ERP (Enterprise Resource Planning) systems are pretty much essential for any business nowadays because they seamlessly integrate different functions like finance, HR, and supply chain management. They keep all the data in one place and give you real-time access to it.

 

The result? Making better decisions because you’re working with accurate, up-to-date facts.

 

But to be able to implement it properly, you first need to understand how it can impact your company, so let’s get right into it.

 

The Role of ERP Systems in Business Processes

 

With a good ERP system, you get a unified platform that contains all important information.

 

For example, take a manufacturing company; an ERP system will connect inventory with production schedules. It can make sure all raw materials are ready when they’re needed, and you have less downtime and more efficient production.

 

Say your inventory levels drop all of a sudden; an ERP system will immediately notify your purchasing department and prevent your business from losing sales. Your managers will have an easier time making plans and your business is at less risk of being overstocked or understocked.

 

In retail, an ERP system will manage inventory across all your locations. It tracks sales in real-time, and gives accurate data to restock products quickly. This prevents stockouts and also allows for better sales forecasting.

 

A tech company will also benefit from an ERP system because it can keep projects on track. It will connect development schedules with resource management and budget tracking, so if the costs get too high, the system will alert the managers on time so they can adjust the resources and/or timelines before the project goes off course.

 

Essentially, an ERP system will align all aspects of the project, which will make it easier to manage and prevent going over the budget.

 

3 Ways an ERP System Can Help You Make Better Decisions

 

More Accuracy

 

Since you’re getting information from HR, finance, supply chain, and more, you don’t have to rely on outdated, fragmented information.

 

If you can track inventory levels, production schedules, and customer orders all in one place, then you can base whatever decision you make on the latest, most complete data instead of guesswork.

 

The US Chamber of Commerce has reported that over half of the companies that implemented an ERP system have seen improvements in standard processes, and approximately 45% saw enhancements in most of their processes.

 

Improved Forecasting and Planning

 

Strategic planning and forecasting are big parts of success, and an ERP system can help you out there, too. It will analyze historical data and allow you to predict future trends more accurately.

 

For example, if you own a retail company, an ERP system can go over past sales data and let you know what type of demand you can expect during peak seasons so you can have stock prepared.

 

This predictive power will let you plan better and even avoid some problems before they happen.

 

Risk Management

 

When it comes to managing risk, an ERP system is invaluable.

 

The centralized data can help catch any potential risks before they arise, like spotting possible overruns before they become problematic. It will allow you to take proactive measures to minimize risks, which means better results and more revenue.

 

3 Possible Challenges With ERP Implementation

 

The benefits come only after the system has been successfully implemented, which can be a challenge.

 

Whatever you’re working with, be it SAP, Oracle, or something else, the good news is – you don’t necessarily need to do it all by yourself.

 

If you’re trying to implement, for example, NetSuite, you can consult a NetSuite ERP implementation partner to set up the system and help you customize it.

 

Of course, you should still be acquainted with potential roadblocks, so let’s go over the three most common ones.

 

Data Migration

 

Transferring data from your current system to an ERP platform can take a very long time and can be rather complex.

 

The mistakes during this phase can lead to a world of trouble down the line, so unless you’re working with an expert, make sure to take your time and check that all data you’re transferring is correct.

 

Process Alignment

 

You’ll need to align all existing business processes with the new ERP system to avoid disruptions. This often requires reevaluating and maybe even redesigning processes to fit the ERP system’s capabilities.

 

It’s very important that the new system supports the needs of your business without forcing inefficient workarounds.

 

User Adoption

 

Getting your team on board can be another hiccup in the process. Employees like routines, so if the system is complex or it messes up their usual workflows, they’ll resist.

 

This is why you have to train them properly and communicate in a clear way about the benefits of the ERP system.

 

According to SoftwarePath’s 2022 ERP Project Report, only about 26% (on average) of employees use a company’s ERP system. And as companies grow in size, that percentage tends to decrease. This means that you won’t need to train your whole workforce (on average), but instead, only key employees who will benefit from the ERP the most.

 

Conclusion

 

An ERP system can be a very positive addition to your business (if chosen and used correctly). It’ll allow you to make decisions based on accurate and current data, and it will also help manage risks.

 

There are some challenges when it comes to setting it up and getting used to it, but once that initial (and shall we say, awkward?) phase is behind you, you’ll be left wondering how you ever managed without it.