Scaling a business is sometimes more complicated than it appears. Needing to factor in business practices while dealing with more customers can quickly overwhelm a company and its systems. However, there is a simple solution to this: enterprise resource planning (ERP).
ERP systems are not just standard in business today but are essentially the backbone of many companies. They help manage, plan, and streamline practices and keep companies running as well-oiled machines.
What Is an ERP System?
Beginning in the 1960sย as material requirements planning (MRP) systems, ERP systems evolved into central databases that controlled a companyโs core aspects and departments, including accounting, supply chain operations, customer relationship management (CRM), inventory, and even human resources.
ERP systems operate in real time and provide an accurate overview of all business practices at a glanceโmaking them an essential tool for management and accountants. More than this, they create a framework within which a company can grow increasingly complex without becoming unmanageable or unsustainable.
Choosing an ERP System
Choosing an ERP system can sometimes be less complex than gamblers considering trying the Paroli betting system over another. In many cases, companies offering these systems are willing to provide demos beforehand to see if the system is viable for a company.
Some of the largest ERP systems internationally include SAP, Microsoft Dynamics 365, Oracle Netsuite, Oracle JD Edwards, and Infor. Each has unique aspects that make it better suited for certain industries over others and can help almost any company grow exponentially.
How ERP Systems Facilitate Company Growth
Because of their unique features, ERP systems can help nurture growth in a company by maintaining its framework while continually expanding outward in several ways that other systems often cannot accommodate.
Standardization
One of the most essential parts of scaling a business is maintaining the same standard across divisions and departments. This ensures that all aspects of the company stay on brand and offer the same quality and service,ย resulting in a better customer experience.
Because an ERP system operates as a central database, it can ensure that a set standard is enforced across departments. An example is in reporting structures. With the ERP system outlining the format and layout of reporting, all reports from various departments will be uniform and easily read by employees working in different areas.
Workflows
Aside from standardizing processes, ERP systems are known for optimizing workflow processes. These systems achieve this by applying a sound logic base to different departments and mapping out what function each department requires.
Aside from logic mapping, these systems integrate across departments, eliminate information stores accessible only by certain sections, and facilitate collaboration across functions. By managing these workflows, employees have more time to help garner growth and need to worry about systems less.
Automation
Another significant function of ERP systems is automating mundane and simple tasks, such as invoicing, payroll reconciliations, and even basic order processing.
By automating these functions, an ERP system frees up employee time and can eliminate some risks that could occur due to human error. An example is if an employee forgets to order a crucial raw material, causing operations to cease, rather than a company using an ERP system to automatically order more once stock levels drop below a specific benchmark.
Visibility
One of the most considerable benefits for management using an ERP system is the real-time visibility of all business practices, such as inventory levels, creditor and debtor statements, and profit and loss reports.
Visibility over all these aspects of a company can help management assess performance, identify trends in operations, make decisions, and work towards the businessโs overall growth. The advanced reporting offered by most ERP systems also greatly aids in this.
Modular Design
ERP systems are modular by design, with some companies requiring more extensive capabilities than others. This design helps companies grow by being scalable as the company expands and not restricting operations to the systemโs limitations.
Instead, companies can enable (or disable) any module at any time. For example, many of these modules, such as production, can be further developed and tweaked to meet a companyโs exact needs, including adding a bill of material (BOM) or labour recovery linked to production.
Sales Management
Proper sales management and tracking are pivotal to successful growth. ERP systems aid in this task by creating a seamless sales process that can automate lead tracking and provide comprehensive sales reports based on items sold, customers, or even market segments.
Including customer relation management (CRM) functions in most ERP systems also helps improve sales by providing better customer service. By detailing a full view of each customer, these systems can show which customers require outreach, which have a problem, and which require attention to be retained.
Inventory and Supply Chain
Scaling any company without proper inventory management and supply chain recording will likely fail. However, ERP systems help reduce this risk by providing advanced tools, including inventory tracking, forecasting, and management.
As supply chains become busier and inventory levels grow due to business growth, these tools can also alert management to excessive inventory levels, problems with certain supply chain sections, or issues arising in production. As a result, management can take proactive steps and reduce the impact of these instances on the companyโs growth.
Finances
Accounting is essentially the core of any company, handling everything from purchasing stock to payroll and invoicing, so having a robust accounting system in place is the only way to achieve actual growth without things falling through the cracks.
As such, almost all ERP systems come with extensive financial tools that allow for cash flow reporting, centralized debtors and creditors, and easily managed payrollโsomething often requiring separate payroll software. As an added benefit, many ERP systems conform to required reporting standards, meaning the reports they generate conform to legal standards.