There are various processes such as purchasing, sales, inventory, etc. that are involved in the running of a business. Enterprise Resource Planning is the use of software and technology to integrate core functions into a single system to streamline processes. The main feature of the ERP system is the centralization of information that is shared by multiple functions. This means that employees from different departments retrieve data from the same database.
The system functions like the human central nervous system such that it receives information from different sources and link it to other parts of the business. It was first developed in 1972 by SAP, a German software company.
Read more: Webopedia
Benefits of ERP To Small Business
Reduces Operational Cost
One of the most significant benefits of ERP systems is the reduction of operational cost. Every industry is looking into lean business, trying to cut costs, and reduce waste. The industries that ERP can have the greatest impact though are the industries of manufacturing, construction, healthcare, and financial services. For a long time departments within a business required independent systems to operate. However, ERP helps to cut down on operational cost by coordinating all the aspects of the business into a centralized system. Apart from the operational cost, the ERP system also helps to reduce other costs such as inventory cost, marketing cost, etc.
Read more: Contract ERP
Increased Visibility
The centralization of information helps to identify all the processes involved in running the business. This can help you make quick and informed decisions. For instance, you can track the inventory process on a daily basis. The information about inventory will help you control the working capital and other precise processes that determine the success of your business. Also, having a central database facilitates collaboration between employees within the company.
Read more: SelectHub
Improved Reporting and Planning
Due to increased competition in the business world, analytics has become an integral part of running businesses. ERP promotes a single unified reporting system that makes it easy to generate analytics. Additionally, it eliminates the hassle of using multiple spreadsheets and emails when preparing reports. In fact, some common financial reports such as income and cash flow statements are simplified and can be retrieved without the help of a professional.
What Industries Can Benefit from ERP?
- Healthcare– The processes involved in the healthcare industry plays a crucial role in saving lives. Therefore, ERP is suited in this industry to streamline operations and improve the delivery of services.
- Hospitality– ERP can be used in the hospitality industry to streamline processes and offer the customer the best service. Automated ERP systems can help reduce operational cost and significantly improve profits.
- Construction – ERP software greatly assists construction companies in regards to managing schedules and establishing new margins as projects change and adapt over time. Setbacks are inevitable, it’s how you react to and plan ahead of those setbacks that make the critical difference. ERP can assist with CRM, cost estimation, bid management, project scheduling, inventory management, reporting, productivity/performance monitoring and more.
- Manufacturing and distribution– In the manufacturing industry, ERP systems can be used to organize operations and minimize wastage. Also, it enables distributors to keep the supply chain under control.
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