Does My Small Business Need An ERP System?!?



There are different types of businesses. Depending on many factors, in some cases ERP software wouldn’t be a good investment and will have a poor ROI. There is no general answer to this question, and every Manager should analyze the current circumstances and make a decision. Here are the main benefits which come with ERP, according to some leading consulting companies. Knowing them will make this decision easier. Use them as questions, for example: If ERP will optimize the inventories in the company with 10%-20%, do your inventories need to be optimized and is it worth it? You will improve your cash-flow by managing the stock level, but how much would it be? While a 15% optimization in a company with inventories of 200 000$ equals 30 000$ free cash-flow, such an optimization in another company with 2 millions of inventories will have a much greater effect in absolute value.
Most probably a company such as the second one, which does not use an ERP solution, doesn’t exist. Like many things in life, you should compare the advantages and disadvantages and to square accounts. The global benefit from ERP system is the efficiency and integration of information from the different departments. It will help you plan and coordinate your business better by automating many time-consuming processes, like routine day-to-day operations, it will help reduce operational errors, and will allow for collecting and organizing vital business information, making detailed report, etc.


Effective management of inventories and purchase orders is vital for a manufacturer, especially if he uses complex bills of materials for the production process. Delivering every single part on time is crucial for reducing production costs, and using the full capacity of the machines and employees. An ERP system will help such a company, by planning every single purchase order of materials, taking into account the delivery time of every supplier, calculating the most effective quantity to order, taking into account the current stock level, current sales orders and many more factors, so that the management wouldn’t be afraid of running out of stock, and would feel comfortable with big jumps in sales. An ERP system is a must, if the company is going to prosper.


There are ERP vendors providing focused solutions for specific industries. The biggest names on the market also have such products. Because of the specialization of these systems, they come with valuable know-how, which can boost your company’s operations significantly. The value added with the successful implementation of such a solution could be many times greater than its cost.



 

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