What is ERP? In a mid-size manufacturing company, multiple departments are running each sector of the company. From sales and marketing to operations, each department often runs on separate software from the next, which leads to miscommunication and potential inefficiencies when a customer deals with more than one department per transaction.
A solution to the problem is an ERP system. What is ERP? ERP, or enterprise resource planning, can help tie all your departments together and improve communications and efficiency. This article will cover the basics of ERP software and why you should use it to improve every part of your manufacturing company.
What is ERP?
ERP software helps connect all your companies software systems. The ERP system creates databases in one central virtual location giving access to all other areas of the company. This integration streamlines data, which creates efficiency between departments.
When you look at your company, each department has a degree of reliance on the next for its processes. Each department relies on data from the following to complete its reports or to help service customers and clients. The cross-department needs for data could mean sales are pulling a report for purchasing to finish a report for the supply chain manager.
ERP systems allow each department to access other departments data and reports in real-time. By integrating your companies CRM software, inventory system, accounting system, and any manufacturing software together, ERP systems allow the C-suite and management to keep their finger on the pulse of the operation.
Why Use an ERP System?
With the integration of all your business systems comes many benefits to your company. The return on investment for an ERP system outweighs the initial cost to implement the system. A few of the benefits are higher productivity, IT costs and maintenance can be lower, there’s better process insight, and moving to a more agile method are just a few ways ERP systems benefit your company.
Using an ERP system helps reduce the number of resources needed in your processes. Fewer programs and a streamlined software system allow for more automation. ERP systems give your employees more time to deal with higher priority issues.
If your accounting department doesn’t need to take all accounts receivable and payable and enter them manually, they can look for ways to reduce costs through analysis with the freed uptime. If purchasing is automated, inventory control is implemented without having clerks tasked with ordering staple stock.
Lower IT Costs
ERP systems lower IT costs and time spent troubleshooting. Before using an ERP, IT had multiple systems and databases to maintain and troubleshoot. If more than one system went down, this could put a strain on your operations and administrations.
With all your systems integrated into a shared database, troubleshooting one system is simplified. Any database problems can be solved quicker with less downtime. If your IT deals with a vendor, it simplifies it to one vendor you need to contact.
Better Process Insight
With a streamlined system and shared database, the ability to get real-time insight into your companies data it easier and quicker. Managers and C-suite have access to every department’s data. ERP allows a real-time snapshot of the health of your company or any area of it.
ERP systems allow for the most current reporting when speaking to shareholders. It will enable an accurate picture of customer data with CRM integrations. You can plan further and more accurately with inventory for potential large quantity orders or see issues with billing and receivables.
Allows for the Movement to Agile Project Management
What is agile? We’ll dive deeper into in a later article. For now, according to agilealliance.org, the agile method is “the ability to create and respond to change. It is a way of dealing with, and ultimately succeeding in, an uncertain and turbulent environment.”.
Implementing an ERP system allows real-time data to be used to make decisions during the process. It’s similar to kaizen, the Japanese term for continuous improvement. The agile approach will enable you to be proactive with problems using benchmarks and trends without having to wait a month, or even a quarter to see.
Tips to Implement an ERP System
Now that you have basic knowledge of what and how an ERP system is and can benefit your company. Here are a few tips to help implement a system.
#1 Have all of your management team onboard
Change is hard. It’s even harder if your organization has the “if it ain’t broke” mentality. The entire team needs to be committed and give their complete support. Education and the agile method of implementation will help. Allow your management team to be a part of the process. Allow their feedback, both negative and positive. Show the benefits and how it will improve the process, which may lead to incentives.
#2 Hire the right vendor, consultant, or development company
There are many options for ERP software. From open source free software to hiring teams of developers to build a custom system. What is the size of your company, who is maintaining the ERP, how does your budget look, these are a few questions to ask while planning to move to an ERP system.
One viable option which has a high ROI is to hire a team to build and maintain your custom system. Custom software development ensures you get the features you want and need with no additional license fees, maintenance fees, or the worry of legacy issues in five years. Here is another post that we wrote about hiring engineers to build a system.
#3 Set goals for each step to full implementation
Each step of the way should have realistic and measurable goals to ensure completion correctly and efficiently. Use the old method of SMART goals and share them with your team and software professionals. Having a clear roadmap to plot, achieve, and measure milestones will allow your team minimal stress while changing to an ERP.
#4 Training until it’s second nature (or you don’t kill it)
If you are coming from old software or still using paperwork, yes it happens, then you’ll need to make sure you and your team stay up to date on features and functions of the new system. Time should be allocated to allow for proper training before and after implementation. The user interface is another benefit of custom ERP systems. It enables you to help design the user interface, which gives an advantage with your team.
While finding and implementing a new software system can seem daunting and expensive, ERP implementation has the key features and benefits that will give you a significant return on ROI. From real-time accessible data to moving into an improvement based agile mindset, the right ERP system can provide you the competitive edge you need in your industry.
To learn more about ERP development and implementation, email, or call us today at 315-738-6016. We are a software company specializing in custom software and integrations, cloud technologies (AWS Certified), blockchain, and staff augmentation. We work with startups to global corporations in manufacturing, insurance, finance, defense, and cybersecurity. Contact us today for more information on how we can help start, grow, or make your business more efficient through our software solutions.