How Does an ERP Work?

ERP systems are used to manage all aspects of business operations.

ERP software can compare metrics across departments, and offer a variety of reports based on user roles and preferences. Data collected allows for faster data discovery and reporting. It also gives complete insight into business performance and how resources are being used.

ERP allows for automation and reporting to be synchronized by eliminating the need to maintain separate spreadsheets and databases that could have to manually merged in order to create reports. The combined data collection and reporting provides valuable insight such as how to reduce costs or streamline processes. This information can be used to make business decisions in real time.

Types of ERP – Cloud Vs On-Premise

ERPs of the future are more flexible than previous generations and can be used to support a wider range of business operations. ERPs are now a valuable asset to businesses because of the impetus they provide. However, there are many factors that influence the success or failure of an ERP implementation. ERP buyers are often faced with the question of whether to choose On-Premises deployments or On-Cloud.

The On-Premises ERP model uses software that is installed on company servers and managed by IT staff. The on-cloud model allows customers to access the software via a web browser. The vendor provides all maintenance and uptime. Before making this critical decision, it is important to understand multiple aspects of these models.
Cloud ERP vendors claim that IT infrastructure management should be left to the experts and that businesses should concentrate on what they are best at, which is their operations and not technology. While this is true, there are other factors that must be considered.
You can see a more detailed comparison here: Cloud ERP vs. On-Premise ERP: Which is the best choice for you?
 

Which industries can use ERP?

ERP has been a boon for companies in every industry and with different business models. ERP solutions can be flexible and offer extensive functionality to meet the needs of many organizations.

  • Corrugated Board Boxes
  • Chemical
  • Distillery
  • Dairy
  • Discrete Manufacturing
  • Public
  • Sugar
  • Retail
  • Engineering
  • EPC
  • FMCG
  • Fisheries and Seafood
  • Flour Mills
  • Plastic
  • Oil and Gas
  • Pharmaceutical
  • Publishing and printing
  • Process Manufacturing
  • Paper & Packaging
  • Trade and distribution


ERP Modules

ERP systems have evolved to support other applications and “ERP Modules” that allow for day-to-day business functions. These common functional areas are organized into ERP modules in many ERP systems. They include but are not limited to:

  • Finance
  • Human Resources
  • Sales
  • Manufacturing
  • Material Management
  • Production Planning
  • Supply Chain Management
  • Customer Relationship Management (CRM).

ERP Implementation Phases

Organizations need to realize that choosing the best ERP software takes time and research. The ERP Software selection is only half the battle. It’s just as important, if not more, to implement it. Poor implementation can lead to a poor product, while a good product that is implemented well may be able to bring great value. Because ERP implementation is a lengthy process that can prove difficult if not managed properly, organizations must create a roadmap. It is crucial that organizations take the correct steps for each phase of any project.

1.Project Kick-off is generally when the vendor team presents to the Client the steps involved in ERP implementation. They also provide the Road Map. The Client’s Team is presented with the Project Implementation Team during this stage. The kick-off team is essential as ERP implementation is an enterprise-wide effort and all key users/departments must be informed about the reasons the company is moving forward with ERP implementation.

2. Discovery and Planning: Also known as “Client Discovery”, this phase of ERP Implementation involves the formation of an Implementation Team (from the vendor) and a Project Team (from the client). The Implementation Team is responsible for understanding the business processes and elements of the client. The Implementation Vendor creates a Project Plan and the two teams agree on it. The Plan includes Project Governance Methodologies and Roll-Out Plans, Resourcing, Deployment and Roll-Out. During this phase, the potential solutions and loopholes are identified.

3.Master Data Collection: This involves the creation and collection of Master Data. This phase includes data about the company’s chart, finished product, raw material buyers and vendors list. The vendor will request the data from the client. This phase is generally parallel to the Configuration/Customization phase, which involves the vendor.

4.Configuration/Customization: The vendor configures the client’s processes into their ERP based on Client Discovery.  Some customizations may be required for clients with Business Critical Requirements that can’t be set up.

5.User Acceptance Testing: This stage of the ERP Implementation Life Cycle plays an important role in determining if the system’s functionality meets the requirements. Users perform the UAT according to the Test Data and Test Scripts they have provided. The UAT stage may allow for some tweaking to the ERP software.

