It is very important to understand how an ERP can positively impact the organization.It will enable to illustrate the paybacks where the organization will receive from the ERP system implementation. The benefits and features of an Erp system will help to recognize the importance of managing information, flow of data and business processes.Company and industry can yield numerous benefits with the ERP system.
How ERP helps in improving an organization’s performance
The ability of an ERP system to provide the same updated and accurate information across different functions is what makes the application so valuable to enterprises.
Let’s take the example of a customer order to understand this better: Before the advent of ERP applications, once a customer order was placed, it had to follow a paper trail from department to department – with details of the order being entered and re-entered into the applications of the different departments. This manual process was prone to errors and delays; till the order was entered into the application of a particular department, the goods could not be manufactured or shipped.
With an ERP system, a customer order is entered only once, and this information is available to all the applications across different functions. Once the order is entered, the application checks if goods are available in the inventory. If the goods are not available, it raises a purchase order which is subsequently used by the production team to manufacture goods, and by the finance team to issue an invoice. The produced goods go back into inventory, where they then become available for shipment. This single view of demand and supply enables organizations to better understand the needs and demands of the customer - and actually anticipate their requirements. This information can then be used to forecast future demands. This shortens lead time, reduces the overall cost of manufacturing, and ensures enhanced customer satisfaction.
The advantage of ERP is the fact that people in different departments can all see the same information, and update relevant information. As soon as one department finishes its part of the order, the ERP system forwards it to the next concerned department, which is defined in the workflow. To understand the status of an order, anyone in the organization can simply login to the ERP system. Web-based access can also be provided to customers who want to track down the order status.
Benefits of ERP
Apart from the low cost of ownership and savings achieved by standardizing one application to manage multiple business functions, usage of ERP promises much more. With a successful implementation of an ERP system, top management can have a consolidated view of sales, inventory and receivables at the same time.
Improved visibility: Due to the centralized nature of ERP systems, organizations can track inventory levels on a daily basis, including inventory in transit and future consignments to be received. This visibility can enable organizations to control their working capital requirements to a great degree. This visibility also enables organizations to run their enterprise in accordance with their strategy, while empowering them to make quick decisions to pursue opportunities.
Reduced operating costs: One of the most immediate benefits from implementing an ERP is reduced operating costs: such as lower inventory control costs, lower production costs and lower marketing costs. By avoiding duplication of information but not reinventing the wheel for common business processes, an ERP provides opportunities for cost reduction and value-added tasks, leading to increased margins.
Standardized business processes: Most ERP vendors design their products around standard best-business processes, which are based on industry best practices. Organizations can use these business processes to standardize their own processes. This process consistency allows a consolidated view of the business across the distributed enterprise, enabling organizations to drive continuous improvements, as operations are streamlined and there is healthy synergy between departments and functions. The improvement also comes from transparency and reduction in human errors due to automation of inter-company transactions.
For any productive business organization ERP can play a vital role. A successfully implemented centralized ERP system will help in improving alignment of strategies and operations, productivity and insight, financial management and corporate governance. ERP system also enables in reducing costs through increased flexibility and overall risk.
For more details about Web based ERP development, please feel free to contact Prevaj Consultants at prevaj@prevajconsultants.com or call +91-8144760745
