Before getting into the topic of Why you should implement ERP, you need to know What ERP is and the Benefits of Implementing Enterprise resource planning software (ERP). So first, well, let me brief you about ERP. In simple terms, ERP means a software application that organizations can use for managing their operations.
If I explain ERP in detail, ERP means a single application where all the business functions of an organization can be handled, and all the operations are seamlessly integrated with each other.
The business functions for each industry vary. Suppose we take the example of a Manufacturing Company. In that case, the different business functions involved will be Sales & Receivables, Purchase & Payable, Inventory, Manufacturing, Maintenance, HR & Payroll, Finance, and additional modules such as Quality, Fixed Assets, Budgeting, CRM, MRP, MPS, and so on. If all the mentioned modules can be handled using a single, centralized application, we can call it an ERP. Also, there should not be any duplication in data entry when ERP comes into place.
A Classical example is when a purchase order for raw material is created by the purchasing department, after getting automatically checked for budgets, based on the purchase requisition generated from Sales Order created for Products where manufacturing is involved, Stores can receive the raw materials from the Supplier using the same PO and accounts department can do the product costing and can make the supplier payment using the same PO. Similarly, for other operations, if the actions of different modules can be integrated with each other and data of one module is available for other modules automatically, we can say that the application fulfils the criteria of becoming and ERP. Also, all the transactions which are having financial implications data will be flown automatically to the general ledger.
In a single word, I can say for better control.
- ERP decide what a user should access and what shouldn’t.
- ERP decide whom to enter a transaction and who can approve.
- ERP chooses what kind of reports each user can generate. You will have all the data online and up to date.
When a customer asks for a statement, you can get the same in a single click. When a customer complaint arises saying a product is damaged, you can find the details in a single click such as when this product was purchased by the customer, its invoice and sales order details, which are the other customers who also purchased these goods and whether any other customer had raised similar complaints, when this product was manufactured, who was there in the plant. At the same time, this was produced, whether these goods have passed the quality checks, what was the quality check parameters and readings, which is the batch of raw material used for this production, what quantity used for production, when this material was purchased, in which stores this item was stocked, which Supplier supplied this, what was the batch code for the raw materials, whether supplier quality check has passed these raw materials and like that hundreds of questions will be able to answer, and information can be retrieved in single clicks. Having the ERP data in the server and using the historical data, different kinds of analysis can be done such as sales analysis, lead analysis, conversion analysis, production analysis, purchase analysis, expense analysis, comparison between last year and current year, last quarter vs current quarter and so on.
In short, every organization with a perfect ERP implemented will have better control, requires less human resources, data access will be easier, user security will be in place, reports are available online, and any data analysis can be done then and there. The only thing is to make sure the implementation is perfect and done by experienced hands.