Understanding The Difference Between Flat File and Relational Data

As an LBM dealer, you likely have thousands of loyal customers who have done overwhelming business with you. As part of your dedication to customer experience, you store their orders and information for years so you can support them in their quest to ensure recurring business.

This is a lot of data storage. In years past, it would have been stored in file cabinets that likely span your entire back office. Hopefully, now you are using a document management system with your ERP connected to your inventory management and point-of-sale solution.

There are two main types of electronic data storage: flat files and relational databases. Both serve the purpose of storing information, but they do so in very different ways. Understand which type of storage might be the best fit for your needs.

Flat file data storage

Imagine a spreadsheet with rows and columns. This is essentially what a flat file looks like. Each row represents a single record, and each column represents a specific field or data point within that record. For instance, flat file data storage for customer information might have columns for customer ID, name, address, phone number, and email address.

Flat file data storage is popular because it is simple. It is easy to set up and use, often requiring minimal technical expertise. Additionally, flat files are suitable for storing small to moderate amounts of data. They work well for basic tasks like maintaining a contact list or keeping track of inventory for a small store.

For an LBM business, you likely have thousands of data points for your customers, and therefore, these flat files will have thousands of rows. Therefore, flat file data storage has limitations. Managing and manipulating data in a flat file can become cumbersome as the amount of data grows. Flat files also struggle with data redundancy, which means the same data might be stored in multiple places, leading to inconsistencies and inefficiencies.

Relational databases

Relational databases offer a more sophisticated approach to data storage. Unlike flat files, relational databases store data in multiple tables. These tables are linked together using relationships, which helps eliminate data redundancy and improve data organization. They can also reference and keep track of data constants (product ID) as well as data variables (product price or quantity).

Here's a simplified example: Imagine a relational database for an online store. One table might store customer information (customer ID, name, address, etc.), another table might store product information (product ID, name, price, etc.), and a third table might store order information (order ID, customer ID, product ID, quantity, etc.). The tables would be linked together using the relevant IDs. For instance, the order table would reference the customer ID and Product ID to define a specific item that was ordered.

This relational structure allows for efficient retrieval and manipulation of data. You can easily query the database to find specific information, even if it is spread across multiple tables. For example, you could find all orders placed by a particular customer or all products purchased by a specific customer, as well as shipping locations per customer or product.

Many LBM dealers are growing their business by opening new sites. With relational databases, you can keep data from different branches in the same database but in separate tables, which allows you to query the entire database quickly while being able to compare the branch data for reporting needs. For example, suppose you want to understand the success of a particular millwork, door, or even a particular species of lumber. In that case, you can query this information for each branch to compare the needs of your regional customers.

Relational databases are the preferred choice for complex data storage and management. They are ideal for businesses that need to store and analyze large amounts of data, such as customer information, financial records, and product catalogs.

Choosing the right database for your needs

The decision between flat file data storage and a relational database depends on your requirements. Here are some factors to consider:

• Amount of data: Flat file data storage might be sufficient if you are dealing with a small amount of data. However, if you anticipate your data growing significantly over time, a relational database is a better option. This is especially true for data integrity, as it reduces data duplication, making it more reliable.
• Data complexity: Flat file data storage might work if your data is simple and has few relationships between different data points. However, for complex data with many interconnected elements, a relational database is essential to track how much stock you have, which products are selling well, and where that stock is located. Especially if you have inventory and stock across multiple branches, having a relational database that can keep branch data separate allows more robust reporting. Think of a relational database as a super-organized way to store information. Instead of just having a big list of data, you break it down into smaller pieces – from inventory to customer data.
• Data sharing and collaboration: A relational database is the best option if multiple users need to access and modify the data. Relational databases provide better security and data integrity when multiple users are involved.

Industry-specific software powered by relational database

ECI’s fully integrated and industry-specific inventory and business management software is backed with relational databases. Our powerful software lets you easily and quickly query your customers’ orders, invoices, and POs. You can report on sales or orders across your entire customer base and even across multiple branches so you can make data-backed decisions about your inventory, pricing, and business strategy, which improves your customer experience and loyalty in the long run.