6.Training and Knowledge Transfer: New end users need to become familiar with the new system. To do this, they will need to be taught how to use the ERP efficiently. The training for ERP Implementation is done by the vendor. The vendor can do this or the Champion Users.

7. Go-Live Checks and Availability: It is essential that all necessary checks be made within your organization before the system can go “Live”. This includes software sign-offs by the Users, hardware/network readiness at every point of usage at any location, availability and other resources. The ERP Software is then installed on the Live Server.

8. Go-Live: This stage allows the company to completely migrate from its old ERP System or Legacy system to the new one. These phases of ERP Implementation Life Cycle allow users to work with the application software using real-time data. This phase can be difficult for users as it is a new system. Users may make mistakes or not understand the system fully. ERP Implementation vendors usually provide extensive support (onsite or remotely) during this phase so that any issues can be addressed quickly.

9. Post Implementation Support: This final phase involves monitoring the ERP System’s performance. The system is maintained at a regular rate to ensure its smooth operation. Client is informed about the new releases and any enhancements or fixes made to the older versions. ebizframe ERP offers comprehensive post-implementation support policies.

ERP Benefits

It can be difficult for companies to quantify the benefits of ERP. To identify the ROI of ERP projects, companies must be well-equipped. This is true not only before they start but also during the implementation.

If you are looking to put in a new ERP system or quantify the benefits of an ERP system, these are the metrics that you can use to calculate the right ROI on your ERP investment.

The correct and rapid generation of documents can reduce the time required to produce them. This includes shipping receipt documents. It can also help you save a lot of money on demur-rages. A single shipment saved can easily save you US$ 50,000 per year.

Reduced time spent on documents preparation (e.g., one person could prepare 40 vouchers per day). One person can create 70 vouchers per day using the copy/template feature in ERP.

Better landed cost calculation has an impact on profits.

Your team will be able to chase receivables more efficiently if they have quick and accurate information about receivables aging. A 15-day reduction in receivables aging can dramatically reduce your working capital requirements. You will also be able to get more cash through improved collection and lower bad debts.

A better control of Sales Returns and Incoming Material Rejection could lead to a healthier bottom line as well as more business with satisfied customers.

Reduced time spent on Data Consolidation & Reconciliation of Branch Data.

The 20-day reduction in import cycle helped reduce the time to delivery to end-customers and resulted in 50% more customer orders.

Reduced man-hours required to calculate payroll – 400 man hours per month

You can save time and money by using one system to access all locations via the internet.

Six Reasons Why Your Business Needs An ERP

1. Departments working in Silos : Are you able to keep all of your important data, such as stock, receipts, purchases, etc. Do you prefer to keep all your data in a register or manually? Do you spend most of your time hunting for “true” reports? You cannot expect to be ahead of your competition in a global competitive market if you waste your time on tedious clerical tasks. It’s much harder for your team to make use of shared resources if all of your departments work in silos. All functions within the company must communicate. Data must flow seamlessly between departments. ERP Solution allows all departments to access a single database. The stored and organized information provides accurate and current data that allows you to make faster decisions and allow you to concentrate on business-related activities.


2. Limited/Delayed Access to Critical Business Data: It is not easy to find the right transaction or information in your business’s massive data collection. An ERP Software can collate data from multiple departments and create customized graphs and reports to give you productive insights.

3. Inexpensive and time-consuming Financials : Is it taking your accountants forever for data to be consolidated across multiple software systems? This could be a sign that your company requires an ERP System. Accounting staff will not have to spend hours reconciling data, cross-posting information, or re-keying figures manually, because all Financials are in one database. Accounting staff will be able to produce critical reports faster and more efficiently than ever before. You won’t even need to ask anyone for help when you’re writing a report. These reports are available on your mobile or laptop.

4. Sales negatively affected: Your business’s sales volume will increase as your business grows. If customers’ demand is greater than stock/services availability, it can potentially damage your company’s reputation as well as cause loss of business and goodwill. An ERP System must ensure that all departments have access to real-time information so they can make timely decisions and avoid potentially damaging situations.

5. Inefficient and expensive IT: If you don’t have an integrated ERP System that automates your enterprise with all data in one place, it is likely that IT management is wasting their time trying to fix up disparate systems. This is both time-consuming and very costly. An ERP system can reduce the IT team’s workload and help to reduce the need for complex updates.

