The Global ERP market size is expected to reach 66,389.7 million by 2026, with a CAGR (Compound Annual Growth Rate) of 8.2%, solidifying ERP as a core driver of the fourth industrial revolution. ERP systems revolutionized the way businesses operate and can be integral to a company’s competitive advantage.
Here are four ways that ERP systems can help your business become more profitable.
1. Streamlines the supply chain
Supply chains can be very complex, relying on many different moving parts to achieve the common goal of production. Due to the complexity, it can be difficult to anticipate issues and carry out solutions in a timely manner. In the supply chain “machine,” an ERP system acts as the oil, keeping every part of the process running smoothly and as a result, increasing profits.
ERP systems allow for complete visibility of your entire supply chain in real time. For instance, once an order is received, a supervisor can see in real time what resources are being used and where the product is in the supply chain. Therefore, if there is a bottleneck due to a late shipment or the item is stuck at a port, a manager can make adjustments to compensate for the inconsistency. This is just one example of how ERP systems can help streamline the supply chain, resulting in greater efficiency and profitability.
2. Keeps inventory lean
A lean inventory refers to the practice of eliminating wasted time, effort, and resources when managing inventory. Instead of viewing inventory as a static asset, lean inventory management focuses on the concept of it being a continuous flow. Keeping a lean inventory helps you keep the products you need on hand at the right time and can reduce storage costs and waste. While this can be a challenging task for many companies, ERP systems are more than capable of doing the bulk of the work.
Data obtained from ERP systems can provide detailed information on current and past inventory statuses. Additionally, using historical information and data analytics, they can create demand forecasts that can aid in determining what you need to order to meet your demand and help eliminate stock outs. This leads to increased inventory velocity and frees up cash to be used to grow your business.
3. Maintains uniform business practices
Developing a standard of best business practices across your whole company can greatly increase efficiency, resulting in higher profit margins. In a complex company with different teams and departments all practicing their own processes, it may seem like an unattainable goal.
However, an ERP system allows you to implement specific processes to develop standardization throughout your business. For example, when a salesperson makes a sale they may be required to log it into the system (or sales order processes may be automated through eCommerce automation or integrated EDI). The sale is then recorded and available for accounting and manufacturing departments. In contrast, unregulated processes and disparate systems promote scattered, unorganized logging measures, such as duplicate entry, an email or physical paperwork. These inconsistencies can lead to losing necessary information and slowing down business processes. An ERP system ensures your most efficient business practices run seamlessly, reduces human error, and ultimately increases profitability.
4. Saves time and reduces errors
Employees might find themselves spending a vast amount of time and effort on completing administrative tasks, such as managing records and finding sales reports. In fact, an employee spends on average 1.8 hours every day searching for data according to a McKinsey report. In order to reduce this statistic, companies have taken to ERP systems to automate their information systems.
An ERP system is a powerful, centralized shared database, allowing you to access up-to-date information on various aspects of the business without wasting time looking through physical records. Consequently this saves employees’ time and provides them with an easy way to gather information using one version of truth.
Choosing and implementing an ERP can seem overwhelming, but it doesn’t have to be. Get to know Kissinger Associates. For decades, we’ve helped growing companies in manufacturing and distribution by providing them with systems that benefit their unique business. Get to know more about our team and contact us for a free consultation.