When most people think of enterprise resource planning (ERP)
systems, they think of complex software solutions directed at
large, multinational companies with massive budgets. We've all
heard the horror stories of how complicated ERP systems can be, and
the challenges associated with finding and implementing the right
system. For this, and other reasons, many mid-sized companies have
shied away from ERP systems for many years – preferring to
struggle with an array of disjointed systems and masses of
spreadsheets, rather than undergo the pain of the implementation of
a new program.
However, today, implementing an ERP system is well within reach
for most small and mid-sized businesses. These days, almost all of
the mainstream ERP vendors offer some kind of solution directed at
helping small and mid-sized businesses increase productivity,
reduce costs and transform their business. These systems include
best practices and right-sized solutions that are practical and, in
many cases, much more affordable than in the past.
There are several reasons to consider implementing an ERP system
for your business. Having an ERP system allows you to:
Integrate business functions:An ERP can help you reduce your
operating costs by better co-ordinating various business functions
within your organization. An ERP provides a single integrated
platform with shared data. Areas such as production, new orders,
purchasing, accounting, supply chain management and logistics are
all linked together to provide your management with clear
visibility into key performance indicators. This is extremely
valuable for forecasting and supporting business decisions.
Get a real-time view of your operations: Knowing where the
company stands on a range of issues at any given point in time
provides you and your management team with the real-time data you
need to make smart decisions. Many small businesses have too little
information at their disposal, to make data-driven decisions.
Making critical decisions based on gut instinct can be a very
dangerous strategy in today's tough business environment. An
ERP system provides the data you need, and today's systems do
so in easy-to-read, easyto- analyze, drill-down dashboards.
Better predict optimal inventory: The financial benefit an ERP
system can bring your business comes in part from its prediction
capabilities. An ERP system operates with real-time information
linking accounting, inventory and production in a way that allows
owners and management a consolidated view into overall operations.
This allows managers to predict monthly orders in order to maintain
adequate inventory levels.
Improve inventory management: An ERP system can enable you to
accurately track all of your inventory, from its arrival at your
facility, through production, until final shipments are made. In
the case of a bakery, an ERP system can enable you to track
ingredients from the vendor to specific batches in production. For
example, if you bought flour from a vendor and found out later it
might be contaminated, the flour can be specified by batch within
the ERP system, allowing you to pinpoint when the bad batch
arrived. The goal should always be isolation, so if only one batch
is bad, you are able to find it and eliminate it. Batches can be
isolated with precision, because an ERP system enables you to
barcode each batch and track batches through the arrival and baking
process. This tracking feature is particularly useful in recall
Choosing the right ERP system for your business
There is no question that an ERP system can go a long way in
helping you transform your business operations. However, with so
many options out there, choosing the right system for your business
can be a challenge. Like any type of software, ERP systems can be
tremendously different; each one has its own strengths and
weaknesses. ERP software selection starts with an understanding of
critical success factors, which we define as those things an
organization must do well in order to be successful. With this in
mind, before investing in a new system, consider hiring a
professional, vendor-neutral advisor, to help you conduct ERP
software selection in order to help you make the best possible
decision. Good ERP system advisors can bring a wealth of knowledge
to the table that can prove invaluable as you to sift through the
advantages of one system over another. In addition, a strong
advisor will help you focus your attention on the key functionality
that will have the greatest impact on your business.
Although getting help from a professional advisor does represent
an additional expense, it's one that will usually pay for
itself very quickly. After all, although there is little doubt that
ERP systems are more cost effective than ever before, they are
still one of the most important IT decisions you will ever
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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