ERP – Enterprise Resource Planning – is a fuzzy term, because strictly speaking, everything that makes up a company is a resource. Tangible as well as intangible assets, money, receivables, people, information, data, documents, customers, time, the knowledge in people’s heads, the ranking on Google.
A company-wide resource planning would have to map all assets and processes that have to do with these parts of the company.
Before we talk about the advantages of ERP software, we examine what ERP is and which modules and functions are contained in an ERP system.
Subsequently, we go into further exciting aspects of ERP software and process optimization.
What is ERP?
In business reality, Enterprise Resource Planning usually refers to specific areas and processes. This is why ERP still resembles a patchwork cloth in many places.
Take Purchase order processing as an example. It includes procurement, ordering, enterprise resource planning, manufacturing, logistics, implementation, billing, maintenance and service, help desk, document flow, and so on.
In many places, such complex processes are not consistently mapped. There is often a gap between administrative activities and the shop floor.
What is ERP Software?
In the world of software, it has become common practice to summarize the following applications or modules under the term ERP software:
- Customer Relationship Management (CRM)
- HR and Payroll
- Purchase and Sales
- Project Management
- Manufacturing Requirements Planning (MRP)
- Inventory and Warehouses Management
- Fixed Assets Tracking
An ERP solution can contain all or some of the above modules, depending on your company’s requirements and the modules provided by your ERP vendor.
Introducing a New ERP System
Most companies don’t come up with a new complete solution overnight, either. They introduce ERP modules, step-by-step, and integrate them into their existing IT environment by integrations. The result is a hybrid solution with one primary system and additional connected applications, including in-house developments or modules from other providers that your ERP manufacturer does not have in his luggage.
Ten Advantages of ERP systems
The goal of Enterprise Resource Planning systems is to make your company even more successful. The quality of business processes increases through the use of ERP software, while costs decrease.
We have summarized ten reasons why every company should use ERP software.
1. Common Database
ERP systems create a unified database for all departments throughout the entire company. A single database improves transparency, information flow, and communication. Redundancies, inconsistencies, and double data entry are a thing of the past.
2. Consistency and Transparency
ERP software has a modular structure and bridges the data of different company departments. Inventory management and warehousing, sales and service, accounting, and project management can call up relevant data from the other areas and benefit from a uniform, complete information.
Transparent information is available throughout the entire company – after all, processes run throughout the whole company.
3. Process Optimization
The workflows and processes of your company are already put to the test during the introduction of an ERP system. The software often supports business best practices and compliance rules. The ERP system also handles process documentation required by law, because it logs all activities.
ERP software providers support their customers when introducing new modules or systems. They know which requirements can be implemented and how. When choosing a provider, you should make sure that your software provider already has other companies from your industry in its portfolio.
4. Improved Collaboration
ERP systems promote electronic collaboration (e-collaboration) in particular through a built-in chat module and an integrated email inbox. Distributed teams can collaborate over long distances with the same documents and information. Access restrictions prevent business secrets from being leaked.
5. Reporting, KPI and Dashboards
Complete, reliable, and up-to-date figures for the management are integrated and connected in the ERP system. This enables flexible and meaningful reports. A sound ERP system supports standard reports as well as individual customization that you develop yourself or your ERP provider.
The result is tailor-made reporting for the management of all company areas. All levels of the company, from the managing director to the departmental management to the individual departments, can be provided with information in real-time.
6. Elimination of Error Sources
The data is no longer recorded twice, so there are no communication errors or inconsistencies. Invoices are automated, complete, and correct by the ERP software, as items and accounting data are taken from the system. Different departments do not receive contradictory information about the same facts.
ERP systems handle processes efficiently. Recording effort and redundant work are eliminated. The search effort is reduced. The time saved also means a competitive advantage. Thanks to process-oriented workflows, automated, and manual tasks interlock seamlessly. This reduces unit labor costs and throughput times – you work more efficiently and productively with an ERP system.
You can usually configure the functions of your ERP software yourself and quickly adapt them to changing requirements. As a result, improvements can be implemented promptly, and your company will pass slower-to-evolve competitors.
8. Cost Reduction
The introduction of ERP systems reduces the administrative effort enormously because your business processes interlock smoothly. Just-in-time deliveries and services are made possible through resource optimization. Unnecessary inventory or excess of personnel is avoided. Electronic accounting meets UAE legal requirements like VAT.
9. Successful Project Management
The 360-degree view of projects and project resources facilitates and improves project planning and controlling. The recording, documentation, and invoicing of deliveries and services are made more accessible.
As you can see – the more modules you integrate into your ERP system, the more functions you cover, the more you benefit from the introduction of this software.
10. Employee Motivation
Tedious routine tasks are automated by ERP software; processes are simplified and streamlined. The employees feel less pressure and more job satisfaction. They have a sense of achievement and have to do less overtime. This motivates and binds valuable specialists to your company.
Some ERP Systems even introduce gamification to motivate their employees.
With Enterprise Resource Planning, companies work more effectively and smoothly. Thanks to various modules, ERP solutions can digitalize processes throughout and map them transparently. This ranges from CRM for marketing and sales to projects, inventory management, invoicing, and financial accounting. Thanks to uniform data management, data is no longer recorded twice, and information is available where it is needed.
With ERP systems, managers have a complete overview of their company. If the ERP is hosted in the cloud, evaluations are available in real-time. The dreaded planning gap belongs to the past.