Does An ERP Help My Business Turn Profitable?

Business profits are a function of market competitiveness and management effectiveness. An ERP helps your business to be managed better, which could eventually improve your market competitiveness.  

 Value addition in any business takes place over several activities. ERP makes these activities more efficient in several ways. One of them is ensuring that activities are genuine and authorized.  Next, it regulates their flow, by means of process workflows. This means that every task or activity takes a pre-defined route to completion. This will ensure there will be data completion and data quality checks before an activity comes to an end. For example, a sales order workflow ensures that the customer selected is correct, order terms are as defined, quantities and rates of order items are correct. Lot of times, capturing the values for a transaction correctly itself will help protect revenue and prevent leakage.  

 One of the important areas where businesses make big savings is inventory – the stocks of raw materials, components , finished goods that you carry. One of the important costs associated with inventory is the Carrying Cost. This consists of warehouse rents, other overheads, interest on the value of inventory as if that money is on loan and insurance premium on inventory. Most ERPs pay a lot of attention to this part of business, as it is well-understood. A good ERP can let you save a lot by means of inventory optimization.  

 Many firms, surprisingly, find it difficult to bill their customers correctly and sometimes, bill at all! The impact of this on the business is huge, in the form of revenue leakage and cash shortage. Starting with a sales enquiry, to order confirmation, fulfillment and invoicing the customer, to collecting the invoices, there are several points of potential failure. A workflow-driven ERP puts all these processes in proper sequence and managers are able to know if anything is amiss. Users get the tasks open for them and they only need to complete those to get this going. Because of the task-dependency, no tasks can be left unattended since the next user down in the flow will be kept waiting.  

 Financial data is at the heart of running a business. You can take sound decisions only with good data, or else it will be simply based on gutfeel. If properly designed and tested during implementation, your ERP can get you most of the data that you need. Even small businesses will start seeing the benefits of taking decisions based on real data. Very soon, that leads to a great deal of financial discipline in running the business. You will take important calls such as business expansion, continuing with the business itself or shutting it down etc. with total confidence.  

 To summarize, any business benefits from the management of business processes in an integrated manner. That brings in efficiency and economy in operations: the mantra for profitability