The right ERP might give you an edge, while the wrong one might cost you your business! In todays shrinking world, where information sometimes determine if a company will survive or make room for someone else, the highly competitive economy relies on sophisticated ERP or Enterprise Resource Planning mega software to manage its critical information data.
This software, no matter the industry you are in, whether you are a retailer, a manufacturing operation, a service provider or any other type of company, the ERP will act as an umbrella under which your various OEM devices, or Original Equipment Manufacturer of devices, will in one way or another link to it. Generating the essential information that your ERP system will compute and analyse to help you improve on your overall process.First and foremost it is important to understand what is and what does an ERP?
An ERP is the software that manages critical information that will help your organization to win new, more profitable business that will enable your corporation to introduce new products faster than your competitors, with fewer defects and lower warranty expenses.
An effective ERP will improve the flow of information between customers and suppliers therefore improving company innovation, it will allow your organization to maintain inventory levels at their lowest without running the risk of experiencing costly out of stocks while reducing unnecessary inventory, it will also contribute to increase customer satisfaction and retention by keeping your shelfs stocked with what sells, limit additional personnel needed as each person unnecessary tasks will be phased out with time, get more out of your production assets without investing more money by ensuring longer sequence of production unstopped by unnecessary events, be flexible to meet customers buying habit swings due to seasonality or taste change and determine your cost of acquisition for new customers versus cost of maintaining existing clients. It will help you focus on the activity that delivers the highest ROI.
Obviously your ERP can’t do this on its own it requires constant information and for this purpose needs to be linked with each and every single OEM devices that your corporation use. Numerous ERP exists but none are like a cookie cutter recipe that you buy from a box, open up and just get it working. No the selection of the right ERP is a fastidious process, that many company often don’t realize is as important as the tool itself.
For the proper ERP to be chosen a company must understand all of its process and have them all documented. What isn’t documented can’t be measured and analysed. The proper resources need to be allocated to properly evaluate the various ERP available and whether or not a custom made ERP needs to be created. It might take between two to three years for a company to have its ERP chosen, the various process documented and seeing some of its modules operational.
At first it might be a good idea to implement mode after module rather than trying to implement the whole of the ERP at once. Most companies simply don’t have the resources to undertake such a project and those who in theory do, will always be confronted with more urgent matter and therefore continuously delay the full installation of the ERP. This kind of situation causes demobilization of employees and sometimes organization will simply abandon their project until they finally allocated the proper financial and human resources to bring to life.
For example if you are a large grocery chain you will need for your cash registers to be directly connected to your ERP so that each single transaction is recorded to remove the purchased items from your inventory to maintain an accurate inventory count.
That inventory count will not only serve as the basis for your reordering process, but more importantly it will supply you with critical information in terms of what products should use what number of square feet of shelfs in your stores as a function of the unit sales, dollar sales, profitability, reordering lead time and minimum orders, terms of payment and other factors as they vary from one company to another. When this analysis is done you can dedicate the proper amount of shelf reducing or increasing it as per the results of your analysis and build the ‘perfect’ planogram for your stores.
In doing so your warehouse merchandise will increase its number of turnover and you will no longer be left with costly dormant inventory. Obviously the warehouse information gathering will need to be coordinated with the stores in terms of what space should be allocated to what product, lead time and minimum order from suppliers, lead time to get from warehouse to stores and many other information.
By allocating the perfect shelf space to each supplier and product, your store will increase customer satisfaction as those product that are in high demand will no longer be out of stock and force your customers to shop elsewhere and those product that aren’t selling as fast will no longer crowd your shelfs and accumulate dust.
If you are a manufacturer you will want your ERP to give you total visibility at every single point of your manufacturing process, so that everyone can have access to data and operating information, from each and every single critical piece of production equipment in order to, at anytime and anywhere in your production shop, be able to gather critical information in terms of material planning, job work or sub-contracting management, real time sales forecasts, graphic order boards, total quality management, procurement and replenishment.
Your ERP will need generate information in terms of Production Part Approval Process (PPAP), Failure Mode Effect Analysis (FMEA) and Advance Product Quality Planning (APQP) so that you can concentrate on managing more closely all value-added services and or processes. More importantly your ERP will work in conjunction with your various OEM devices at all time in order to prevent your production from experiencing costly shut downs for any reasons, whether it be because of missing inventory, defective merchandise, etc?.
Your ERP will manage your delivery process from the moment it leaves that production line, monitoring the wrapping process, loading time, delivery lead time and damaged upon actual delivery so that all costs pertinent to this process are categorized and eventually are targeted to streamline your process and increase speed and reduce costs.
If you are a service provider you will want your ERP to manage your customer lists, the effectiveness of your marketing and sales programs, your email blitz, your faxes and so on and so forth, to be in a position to measure the customer satisfaction through surveys, sweepstakes, fidelity programs, why customers continue to use your service, why customers buy again, why a new customer joins so that you can capitalize on what worked, improve on what was slightly successful and change what didn’t work. In this way and only this way will you not have to reinvent the wheel every single time.
The right functional ERP is and should be a tool that will give the pulse of your process at any time, it should allow you early detection of problem or problems so that once alerted, you can quickly design and adopt corrective actions before the problem or problems get out of control. The right ERP will help you cut costs, track production and ensure an efficient delivery process.
The wrong ERP will the ERP that is thought to be simple and that will be a quick fix. No gain comes without pain, however if the proper analysis of your needs, the proper human and financial resources are dedicated to the project, then the gains will be significant and will far out weight the efforts and dollars invested in its evaluation, selection, documentation and implementation.