If too much inventory is purchased, capital is locked into unused assets.

4. Fulfilment infrastructure

Although subscriptions introduce reverse flows such as returns, swaps and refurbishments, outbound fulfilment still needs to operate with precision. ERPs typically coordinate:

• Order release to warehouses
• Picking and packing workflows
• Shipping documentation
• Integration with logistics providers
• Delivery confirmations

In other words, while the subscription lifecycle may be managed elsewhere, the ERP continues to anchor the physical movement of goods across the supply chain.

5. Governance, reporting and organisational visibility

As businesses scale, leadership teams need a unified view across departments. The ERP provides this operational oversight by consolidating data from finance, procurement, inventory and logistics.

7 reasons why an ERP cannot be the core system to run a subscription model

When companies launch their first rental or subscription pilot, they often assume the ERP can “run” the model. After all, the ERP is the central system in their existing business. It feels logical to extend it.

ERPs were designed for linear commerce, where products move in one direction: from manufacturer to warehouse to customer. Subscription businesses operate in continuous loops, where products return, revenue recurs, and customer relationships evolve over time.

1. ERPs are built for transactions. Subscriptions are built on lifecycles.

Traditional ERP logic revolves around discrete events:

order → invoice → ship → close

Subscriptions, on the other hand, introduce an ongoing lifecycle:

• activate
• bill repeatedly
• pause
• upgrade
• swap
• extend
• return
• refurbish
• redeploy

These states are dynamic and customer-driven. Most ERPs are not designed to manage objects that never truly “close.” When companies attempt to replicate lifecycle logic inside an ERP, they often end up creating complex process chains that are difficult to maintain.

2. Recurring billing is not native to most ERPs

While some ERPs offer billing modules, they are typically designed for predictable contract invoicing rather than flexible subscription behaviour.

Subscription billing requires capabilities such as:

• prorated charges
• mid-cycle changes
• automated retries
• usage-based pricing
• deposits
• partial refunds
• contract extensions

Building this logic inside an ERP usually demands significant development effort, and even then, it rarely delivers the flexibility modern subscription models require.

3. ERPs struggle with asset circulation

In a sales model, inventory leaves the balance sheet once sold. In a subscription model, the same asset generates revenue across multiple customer cycles.

This introduces operational questions ERPs were never built to answer:

• Where is the asset right now?
• What condition is it in?
• How many times has it been deployed?
• Is it profitable yet?
• Should it be refurbished or retired?

Without a system designed for asset lifecycle tracking, companies often rely on spreadsheets or disconnected tools, increasing operational risk.

4. Reverse logistics breaks linear workflows

Subscription businesses depend on products coming back. Returns are no longer exceptions. They are expected, frequent and operationally critical.

Each return triggers decisions:

• inspect
• repair
• clean
• refurbish
• restock
• redeploy

Linear ERP workflows typically focus on outbound fulfilment. Once reverse flows become central to the business, process gaps start to appear.

Industry conversations around circular operations reinforce this shift. Traditional supply chains were built for one-way movement, not for retrieving, inspecting and redistributing products in continuous loops. Businesses that rely on outdated operational structures often underestimate the requirements of these circular flows, which is where complexity begins to surface.

5. Customer relationship management goes far beyond the sale

In subscription models, the transaction is only the beginning. The real value is created over the duration of the customer relationship.

Businesses must support actions such as:

• subscription changes
• payment method updates
• swap requests
• cancellations
• renewals
• extensions

Most ERPs are not designed to power customer-facing journeys. Attempting to use them this way often results in fragmented experiences that increase support workload and reduce customer satisfaction.

6. Customising an ERP is expensive and slows innovation

It is technically possible to modify an ERP to support subscription processes. Many companies try.

The challenge is not whether it can be done. The challenge is what it costs.

Heavy ERP customisations typically lead to:

• long implementation timelines
• reliance on specialised developers
• high maintenance costs
• reduced system flexibility
• slower product launches

In fast-evolving markets, this loss of agility can become a competitive disadvantage.

7. Modern subscription businesses operate on multi-system architectures

Today’s most resilient subscription companies do not rely on a single platform. Instead, they build an ecosystem in which each system performs the role it was designed for.

Typically:

• the shop system handles checkout
• the subscription platform manages lifecycle and billing
• payment providers process transactions
• logistics partners enable fulfilment and returns
• the ERP anchors finance and governance

From an operational standpoint, this structure allows businesses to scale without forcing one system to do everything.

Across the subscription landscape, the companies that scale successfully tend to follow a similar principle: do not overload the ERP. Let it remain the financial backbone while specialised systems handle subscription operations.

Subscription models need a subscription management system at the core, not an ERP

For physical product subscriptions, the ERP remains important, but it should not be the system that runs the subscription model itself. ERPs are built for linear sales flows, while subscriptions create circular product and revenue cycles that require dedicated tooling. A subscription management system sits at the core of the subscription operations, handles the lifecycle and payments, and then passes structured data into the ERP for finance and logistics.

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ERP systems most commonly used by companies running a subscription model

In our conversations with businesses already operating a subscription model or preparing to launch one, we consistently see the same pattern: companies rely on their existing ERP as the operational and financial backbone, even as they realise the ERP cannot run the subscription model itself. While an ERP cannot manage subscription lifecycles, recurring billing or asset loops, its functionality remains highly relevant for finance, procurement, logistics and company-wide reporting.

Across these discussions, the following ERPs appear most frequently in subscription businesses for physical products:

• SAP
• Microsoft Dynamics 365
• Netsuite
• Odoo

Conclusion: ERP is not the foundation for subscription businesses

An ERP is a powerful system for managing the financial and logistical side of a traditional business. However, subscription businesses require a different operational logic. This is why companies like Bugaboo and Stokke eventually adopt a dedicated subscription management solution.

Trying to run subscriptions inside an ERP feels natural in the beginning, but quickly creates complexity, manual work and customer experience issues.

If your business manages physical product subscriptions, the most efficient architecture is:

• Keep your ERP
• Add a subscription management system that handles lifecycle operations
• Connect both systems for clean information flow

This combination provides the stability of your ERP with the flexibility required for modern subscription models.