When I talk about ERP selection and implementation to my perspective customers, analyst and others. I spent lot of time to explain inherent value of using business applications, including ERP, CRM, etc. Here, I am trying to put my thoughts on “Why ERP is must for growing organization?” be it manufacturing or service industry.
Enterprise Resource Planning (ERP) is an enterprise-wide information system that facilitates the flow of information and coordinates all resources and activities within the business organization. Best feature of ERP is to eliminate the duplicity of work and generate stable information base, which can be used to take realistic and information based business decisions. Apart from this, here I am listing other brownie points of having an ERP application, which are as follows: –
Best Practice Procedure
Most of the well-known ERP product development companies, design their product with considering best practices of respective business domain. Hence, by adopting such ERP, business houses are bound to gain in terms of more efficient business process and automatically make your business process more efficient and easier to accommodate organization growth.
Decision based on Real Time Information
In the absence of ERP, decision making process is based on either guesswork or thumb rules or data driven from multiple platforms, which cannot provide right scenario every time. Scope for error is huge. Sometimes you tend to take right decision, but more often, they are sub-optimum decisions, which can limit possible gain / cost monetary loss and customer goodwill. But whereas if an ERP is in place, organization tends to take decision based on real time single platform information, which are more accurate and more business friendly.
Integration of all business modules into one business system benefits organization with enhanced responsiveness in terms of higher productivity, known flexibility (Knowing your limits is also plus) and in time customer responsiveness. This can be resulted into performance optimization across organization.
Before addressing the importance of Data consistency, we need to understand, What is Data ? In simple term, data is an fact and statistic collected together for reference / analysis or making basis of reasoning.
Therefore, being an integrated system, it decreases level of inconsistency in information. Thus system provides correct data and information to decision makers.
Visibility at all Level
Best part of business functions integration is to provide visibility at all levels. Here visibility means organization can have trace of an record or management can come to know about status of an project on few clicks. So, it automatically makes everyone responsible and if anyone stuck for any particular reasoning. It can be address in shorter period. Hence, it is easier to identify area of improvements.
Improved Operational Efficiency
System will help organization to plan more efficiently, it may be related to production or purchase planning. Organization’s operational efficiency will improve as it reduces tear-downs or unnecessary downtime. Better purchase and production planning will lead to increased productivity and its direct impact on timely good delivery. System based inventory management can provide respite to inventory manager to keep nab on it.
Managed and Controlled Costs
Being all the information at one place, financial decision making will be simpler and cost effective. With system help to perform effective production planning will boost operational efficiency and will reduce tear-down or unnecessary downtime and with the purchase planning organization can control inventory.
Better Compliance Adherence
Now a days many matured ERP systems assures most of the compliances adherence through its best known business processes, workflow management, integrated reporting system and access control policies.
Balance of Demand and Supply
Balance between demand and supply is possible as MRP & MRP – II are components of ERP system, will help organization to reduce inventory while keeping customers happy.