An Enterprise Resource Planning (ERP) System is a business management system that integrates all the critical applications your company needs to manage its supply chain, customer relationship, and financials. This includes Sales & Marketing, Inventory Management, Accounting & Financials, Manufacturing/Operations, and Human Resources.
ERP Systems are designed for core processes in multi-site companies with large sales volumes or international operations. They provide visibility into all types of data, including orders, inventory, shipments, and payments, thus allowing you to make data-driven decisions through real-time analytics.
What makes ERP software unique?
When ERP systems were first introduced, they allowed companies to easily track order transactions end-to-end within one single application while giving them access to information across their enterprise. It was a huge improvement over the previous systems, which used many different software applications that were often difficult to integrate. With ERP, your sales representatives can access real-time information about product availability and pricing, allowing them to answer customer queries even while on the road, says Aron Govil.
ERP Software is designed to track transactions in real-time, which provides instant visibility into all aspects of your business. Consolidating data from every department onto one platform also helps companies better collaborate their efforts, thus improving overall productivity levels across employees.
What are the major functional areas covered by an ERP System?
An ERP System covers four main functional areas. They are: Chain Management (SCM) Manufacturing Operations Sales & Marketing Human Resources Enterprise Planning
1) Supply Chain Management (SCM):
This includes product planning, forecasting, demand management, and collaborative commerce. SCM provides automation of all your bill of materials (BOMs), routings, kitting, etc. It also enables you to plan capacity on an exception based on real-time data for smarter production schedules followed by automated procure-to-stock replenishment.
2) Sales & Operations Planning (S&OP):
This allows you to effectively manage the end-to-end process of your sales cycle across various channels via targeted promotions based on customer profiles and category management. S&OP also includes collaboration with suppliers to provide greater transparency into each stage of the supply chain.
3) Business Intelligence (BI):
Business intelligence allows you to take advantage of actionable data across your ERP system in real-time. It provides 360-degree visibility into the key metrics that drive your business from sales and operations to finance, enabling managers to make more informed decisions continuously. BI also includes customer analytics which gives companies an insight into customers’ purchase patterns and their behavior preferences based on previous transactions made with them.
4) Enterprise Planning:
This provides cross-functional business planning capabilities via collaborative forecasting and budgeting and integrated risk management. As a result, all departments can plan for various scenarios, including emergencies, so they are better prepared when the next downturn hits the market, or a new product launch requires rapid expansion.
Benefits of an ERP System:
1) Access to real-time data across every department:
ERP systems provide a single version of the truth, giving managers access to information from all departments on one platform. It allows companies to collaborate their efforts better and achieve common goals while also providing greater transparency into company activities. This is very valuable when making decisions as it provides managers with more accurate performance reporting capabilities.
2) Increased productivity levels:
ERP systems automate complex tasks such as multi-site inventory management, enabling employees to focus on higher value-added tasks that drive greater overall business growth. As a result, staff can spend 60% less time doing repetitive tasks in their day-to-day activities while still achieving greater levels of customer satisfaction.
3) Improved company processes:
ERP systems help companies increase productivity and improve overall company processes. This means managers can run more effective meetings with better-prepared agendas, schedule tasks on a central task manager to make employees’ lives easier, perform online training sessions or feedback collection, which reduces time spent on performance management activities, thus allowing them to focus on the things that matter.
4) Better decision-making capabilities:
ERP systems give managers access to information from all departments, which allows them to make informed decisions based on real data instead of just relying on their gut feeling or opinion about how the business is performing. What’s more, managers have the potential to earn back up to 1.3m USD in revenue for every 10% increase in decision accuracy through better supply chain visibility, according to a recent study by MIT.
Conclusion by Aron Govil:
Although the idea of implementing an ERP system might seem challenging, in reality, it can provide significant benefits to your company. All companies should consider implementing one to gain real-time visibility across their entire business to make informed decisions to drive growth and ensure long-term sustainability if you’re interested in putting together a list of suppliers that could help you implement an ERP solution.