As your business grows beyond the capabilities of Quickbooks and Excel, you may find yourself immersed in an industry full of acronyms when you begin to search for a software system that can accommodate your growing business’ needs.
We have posted this article as a resource that begins with the definition of ERP and will also outline some of the benefits a business can realize by implementing ERP software.
For those more experienced ERP shoppers, we hope you will come away with some helpful reminders. If you have any advice for those just starting out, please comment!
“What is ERP?”
ERP stands for “Enterprise Resource Planning” and can be defined as a software application that is used to manage a company’s resources:
- Sales (order processing and accounts receivable)
- Expenses (purchase orders and accounts payable)
- Inventory (engineering, planning and materials management)
- Employees (human resources)
During your search, you will find the (software) industry is flooded with acronyms and they grow by the day as each vendor defines a new feature or function.
Try to look past this mania and keep focused on what your business really needs – flexible software to help you manage your business.
To save you time ‘Googling’, we have provided a glossary of some of the more common acronyms you will come across during your ERP software search.
“Why should my business invest in ERP?”
You likely already know that an ERP system can benefit your company if you have begun the evaluation process. These benefits can far outweigh the cost, providing the system is selected carefully and is appropriate for your company from a feature, cost and technology standpoint.
There are two main areas where your business will recognize cost savings by implementing an ERP system: administration and inventory.
By streamlining and automating processes, your business minimizes the need for manual and duplicate entries, therefore requiring less administrative functions.
Reduced inventory costs result from better planning, tracking and forecasting of requirements.
Combining your company’s processes into a single, integrated system improves your employees’ access to information and reduces the occurrence of duplicate entries into disparate systems. In addition, triggered workflows can automate processes that were previously completed manually. Now users can focus on using the data instead of entering it.
A single system makes it possible to retrieve and analyze information in real time while automation reduces errors and speeds processes. This results in more proactive business functions:
- Turn collections faster with better visibility into accounts and fewer billing/delivery errors
- Decrease vendor pricing by taking advantage of price breaks as a result of enhanced vendor performance tracking
- Track the actual costs of activities and perform activity based costing
- View a consolidated picture of sales, inventory and receivables
By optimizing your manufacturing and distribution operations with ERP software, the focus shifts to keeping your business ahead of the competition, improving customer service and uncovering new business opportunities.
The search for the right ERP software can be a challenge. It’s important to take your time and do the appropriate research before making a decision. You might be interested in these Six Tips for Successful ERP Software Comparison, Selection and Implementation.