Before ERP introduce separate systems were being maintained in traditional business functions like Sales & Marketing, Finance, Human Resources, Manufacturing, and Supply Chain Management. These systems were often in congruent, hosted in different databases and required batch updates. It was difficult to manage business processes across business functions e.g. procurement to pay and sales to cash functions.
The successful implementation of an ERP system will have many advantages, as indicated below:
Business integration and Improved Data Accuracy: ERP system is composed of various modules/ sub modules where a module represents a particular business component. If data is entered in one module such as receiving, it automatically updates other related modules such as accounts payable and inventory. This updating occurs at real time i.e. at the time a transaction occurs. Since, data needs to be entered only once at the origin of transaction, the need of multiple entries of the same data is eliminated. Likelihood of duplicate/ erroneous data is, therefore, minimized. The centralized structure of the data base also enable better administration and security provisions, which minimizes loss of sensitive data.
Real-time information with Decision Support Tools: The various decision support tools like planning engines and simulations functions, form integral part of an ERP system which helps in proper utilization of resources like materials, human resources and tools. Without an ERP system, your team is flying blind. They make decisions based on guesswork and rules of thumb because they don’t have the data they need. Sometimes they are the right decisions, but more often, they are sub-optimum decisions that can cost you money and customer goodwill. Constrained based planning help in drawing appropriate production schedules, thereby improving operation of plant and equipment. As a part of MIS, an ERP system, contains many inbuilt standard reports and also a report writer which produce ad hoc reports, as and when needed.
Improved visibility, Boost Efficiency and Productivity: In addition to provision of improved planning, ERP system provides a tremendous boost to the efficiency of day to day and routine transactions such as order fulfilment, on time shipment, vendor performance, quality management, invoice reconciliation, sales realization, and cash management. Cycle time is reduced for sales to cash and procurement to pay sequences. If customers want to know when their order will ship or if you need to know whether you have enough of a critical component to accept a rush order, an ERP system gives you instant visibility into your operations and your supply chain.
Establishment of Standardized Procedures: ERP system is based on processes of international best practices, which are adopted by the organizations during implementation. The uniformity of record data that an ERP system instance will help ensure that your records are more accurate, which will increase process accuracy across the board.
Flexibility and technology: Due to global environment, where production units, distribution centres and corporate offices reside in different countries, organizations need multi company, multi currency, multi language and multi accounting modes, in an integrated manner. These provisions are available in the Odoo ERP systems.
Faster periods end close and cost control: ERP systems automatically process transactions and generate audit trails and financial reports that can simplify period-end closings. They flag anomalies so you can investigate quickly, and they simplify repetitive journal entries and other activities that make closing so complex and time consuming. Faster closes mean you know the health of your business sooner. ERP systems calculate and collect costs so you always have an accurate picture of your product cost and margins.
Make Customer Happy with Balance of Supply and Demand: Customers like accurate delivery dates, and ERP can help you provide them with improved inventory and shop floor visibility. In addition, the increased visibility and accuracy will help you improve your delivery in full on time, MRP, a component of ERP systems, will help you balance supply and demand so you can reduce inventory while keeping customers happy.
Reduced lead times and increased operational efficiency: Better scheduling and accurate records ensure that your schedules focus on priorities, leading to shorter lead times. Since you won’t have as many orders waiting for tooling or parts, your throughput will increase. By helping you to plan production more effectively, your operational efficiency will improve as you reduce set-ups and tear downs or unnecessary downtime.
Conclusion: 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 commitment from all levels. A failed implementation may lead to bankruptcy of an organization.
