March 9, 2019
10 Benefits of ERP
Before you buy a flight ticket, you should really know what’s waiting for you at the destination. Like wise, before you determine whether your company should embark on the Enterprise Resource Planning (ERP) route, you should know what’s in it for you and what are the potential benefits.
While SmarB is a cloud base ERP solution, this article is about the overall Cloud ERP available in the market. Let’s first put our attention to the potential benefits, then you can understand how these benefits will outweigh any skepticism you may have.
So, why implement ERP?
1. Lower Costs
Indirect Cost
ERP will help your company to achieve higher efficiency levels, and decrease the error numbers. It reduces the duplication of tasks, which decreases your overall cost for running a business. These cost reductions will allow you to
- Reduce unit price of each unit or type of service you provide.
- Increase your profit margin by dropping the unit cost.
The cost reductions result both from time saved and from improvements in your analysis and control of decisions made for your business.
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Direct Cost
On top of that, with the cost savings from cloud technology (see article), the cost of a cloud ERP system is much less than what it used to be (especially with the removal of any hardwares). In fact, many are surprised with how much saving you can get.
Note: With cloud, the cost of setting up an ERP system is now less than 50{528a46749d196be7df21540ff140c83acfb7bfa395f69b6580b6b804895671bc} of the traditional ERP systems. With that, feel free to contact us for a rough estimation.
2. Improved Reporting
Many inefficiencies in your business operations stem from improper reporting. When you adopt an ERP system, that possibility is largely eliminated.
With traditional reporting, you need to first consolidate your business information from the different departments. You have to wait for individual departments to summarize their information before it’s relevant to you.
Then, you’ll need to process those information on a massive MS Excel file before you can even convert them into a reporting template.
Now, with ERP, imagine this, you don’t need to use a MS Excel any more. More than that, there are no waiting time between departments. And you don’t have to convert the files from one format to another format.
In fact, your reporting will follow an automated system, which allows your various departments to each access the information they need. Once all departments have updated their respective database, the system can just churn out reports an at instant.
3. Reduction in Complexity
It’s true that when you implement a system, it may take awhile to capture the information you need. In fact, more often than not, you need first clarify the processes before you can start implementing ERP.
Hence, some people would argue that the system makes it more complex than pre-implementation.
Nonetheless, many forget that the reason for adding structure to your business is really because your business is growing. And the simple structure that you had, is not sufficient to support the business any more.
That’s why, when I refer to ERP’s ability to reduce complexity, I’m really referring to it’s ability to reduce unstructured, mountains of information. In fact, when you implement a ERP system, you are forced to add structure that make sense to you. You are forced to think and reorganise your information. At the end of the process, you would have already started to re-engineer your business processes.
With a clearer stucture, without a doubt, you would have successfully reduce the complexity you had and making it analytically friendly. Once that happens, you have the information you need that allows your whole business team to improve efficiency even further.
4. Adaptation to your Company’s Needs
Each company is unique, so we will always do a preliminary analysis of your organizational needs, to make sure that the application is well-suited for you.
In fact, our system has been designed to help complex businesses digitise their operations in many situation. This can be done either using our standard modules or our custom-make solution.
And this is crucial because the last thing you need is to have your ERP provider implement the solution and realising that it will not work half way through the process.
5. More Intelligent Business Analytics
Once you start using a ERP system, the first thing that you’ll realise is that you are starting to collect raw operational data. These are data that you’ve always had but never really collected.
Examples includes the speed between lead to sales conversion, your individual production details (like production rate and lead time), your actual raw material cost (as opposed to standard or average cost) or even your frequency of purchase managed against storage.
I can go on but I think you get the idea.
When you are have so much raw information about your business. using high-quality data, it will allow you to utilize intelligent analytical tools to arrive at more beneficial business decisions. As a matter of fact, some of the best ERP systems offer analytics functionality built-in, which allows for easier analysis of data.
6. Task Automation
Without a doubt, once your work has been fully implemented, you can use ERP systems to fully automate some of the more repetitive tasks. In fact, with SmartB, can you even deploy some robots in your work environment (read more).
However, just to be clear, some of the work that you do may require more information. Hence, it may feel like you are doing more work. When that happens, you need that you are recording more information than the past and that alone is an added benefit (as mentioned on Pt 3).
Once you see that through, then you automation comes in all sorts of shapes and sizes, including automating invoices, delivery notes, etc. This gives your team more time to focus on productive tasks that gives your product or service more value.
In addition, removing the human element in some of these tasks will usually bring you a lower error rate.
7. Superior Supply Chain
You see, ERP helps you connect the dots. And the dots are usually related to the operations of your business. However, that’s what you see on the surface. The real benefit comes with you know that the entire inventory (and logistic) flow is connected – from the purchase process, to the availability of your raw material, and all the way to your production, goods warehouse and out towards your delivery.
Having the end-to-end process in sight makes you more in control of your business.
And if you have the full ERP system in place, it means you can have improved demand forecasting, procurement and inventory. And that makes your supply chain more efficient and responsive.
8. Scalability
A client once asked me, “How many users can the ERP system support?”
My answer was, “as long as they have a device which they can work on”.
You see, a cloud ERP system is easily scalable. This means that you can add deploy as many users as you want. And you can add functionalities to your system as your business needs change. This often means easier management of new departments, new processes, etc.
More importantly, it means you can more information than you realised. With more information, that means you can start working on data science, where business information is driven by facts.
9. Improved System Maintenance
I know I keep repeating this. However, I have to say it again, with cloud technology, system maintenance is now easier than before.
Imagine this, let’s say you have a bug on the system (which can happen occasionally), you call your provider and within 5 minutes, they resolve the issue.
How? Because the provider can just log in to the system (wherever they may be), and just fix the issue.
A long-term provider, as a part of your acquisition of an ERP system, offers you a better processes to keep your information system up to date as management methods and technology advance.
10. Improved Data Quality and Access
When you compare the performance of an ERP system to traditional approaches like manual record-keeping, you’ll see that the ERP system improves your basic processes.
Let’s take it one step further, the fact that you are reading this now, you can potentially already have some software working for you. And eventually you have multiple software, you will then start to realise or experience the issue of multiple system chaos. Which means, you bought an accounting software, then a HR software, then another inventory software.
All of a sudden, you have to spend extra money to integrate the information from different software.
Get it?
Even though there are many software working for you, the truth is, you still require a manual management and integration by a human being.
With ERP, you can have everything working for you under one system, one database and one program.
Summary
Thank you for reading this. If you want to know more about ERP and how it can help your organisation, make sure to contact us and we will do our best to assist you.
Note: Want to find out how you can successfully implement a ERP system in your organisation? Read more here.Â