The acronym ERP stands for Enterprise resource planning – which indeed acts as support for the day to day business operations. It includes Procurement, Warehouse management, SCM, Manufacturing, Accounting in the basket of ERP. ERP systems tie together and define business processes and enable the flow of data between them. By collecting an organization’s shared transnational data from multiple departments, which helps the management to take up the decisions based on the real time accurate data.
ERP systems eliminate data duplication and provide data integrity with a “single source of truth”
SMEs – Small and Medium Enterprises, need to have stronger technology-based ERP. Because, SME’s face many problems related with Marketing, Communication within organization, Opportunity Cost etc. that may lead to inefficiency at additional cost
Advantages of having ERP in SMEs:
1. Efficiency – will be increased when company adopts the ERP in the organization, it reduces or eliminates the human interactions to the least possible point, Errors will be reduced and speed will be increased in the operations. Indeed, the efficiency of the workers will also increase as the burden is reduced from the manual worker.
2. Lack of communication within organization – which intern leads lots of redundant of data entry, miscommunication of reports, customer dissatisfaction etc. ERP gives them a open and integrated communication which results in duplication and increase of accuracy of data.
3. Collaboration – different departments in a company will act as one. ERP collaborates with each departments and gives the real time reports to management to know the business position at any point of time.
4. Operating Cost – ERP software reduces administrative and operations costs. It allows organizations to proactively manage operations, prevents disruptions and delays, breaks up information logjams and helps users make decisions more quickly. If chosen the right solution for the business, and the right vendor who meets the needs, bound to see a powerful ROI
5. Process flow across the organization – which streamlines the operations of the business process flow in the company. This give the management team to actively involve in all the process of the organization before shipped or purchase by approving the transactions. This Improves accounting control and shorter sales to cash cycle.
6. Mobility of work – is done by anywhere in the world at any point of time
Problems while opting the ERP in SME’s:
1. Technology – insufficient knowledge on ERP technologies can also end up electing wrong ERP for the organization. Which intern lead to change of ERP in shorter time phases.
2. Trust factor – ERP implementation partner should be trusted person and should have the consulting skills with industry specific experience to analysis the pain points of the company.
3. Return on investment – most of the SME will think of cost of licenses & implementing of ERP in the company but, the real deal is in the ROI of after implementation. ROI calculations needs consultation and time to arrive at the expected result.
Although ERP provides many advantages, its implementation is a strategic decision, involving significant resources (both financial and human), proper evaluation and business process re-engineering. There must be a commitment from all levels of the organization. SME’s should not think of investment for immediate ROI, but they need to make a clear concept and vision of the organization. ERP which is designed for SME’s will support to increase the functional speed of the organization.