Andrew Dolby of BrightBridge Solutions Limited explains…
Enterprise Resource Planning (ERP) is the business process management software that helps small to medium sized businesses use a system of integrated applications for managing business and automating several business functions. ERP technology is increasingly used by small business to medium enterprises to streamline and condense data that is available in several departments into one platform that allows better decisions and increases productivity.
Integrate the flow of information
ERP systems help business to integrate the flow of information between the different business processes in the organisation while integrating business transactions with the financial system of the company in real time. This allows the management to view the financial implications at a high level and make more strategic decisions. It helps to cover the core processes that start from sales order entry and continues to product pricing, shipping/delivery, inventory and warehouse, production, procurement, invoicing, financials and other business processes
Key data and information of all departments are made available on a single platform at the right time and place. Hence, negating the need to contact employees of different departments and/or go through excels sheets to collect relevant data. ERP system maintains a master date for vendors, customers, products/materials, routines and manufacturing work processes, bill of material (BOM), and other data which is critical. This helps to maintain consistency in the work processes, saves time, and enhance productivity.
Maintain control & reduce operating costs
Small business often uses cheaper tools such as spreadsheets or simple accounting software which is suitable when the company is very small with a limited volume of transactions. However, with complex business processes and increasing transactions the need for an ERP system becomes crucial to further success and growth. With the increase in human resources/employees and growth in revenue, lack of appropriate integrated business software could have a negative impact on small business. The results of not employing an ERP in a growing business is impacted in the form of lost orders, inventory shortages, poor planning, missed invoicing, missed shipments, and a general lack of control.
One of the greatest advantages of ERP software in small business is agility and flexibility for adapting to market needs or the conditions that are imposed by buyers. Dedicated ERP software provides flexibility in terms of making necessary adjustments in data management to maintain business flexibility. For example, stock adjustments, changes in sales figures, cancelation of orders etc can be flexibly maintained in an ERP software rather managed via in a spreadsheet.
Increase sales and long term planning
Controlling business process via a spreadsheet that requires manual input to keep track of sales orders could lead to mistakes in production and distribution, and thereby loss of sale. Dedicated ERP software has an automated authentication mechanism to prevent this from happening. It also sends daily report of proposals so that necessary measures can be taken. It is a long-term investment, provided the system provider/vendor remains a partner for prolonged period
Taking core business decisions requires the availability of necessary information and accurate data in a timely manner. In small business when such data and information are easily available and constantly updated in the ERP system, the management can take informed decisions that are necessary for business growth.
Although the costs of installing an ERP software is can be more expensive than a smaller accounting system or maintaining data over spreadsheets, the benefits of such a software system makes it a beneficial tool for small business. It helps to manage data more effectively, maintain confidentiality, carry out adjustments in a flexible manner, enhance labour productivity, increase sales and take effective decisions at the right time.