6. No/Limited Mobile ERP Access:  Today’s technology requires robust and agile technology that allows you to access critical information from any device and at any hour of the day. There are many apps that can meet almost all of our needs. Many ERP Solution Providers offer mobile access functionality to their clients that is specifically designed for field-based staff. This ensures that all information is at their fingertips. If you are looking for such real-time information, an ERP System should provide such functionality for their clients.

Your sales team can also be enabled to visit retail outlets to collect orders, pay, collect payment, plan route, pocket MIS, stock visibility and other functions. You can do this using a mobile app that is specifically designed for sales teams and linked to the back end ERP. This is especially useful for FMCG and Pharmaceutical companies. ERP System is essential for any company. This is because, in the end with the right ERP system, any business can reach its full potential and capabilities. ESS’s state-of the-art ERP system, ebizframe promises a more responsive, productive, and agile company.

Three Keys to Successful ERP Implementation

ERP software is a key component of any organization’s success. However, it can be resisted by potential users. For ERP implementation to succeed, you need to manage key changes.


1. Successful ERP implementations are dependent on communication.

It is important that you realize that employees are likely to have questions and concerns about the new system they will be using. People from different departments, such as Sales, Purchase, Accounts and Production, will have their doubts and concerns. The ERP software system would be viewed by these people as a way to regulate their activities. This kind of binding accountability can be a cause for concern and could lead to panic.
Therefore, it is the responsibility of management to communicate with their employees the urgent need for ERP system. ERP implementation can have a significant impact on the job role and nature of the tasks. It is important that employees feel comfortable with the new ERP system before it is implemented in an organization. It is important to ensure that your employees are confident in the new system.
 

2. Buy-in from all stakeholders

You must ensure buy-in from all offices and regions. Without buy-in from all levels of leadership, the ERP implementation could be a failure. If you have the support of management and personnel, changes can be accepted.


3. Training & Engaging Employees

ERP software requires that end users have a basic knowledge of the system in order to use it effectively. The change management system should focus on training end users so that they can become familiar with the ERP system and use it in the most efficient way possible.
Important tip: Make sure your ERP vendor has an established process for training employees. Communication between the vendor and you is crucial for a smooth training process. It is crucial that you communicate with the Vendor via their respective SPOCs (Single point of Contact). SPOCs are the authorized ones to make all decisions for their company regarding ERP implementation.
 

How to choose the right ERP for your organization

Every organization should carefully review the capabilities of each vendor and choose the ERP solution that best suits their needs. These are some of the most important factors to consider in such situations:
 

Business Assessment- ERP does more than just enhance the performance of an organization. Implementing an ERP system in a business that is not financially feasible can cause simple processes to become more complicated and time-consuming. This could ultimately prove to be disastrous for the business’s health. Any business that plans to implement an ERP Solution must have a clear understanding of their needs and the anticipated benefits.

Create an ERP Selection team – Choosing the right ERP software for your company is not a simple task. This should be a thoughtful decision that involves members of different departments coming together to form a selection team. They will evaluate the available options in relation to their individual wish lists.

Assess Business Requirements, prioritize them – The team selected should assess the requirements from various departments and order them according to priority. ERP Software procurement can be costly so it is important that you address your most pressing needs first.

Determine Selection Criteria- To score ERP Solutions from different vendors, a selection criteria and a scoring system should be created. The ERP solution that fulfills your requirements will score higher.

After vendors have been scored, vendors can be shortlisted to request DEMOs- Live Demos are a great way for organizations to learn about the ERP Software System, such as the User Interface, time taken to complete a process, Graphs and Analytics, Look and Feel, and so on.

Finalize Vendor – An extremely expensive solution may not be feasible within the company’s budget. The selection team must balance the budget with the fit of the ERP Solution to their requirements and choose the Solution that best addresses these needs.
The contract should be awarded and a roadmap developed. Once the vendor has been selected, the roadmap for ERP software implementation must be prepared. Because ERPs are notorious for slow implementations, the selection team should also ask about the implementation method and timeframe.

Is Your ERP Provider Investing in Emerging Technologies?

Make sure that your ERP Vendor is investing in recent and innovative technologies, such as AI, digital assistants and machine learning, and IoT. Organizations can improve their business practices quickly by having access to the latest technologies. These technologies can have a significant impact on an organization’s productivity and overall profitability.