Running a small or medium sized enterprise (SME) brings with it plenty of challenges, particularly through turbulent economic times. New products, special offers and promises of business growth all provide tempting quick fixes to stay ahead of the competition. Add to that the expectations from customers for reduced costs, improved service and increased product choice as well the business need to reduce waste and inventory and minimise costs in the supply chain. It can get overwhelming to know what to do for an all-around best solution.
Innovative companies also recognise the value of working more closely than ever before with their suppliers and distributors to increase growth and success for all. To achieve this, a company’s internal processes must be robust and tight, which is where even small companies might look towards an Enterprise Resource Planning (ERP) system.
Two major benefits an ERP system provides which non-integrated companies do not have:
1) Complete view of all enterprise activities
2) A sophisticated platform where all transactions are recorded, entered, processed and monitored
These factors enable increased cooperation and coordination across all parties as well as providing full insight for all stakeholders.
How have ERP Systems evolved?
In the golden age of manufacturing, companies relied on storing lots of inventory to keep customers happy and stay ahead of the competition. Customers were predominantly from the local area and expected to have access to the products they wanted, when they wanted them. Warehouses were big – and little or no interaction between wholesalers, businesses and distributors took place; each worked in their own way.
The 1970s brought Materials Resource Planning (MRP) because storing large quantities of inventory was no longer feasible in the expanding world. Using a bill of materials, and the more advanced computer systems of that time, companies were able to calculate exactly the amount of materials needed for each product. They could also formulate processes for product development, sales and operations which were integrated across the company enabling sophisticated processes to be developed. Competition took on a whole new level with the invention of MRP systems.
Finances became part of the MRP picture in the 1980s allowing companies to integrate their processes in alignment with the overall business strategy. This allowed companies to become more streamlined in their product offerings and they could eliminate unsuccessful product lines and develop more customer-focused solutions.
To continue the expansion of MRP systems, various functions such as communications, design, warehouse management, project management and human resource management were added to MRP systems in the 1990s and saw the development of MRP systems into ERP systems. The dawn of ERPs expanded the view which the enterprise had over the entire business – human resources began working with sales to recruit specific sales specialists, warehouse managers began talking to operations staff to alleviate delays in deliveries – the holistic customer service function we take for granted today was beginning to take shape.
One major thing which changed in the world of ERP systems was that they were no longer exclusively for the manufacturing industry; they add immense value to any company wanting to enhance their competitiveness by improving their entire process infrastructure.
Is your company big enough for ERP?
This is one of the biggest challenges we hear at Blue Ocean Systems. Companies do not think they can justify the investment when they are still in the early stages of their development and cash flow is a big issue.
But, if your company is facing any (or all) of the below challenges, you could already benefit from an ERP system:
- Heavy reliance on spreadsheets – often saved on personal drives / folders
- Email is the only source of communication between departments and offices (local and global)
- Employees have to rely on inaccurate and out of date information instead of data driven analytics pulled in real-time
- Business users are dependent on IT for everything due to multiple complex systems
- Low order fulfilment rates due to cumbersome (and manual) systems
- You often run out of popular products because of poor forecasting capabilities
- High transportation costs result from inefficient delivery schedules
- No visibility of cross-sell and up-sell opportunities resulting in loss of new contracts
Many of our clients initially believed that the benefits brought by an ERP system (such as system automation) can only be reserved for bigger companies.
Some of the common objections we hear include:
- My company only has a few employees
- We cannot afford the investment
- We will wait until we grow
- The downtime of an ERP implementation would kill our operations
So, what changed their mind?
- Over 80% of SAP Business One customers have 50 or fewer users
[read some SAP FAQs]
- You can start small and SAP will grow with you
[read more about SAP for SMEs]
- Your company will soon start to increase productivity and reduce operating costs
[read more about operational excellence]
- Implementation is customised to your company’s needs and downtime often takes place during off-peak times
[read more about easy implementations]
- The ability to leverage SAP’s 40 year track record and quality measures
[read more about SAP’s history and quality management]
Are you ready to join over 88,000 worldwide users of SAP?SAP AG]