What Is an ERP System and Its Benefits?
Enterprise resource planning (ERP), is a term used to describe the many different processes and tools that are essential for managing the resources of a business that operates on an enterprise level. ERP systems can cover a wide variety of different business activities and the term “resource” itself can vary greatly depending on the type of business or industry that the ERP system is being used in.
So, in this post we’re going to take a look at ERP systems, their uses, the industries that utilize it and how it can benefit your business.
What Does an ERP System Do?
Let’s start by explaining clearly what an ERP system does and how it helps by providing business intelligence.
As mentioned above, ERP is a term used to describe the different processes and tools that are essential for managing a company’s resources. In order to do so, it must provide data integrity that serves as a “single source of truth”. The ERP system becomes the centre of all of your business processes, making it easier to manage your resources, share data and ultimately create a more efficient business.
An ERP system must be fine-tuned to the business or industry that it’s being used in. Some software system features may be more suitable for a manufacturing business that a healthcare company wouldn’t necessarily need. While the software tools and processes themselves can easily be tweaked to fit different purposes, it requires the expertise of a technology partner that provides managed IT services and consultancy.
ERP implementation can be complex to configure hence to needing a specialist. It has to take your entire business into consideration in order to become an effective ERP system which can act as the central source of all of your data. A data-driven solution needs to work seamlessly with other processes that you’re currently using and needs to be compatible with your existing software solutions.
While it may seem complex we will explore the advantages of an ERP system and how it helps? First, let’s take a look at the industries that commonly benefit from an ERP system.
Industries That Benefit From an ERP System
The most common types of businesses that use an ERP system are as follows:
- Manufacturing companies – Includes: Scheduling production dates, Factory kiosks for stock takes, Work orders and BOMS
- Agricultural businesses – Integrate weighbridge with accounts, stock and dispatch control with traceability of all goods
- Engineering companies – manages their Work In Progress and ability to track products for sale or out on Hire etc.
- Distribution services – Handheld solutions to record invoices/deliveries immediately onto back office accounts, multiple units of measure per product, fully integrated with POS
- Food-related services – Traceability module with multiple units of measure, handheld devices for logging invoices/deliveries instantly, Work orders, assembly and Bill of Material options
- Quarry and concrete businesses – Weighbridge connected with back office accounts, driver operated kiosks, batching plant exchange, electronic PODs, accurately control machinery cost
- Recycling and waste control – Automatically records details required for EPA with instant reports, Telesales interface and TAPI phone integration, weighbridge integration, routing and allocation of collections, Spoilage charges
- Oil distribution – Complete ROMs by the click of a button, Interoperation with Petro systems (fuel pumps), Handhelds for deliveries/invoices to be recorded to back office instantly, driver routing and scheduling, automated signatures
- Healthcare companies – Key for managing production orders, managing cashflow and purchase orders.
- Construction businesses – Managing work orders and project manage end to end status of accounts at each phase of project.
- Professional services – Instant access to P&L information, Debtors ledger and managing cashflow. Business analytics.
As you can see, the industries that benefit from an ERP system are the ones that commonly reach the enterprise level. While it’s not designed for smaller businesses, there are many features that can still be utilized by a smaller company if they plan to scale their operations soon. For example, ERP software can help manufacturing companies implement a robust platform that helps them control the many different manufacturing processes involved. As another example, ERP systems can also help with large projects by offering tools that help with planning, budgeting, relationship management and execution.
With so many powerful tools to help manage and plan resource allocation and use, ERP systems can be adapted to many different types of industries. Again, it’s typically more effective in businesses that are having difficulty keeping track of their resources and distributing them effectively, hence why it’s recommended for enterprise-level businesses. A case can also be made for businesses that are still growing and soon to reach an enterprise level.
The Benefits of an ERP System
Now that we’ve explained what an ERP system is and what it can do for a business, let’s take a look at some of the main benefits of implementing an ERP solution to your business. ERP applications provide detailed information for business functions from accounting, product planning, manufacturing resource planning, material requirements planning (MRP) and supply chain management – a full enterprise resource planning system.
Single Source of Truth
A single source of truth refers to the ERP system acting as the main database for all of your data. This means that the data will not be duplicated, there are no copies of the data to interrupt your process, and it’s accessible by all of the software solutions that you deploy. This single source of truth also helps build better reports which are important when presenting data to investors or helping executives make decisions based on an accurate and updated source of data from your business.
Improved Customer Service
Customer service can be improved in many different ways by utilising the customer relationship management (CRM) module. When you implement a data-driven ERP solution, your customer service teams will have access to full customer information and order details with much faster response times. Access to relevant customer data will also improve the accuracy of the support you offer.
Avoiding Inventory Bottlenecks
There are two main issues when it comes to inventory management; having too much stock and having too little stock. While it might seem like a difficult issue to overcome, the reality is that you probably have all of the data required to make smarter inventory decisions. Implementing an ERP solution means you’ll find it much easier to gather data into a single source which can help you make decisions regarding your current business levels, future projections and past data that can help you prepare your inventory. With a robust ERP solution, you can avoid the higher overhead costs that come with being overstocked and also deal with the longer fulfilment times associated with low stock.
Modern Approach to Business Management
ERP solutions are considered the gold standard when it comes to building a modern approach to business management. This is because ERP solutions offer:
- dedicated security resources to protect your business
- modernisation to your business to reduce production bottlenecks
- create effective reports.
An enterprise-level business that doesn’t use an ERP solution is limiting themselves due to old and outdated tools that are not compatible with the majority of modern resource planning processes such as MRP ii. This results in a slow and opaque business that is not only difficult to work with, but also expensive to operate.
Challenges of ERP Implementation
Unfortunately, if implementing an ERP solution was easy, every large corporation would be using it and even smaller businesses would be taking advantage of the improved work processes. There are challenges to implementing ERP solutions, hence why it’s important to rely on a professional company that specializes in managed IT services.
- Knowing which additional ERP modules may be required
- Maintaining an ERP system can be expensive without the right training or services
- Implementing an ERP solution is time-consuming if done at a mature stage of your business
- Training is required to utilize an ERP system effectively
- Converting data to support your new ERP system can be time-consuming
These are some of the main challenges involved in implementing an ERP solution. However, there could still be some industry-specific challenges that would be unique to your business if you attempt to implement an ERP solution without the professional help of a managed IT services company.
Implementing an ERP System
As a result, you’ll want to ensure that you get in touch with a service such as Hybrid TP to ensure that you’re getting professional guidance and assistance with your ERP solution. For more information or to book a consultation, don’t hesitate to contact Hybrid TP today to see how they can help your business flourish with a sophisticated ERP solution. You can also take a look at our detailed page on our ERP software.
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