Taking off a business to new & greater heights is the main concern of every entrepreneur. Running a business is like flying an aircraft. To ensure that your aircraft is flying high, you need to manage the fuel section, onboard controls and thrust which are respectively the resources, daily tasks, and required advancements.
Being a small scale business with limited resources results in low work efficiency due to plenty of pending tasks. Till the time you try to accomplish the pending tasks, there will be more making their entry to the queue. It gets wearisome to control such a situation while trying to run your business smoothly.
As the company grows, workflow & productivity gets affected without a proper task & time management system. Unmanaged inventory, a heap of excel sheets and far too many lined up tasks are no better than a business nightmare.
The ultimate solution to all of these issues is an Enterprise Resource Planning (ERP) software. An ERP software combines all your business operations in one place to make sure that you’re on top of things that are running your business. But the question is, “Does your business require an extensive and expensive ERP system?” Well, the answer depends on your business requirements and the business hurdles it is witnessing every day.
Let’s have a look at the 10 deciding factors that confirm if you need to upgrade to an ERP system.
- Inaccurate Product Pricing:
If you are being asked about the actual cost of the product recently delivered by the company and you get stuck with calculations then you need an ERP software. With growing manufacturing complexities, deciding and finding the actual cost of the products can be tedious. But if you can track the overall manufacturing process, you get to understand the actual cost of the product.
Through ERP software, you can find out the raw cost, manufacturing time and required resources which helps you estimate the product costing. The details can be accessed by the whole team to understand product pricing.
- Unmanaged Inventory:
Being nescience about the available inventory gives dangerous results. There are two negative aspects of an unmanaged inventory:
- If you have a huge inventory then it will restrict the cash flow, need more storage space, and might get obsolete & damaged after being unused for a long time.
- On the other hand, if you have the least amount of stocks available then it can halt your production unit for quite some time, cause extra cash flow for urgent inventory requirement and affects product delivery as well. Ultimately this results in detrimental customer satisfaction.
With an ERP system, the inventory reports can be easily managed and accessed anytime. Managing a manufacturing unit is highly advantageous with an ERP system as it is an extended version of Material Resource Planning (MRP) software. Moreover, an ERP system can help you plan your inventory, forecast your production cycle, etc. All of these will help you in running your business at an optimum level.
- Disruptive Workflow
The situation of a disturbed workflow may arise because of the lack of stiff connection channels between different domains. This may lead to reduced productivity and work efficiency. In certain situations, if you write a request to a certain department asking for some required data and it takes days to reach you, it will create a disruptive workflow. An ERP system can easily mitigate such issues. For example, using an ERP system the product manufacturing can be made more profitable and within the timeline because of a proper communication channel between the production domain and manufacturing domain.
- Improper Work Updates & Reporting
Updating other domains regarding the project progress manually will get time-consuming. It’ll reach a whole new level of complexity with an increasing workforce. Manual Reporting itself becomes a task if the number of concerned departments is more.
An ERP solution resolves this issue and enables various departments to create and maintain multiple reports on a single software that can be accessed by the whole company. An ERP system provides accurate data extraction in the form of standardized reports for the administrative department. Now, your workforce does not need to do this unproductive task and can utilize their time in producing great values for the company.
- Software Havoc:
To manage various industry operations, there are several specific software like spreadsheets, invoicing, customer support, CRM, etc. Running various operations on multiple software which cannot talk to each other is a recipe for disaster. When many front and back end operations demand software access simultaneously, then it may lead to a software crash. Managing the authorization and login credentials is an added task because multiple third-party vendors can get access to privileged data.
An ERP system integrates all the software at one place and access authorization can be set accordingly. Integration of all the software in one place, streamline the business operations. For example, a lead in the CRM module can be seamlessly converted to a customer in the Accounting module and is readily available when creating a sales invoice.
- Communication breakouts:
There are a number of departments with separate systems and operations which are left unchecked by the admin. While the two nearby or connected departments transfer the data among themselves, the chances of data blunders are more. The broken communication between departments can create a disturbance in the operational workflow.
An ERP system overcomes these communication breakouts resulting in cost & effort efficiency. An ERP system offers centralized storage, information accessibility, and easy communication. It does not only establish the internal communication easily but the external communication between the production department and supplier or customer can also be maintained. An easy and direct connection between the supplier and inventory unit can rationalize the production.
- Unsatisfied Customers:
With the growing requirements, customers are expecting more than before. An unforgiving behavior of customers is being witnessed these days as they have multiple options for a service or product. Due to unmanaged resources, missed deadlines, and late responses, the customers are more likely to be upset with your business. It is a fact that an unsatisfied customer will look for other options refusing your product and it will affect the sales.
Through an ERP system, customers and companies both can access the product details, know their orders, download their accounting ledgers, etc. When a customer gets an instant update regarding issues, he is happier than listening to “We will get back to you in a while with the updates”. A centralized ERP system can create a huge difference in customer satisfaction and can bound customers for repetitive deals.
- Financial Crisis:
At the end of the month or at the end of the financial year, managing accounts and finances is a tiring task. The widespread distribution of company accounts in various spreadsheets causes an accounting headache. Audit and filing reports can be easily managed using an ERP system with accurate accounting reports of each month.
Being a growing business, keeping hold of sales estimations, income & expenses, remuneration, and vendor management are essential financial tasks. Due to the absence of proper accounting reports, if the financial management has become a conjecture task then you must consider an ERP Solution.
Finances are the backbone of any industry without which they cannot survive the market. So, make sure to manage company finances accurately through an ERP system.
- Moderate Growth Rate:
Sharing the project information manually results in a waste of time, energy and productivity. When two specific domains cannot share the work updates in real-time, it holds back the overall working process. Consider a case wherein the organization is using multiple Excel sheets to store data and primarily uses email as a medium to exchange those sheets. Now imagine what would happen if a particular person, who has access to some data, is unavailable. Depending on the severity of the data’s requirement, it can halt some important operations throughout the organization. This will ultimately result in the loss of overall growth rate because, as they say, the show must go on.
This can be resolved using an ERP system because it enables centralized access to data along with access & authorization rules. An ERP system integrates different domains and allows the sharing of information among them by being a single source of truth for company data. This enhances the productivity of the employees by enabling easy information access and updated project reports. ERP system offers real-time connectivity between the different departments of the company.
- Inadequate Insights:
For optimizing business operations, accurate data analysis is required. An accurate analysis can only be performed with useful data insights to generate effective future strategies. With unmanaged data, it is difficult to fetch correct & meaningful information. Business insights cannot be generated accurately with limited data sources. It creates a perplexing situation for mining useful insights from inadequate data sources. Improper data analysis only leads to illogical business decisions that have only one solution that is an ERP system.
An ERP software will help in generating accurate insights for effective future planning. An ERP system integrates all the data in one place thus, fetching the desired data is easy. Analyzing the whole stored data leads you to understand the merits and demerits of the company operations easily