4 Reasons Your Business Needs An Enterprise Resource Planning (ERP) Strategy

ERP

ERP, or Enterprise Resource Planning, is among the most critical set of tools for a growing business. With roots going back to the 60s, ERP (or a version of it) was mainly used in manufacturing as a system for managing, tracking, and controlling inventory. ERP has evolved since then and is now used by companies from different industries. ERP’s modern iteration is a complete software package that provides enterprises solutions to store, manage, and interpret voluminous amounts of data in their day-to-day functions. (1) 

In 2020, the ERP market was valued at more than GBP£30 billion worldwide. By 2026, the figures are expected to balloon to more than GBP£45 billion. Enterprises that need these tools are increasing as they see their value. Ninety-five percent of businesses that used ERP reported a boost in the efficiency of their business functions. (2) (3)

 Clearly, ERP has something to offer to businesses. But what does an ERP do?

The role of ERP in an enterprise

ERP is the centrepiece tech in companies. These companies collect, evaluate, and disseminate insights from data across different departments such as sales, manufacturing, human resources, finance, inventory management, and others. ERP, in essence, connect business processes to make them more efficient and basically acts as an enterprise management tool. It integrates all these operations into one software program. 

For businesses, adopting ERP can take some time to get used to. Sufficient training time will have to be allocated. Fortunately, there are independent ERP consultants that assist businesses in integrating these tools into their infrastructure.        

Reasons why businesses need ERP strategy

An ERP strategy or system is a great asset in this age of über-competitive markets. Not only does the system help an enterprise become more efficient, but it also helps executives make smart business decisions. These, plus a few more reasons are discussed below:

1. To improve collaboration

The main benefit of ERP in businesses is improving collaboration among various departments. ERP’s centralised database makes this strategy unique, providing the company with a single data source to work with. This setup reduces mistakes as a result of working with inaccurate and invalid data. Fewer errors mean fewer resources are wasted.

ERP

A central database also enables team members working on projects to access any company-wide data they require. And because of the single system where data is gathered, stored, and disseminated, the accuracy and security of the information are high. Manually consolidating all data from different sources or systems will no longer be done.     

2. To improve analytics

Analytics is also vastly improved with data stored in a central database. Data placed by users are recorded and stored through ERP, which makes ERP an ideal tool for business intelligence. Your team’s reports that normally take days to research and compile will just take minutes. An ERP software can help your team generate reports faster and easier. 

Moreover, ERP can provide managers with a customisable dashboard, enabling them to read reports immediately upon logging in to the system. For managers, perusing reports that include critical information like custom key performance indicators (KPIs), expense and income statements, and others is crucial. This information provides helpful insights to the managers. It helps them make smarter decisions. 

With that function, you’d no longer be reliant on the company’s IT personnel to retrieve vital reports. Your company’s valuable and critical data will only be viewed by people who require them.

3. To simplify compliance

For organisations that do business in more than one country, keeping track of various regulations isn’t easy. The different regulations pertaining to human resources, environment, business permits, and information security can be tedious and complicated, even for local companies. 

ERP can help in this area too. Some ERP applications have functionalities that assist your company in maintaining its compliance at all levels. An ERP strategy tool can also help with tax provisions and chemical use documentation. This assistance means reports are easier to generate and submitting them to the relevant agencies will be a breeze. 

4. To improve inventory management

Tracking and monitoring a company’s inventory is always a challenging prospect. This situation is especially true for a company with an expanding inventory. In such a case, inventory is better managed by techs such as RFID (radio frequency identification), barcodes, use of serial numbers, etc. These are tools that all modern warehouses use—they make keeping track of the inventory simpler at every phase of the supply chain. (4)

An ERP system provides and centralises all warehouse techs for easy monitoring. Items on shelves in different storage facilities and items in transport are easily monitored and tracked. Inventory management at this level of visibility makes the process of ‘pick, pack, and ship’ much more straightforward. Human errors would be reduced as guesswork is taken out of the equation. 

Moreover, tracking technologies provided by ERP make reports on your inventory more accurate and always up-to-date. Real-time data on inventory provided to warehouse managers would help them make better business decisions.

Conclusion

As companies grow, the need for a management tool like ERP becomes inevitable. And with increasingly aggressive business practices from the competition, no company can afford to remain complacent. ERP helps your organisation’s various business operations and fosters collaboration through automation. This management tool simplifies these functions and, in the process, makes your company competitive. 

References

  1. “A Brief History of ERP – since 1960 and the future of ERP”, Source: https://www.erp-information.com/history-of-erp.html
  2. “Global enterprise resource planning market – growth, trends, covid-19 impact, and forecasts (2022 – 2027)”, Source: https://www.mordorintelligence.com/industry-reports/enterprise-resource-planning-market
  3. “ERP Trends and Statistics That You Need To Know in 2022”, Source: https://www.yondu.com/articles/erp-trends-statistics-2022/
  4. “Taking your warehouse inventory further with RFID”, Source: https://www.scjunction.com/blog/warehouse-inventory-further-rfid

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