Enterprise resource planning or ERP is, a term used in businesses worldwide, a common term, an important term, but how can ERP benefit your company?
With the business environment being very complicated, the need for a company to have an efficient information system to grow and keep competitive is vital. Keeping competitive is brought about by providing the right information at the right time amongst other things, and business recognises this importance. ERP is part of this.
But first, for those who don’t already know, what is ERP?
What is ERP?
ERP, in a nutshell, are the activities used by an organization to manage and integrate its business. It includes the integration of core business processes like finance, HR, distribution, manufacturing, service and the supply chain, and is realised with software and technology.
ERP software packages are designed to collect and organize the data from these core business processes and connect business activities across departments. ERP can help a company standardize and automate these business processes and improve efficiency of operations.
Read about the history of ERP here: https://qualitas.co.za/2017/02/06/the-history-of-erp/
ERP includes these attributes:
- An integrated system
- Operates in real time
- A common database that supports all the applications
- A consistent look and feel across modules
An ERP system is also typically made up of a core set of components.
Components of ERP
An ERP system is made up of core components, or modules, that are integrated to ensure that everyone in the business is working with the same data and processes.
Modules selected by a company will depend on their business – do they sell products or services, and what business processes they want to improve.
The typical modules found in an ERP system are:
- Human Resource
This module, as the name suggests, is used by the HR department. It is used to manage the human resources of a company and includes all the tools one would need, like time and attendance tracking and performance reviews. It can also include a payroll system.
- Inventory
The inventory module is used to manage the stock items in a business, and includes functionalities such as inventory control and reporting.
- Sales and Marketing
This module would manage the sales process including queries, quotations and transactions.
- Purchasing
The procurement processes are handled by the purchase module of an ERP system. It includes things like supplier details, creating purchase orders and goods receipt notes and updating the inventory with these. There is also the ability to automate the approvals of purchase orders and payments.
- Finance and Accounting
All of the business finances are managed in these modules. It includes a centralized general ledger, accounts receivable and accounts payable. Financial reporting is also part of this.
- Customer Relationship Management(CRM)
The CRM module assists in managing any dealings a business has with customers or potential customers.
- Manufacturing
This module includes production planning, raw material usage, bills of materials, forecasting – all the functions needed in the manufacturing industry.
- Supply Chain Management (SCM)
This module will help manage the flow of material, information and finances, from supplier to manufacturer to wholesaler to retailer to consumer.
Benefits of an ERP system
You can use an ERP system to streamline and improve the efficiency of your business and save time and money in the process. You can also standardize and automate your business processes and reducing or eliminating manual effort.
ERP systems can provide great improvements in the effectiveness of any organization, support upper level management by providing information for decision making and give you the tools to provide better customer service.
Other benefits to using an ERP system in your company include:
Scalability
A huge benefit is that it is scalable and will grow as your business grows. When your business needs more resources, or is growing, ERP software can facilitate that growth.
Integration
All parts of your business will be integrated, from the customer facing front end, to planning and scheduling up to production and distribution.
If you aren’t using an ERP system then you are probably using different systems for your HR, your finances and your inventory. With an ERP system you will have all of these in one system, all communicating with each other, using a shared database.
Collaboration
Because modules access data from a central database, departments will work together. This reduces duplicate efforts as departments are not functioning separate from each other.
Cost reduction
Administrative and operation costs are reduced with thanks to the single source of accurate and real-time information. Improved control and management of operations saves time, prevents disruptions and delays, and assists in making decisions more quickly.
Efficiency
An ERP system will streamline business processes and therefore increase efficiency and productivity. Keeping business processes running smoothly results in improved output.
Security
Data security is improved when using an ERP system. With a common control system, you can ensure key company data is not compromised. Role-based security is also a feature provided by ERP systems, making sure only the right people can access certain information.
Be up-to-date
Because technology changes so rapidly, having a modern ERP system will give you the edge when it comes to managing your customers, partners, and suppliers.
Your system will always be up-to-date, maintained and supported by your ERP vendor. Your ERP system will always have the latest upgrades and improvements.
Flexibility
ERP systems are robust, flexible and configurable, and can be tailored to a business. These systems can adapt to the changing needs of a business.
Mobility
Because of the centralized database of an ERP system, mobile solutions are available, allowing access to the data from anywhere.
Transparency
An ERP system facilitates transparent integration of modules, providing flow of information between all functions within a business in a visible manner.
With all these benefits, know that the list is incomplete and you will realise more when you start using an ERP system.
Time for an ERP system?
If your current business systems are no longer working for your business, it is time to look at an ERP system.
Buying and implementing an ERP system can be a big investment, so before looking at ERP software, you should define your company’s ERP requirements and the business needs it should address, as it is important to find an ERP system that is able to meet these.
Once these are bedded down, you can look at price and ROI.
Most vendors offer an outright purchase or licensing of an entire suite or individual modules, or cloud-based subscriptions based on use or as a flat monthly fee.
As far as ROI is concerned, your business should identify the key performance indicators and develop your ROI calculations and assessments.
Implementing an ERP software system is a perfect time to look at your current business processes and workflows, see what works, is important and can be improved.
Know that by adding an ERP system, your company will be optimizing their business operations, improving efficiency and boosting growth.
Qualitas can help you in implementing an ERP system by providing diverse high-level skills, from business consulting through to development, incorporating some of the latest technologies available, combined with an innate sense of understanding of a total business solution.
