Ah yes, the age-old adage: Why ERP? Let’s answer this immediately: to make more money. This might sound like an oversimplification, but at the end of the day, at the bottom line, enterprise resource planning (ERP) systems increase efficiency, which both saves and makes your business money.
But that’s not the only reason. Other reasons why ERP is important include happier customers, safer work environments, satisfied employees, and increased longevity.
In this article, we’ll explain why ERP is important and outline some of the specific benefits of ERP systems.
What Is ERP?
ERP stands for enterprise resource planning. ERP software is a comprehensive digital solution that centralizes all aspects of a business. It’s especially important to manufacturers because it can also act as the digital center for controlling, programming, tracking, and analyzing hardware, like IoT devices.
Why ERP Is Important
We understand that the idea of completely overhauling and digitizing all aspects of your business sounds like a daunting undertaking. However, once your ERP implementation or ERP upgrade is complete, you’ll find that not only does it grow your business, but you can scale faster than you could with traditional business processes.
Let’s jump into the reasons why ERP is important and the many benefits of ERP systems in general.
1. Reduce Costs, Save Money
The goal of your business is to provide high-quality products and services while paying employees a fair wage and still making a profit month-over-month. We’ve found that businesses that implement ERP systems accomplish that and so much more.
The primary function of ERP systems is to streamline processes and increase efficiency in all business and physical operations. That’s a broad statement, so here are just a few ways in which this increased efficiency saves you money:
- Use advanced Business Intelligence (BI) features to drill down into areas of lost productivity
- Automate routine tasks so employees can focus on more productive and innovative work
- Integrate IoT devices to identify failing or malfunctioning machinery before bigger problems arise
- Integrate Customer Relationship Management (CRM) systems to analyze opportunities to upsell, cross-sell, and notify sales teams when it is the best time to reach out
- Product Lifecycle Management (PLM) tools reduce waste through recycling and upcycle opportunities
- Implement Warehouse Management and Materials Management modules to help you reduce inventory and create space in your warehouses by optimizing space
- Configure your system to keep your team in compliance and automatically keep records to reduce time and money wasted on audits
- Use an ERP accounting system to automatically track and update any money going out of or into your business in real time.
2. Make Smarter, Data-Backed Decisions
ERP systems are continuously collecting, sorting, and analyzing data. Many ERP systems offer advanced analytics and reporting tools with drill-down capabilities, reporting templates that offer new perspectives on a wealth of information, and advanced forecasting abilities that make more accurate predictions based on historical data.
Any business analyst will tell you that analytics are crucial to saving money across all departments. For example, your procurement team can use this data to track prices over time and find the best deals. Your marketing and sales teams can track customer lifecycles and market trends. Human resources can use ERP analytics to track productivity and make more informed hires.
An ERP system offers a centralized location where teams can access the same data – meaning there are no discrepancies between departments. Everyone is working off of one source of truth.
3. Collaborate More Efficiently
The fact that ERP systems are designed to centralize information makes collaboration more efficient and frankly, more enjoyable.
Depending on your ERP selection, you will have the ability to offer various permissions to employees based on their roles. Leadership can share data with employees on a need-to-know basis, and it’s all the same data, reducing interdepartmental disagreements.
4. Build Stronger Relationships with Customers
What’s the difference between CRM vs ERP? Essentially, ERP systems offer a holistic solution to the whole business’s efficiency-related problems whereas CRM systems focus solely on managing customers.
Fortunately, many ERP systems include CRM modules or can be integrated with third-party CRM systems.
Integrating ERP and CRM systems means better customer tracking and increased collaboration among departments. Sales representatives have a centralized source of data they can reference that tells them customer details, like past purchases, communication preferences, and where they are on their customer journey.
Without having to take up the customers’ time relearning this information, salespeople can jump right into the sale and focus on building a human-to-human connection with the customer.
5. Streamline Factory and Warehouse Processes
ERP software integrates with IoT solutions to help optimize the manufacturing end of your business.
Use advanced analytics to identify inefficiencies in your manufacturing and assembly line processes. Or use RFID or barcode readers to track inventory more accurately. You can also use artificial intelligence (AI) to optimize how your team is utilizing warehouse space.
6. Be Prepared for Disruptions
Recent years have proven that major supply chain disruptions can happen suddenly and with tremendous consequences. From pandemics to strikes to natural disasters, ERP systems can help you stay prepared.
Depending on your ultimate ERP selection, you can mitigate disruption using supply chain management tools. Supply chain management gives your team insight into the inventory numbers, prices, and location of materials of suppliers. This reduces unplanned downtime and helps you get what you need when you need it.
7. Scale Smoothly
Sure, a team of 10 can pass the hallway rule; that as long as you can shout to your team members down the hallway, you don’t need an ERP system.
But once you start growing, traditional note-passing systems disintegrate into chaos. Even for a team of 50, email chains and Slack channels get overburdened. You might find that your current systems are quickly obsolete.
ERP systems help businesses grow without having to frequently reinvent their processes. With high-quality ERP consulting and change management strategies, your team can continue their workflows without intervention as your numbers grow.
8. Maintain Your Competitive Advantage
The fact is that traditional processes can’t compete with ERP systems anymore. ERP systems include big data analysis and AI technologies. They automate tasks that take humans a long time to complete. But they aren’t replacing humans, They simply provide humans with more advanced tools to work with.
If your competitors are implementing or upgrading to ERP systems, they have a competitive advantage. An ERP system is an opportunity for you to take the edge back.
9. Automate Tedious Tasks
ERP systems excel at increasing efficiency, and that is in no small part due to their ability to automate tasks.
Many employees find data entry to be tedious busy work. It drains their energy and increases their risk of human error.
Fortunately, ERP systems collect data, sort, and analyze data automatically. This helps employees focus on more productive and energizing tasks.
Departments that benefit from automation include finance, HR, marketing, sales, manufacturing, procurement, warehouse, shipping and receiving, and more.
10. Track, Analyze, Report, Repeat
Thanks to advancements in artificial intelligence and machine learning, analysis, and reporting take center stage as components of ERP solutions.
In hastily growing businesses, tracking and reporting are often shoved to the side in favor of focusing on the meat and potatoes of day-to-day workflows. Because ERP systems automate these functions, employees can focus on their tasks at hand while also allotting time for analysis. This is crucial for any growing business.
Why ERP? Ask Our Experts
If you’re still in the dark about why ERP is so important, let us know! We’d love to learn more about your business and see if, how, and why ERP can help. Contact us at Godlan for a consultant.
