When a company is just starting, it would often have to make do with just using the readily available software applications and IT solutions for their data management needs. Most office tasks can be handled by the popular word processing, spreadsheet, presentation, and database applications. But, as the company grows, they’d soon show some signs that their existing systems and applications are no longer adequate for their requirements.
Larger enterprises often set up an enterprise resource planning (ERP) system and applications for their specific needs. An ERP is a powerful database management system and solution. If you think your company is going through signs that it needs an ERP, you might want to click here for Nexinfo’s ERP implementation checklist or one from other reliable sources.
Here are some of the indicators, which could mean that your company should consider adopting and installing an ERP system:
Your Data And Numbers Are Often Mixed Up
One of the surest signs that you might have to consider implementing ERP is when your internal teams or departments often have mixed up data and numbers. When your finance, human resources, sales, and marketing departments run different systems and applications, they’re bound to have different versions of the same data set. This will take up a lot of company time and result in inefficiencies and maybe even errors down the line.
Each time your company has a new customer, their account would have to be set up separately in each of the different systems and applications of all your relevant internal teams. Each new customer would have to be given an account on your books, an account in your marketing systems, and another account in your sales monitoring applications. Whenever a sale is made, the finance department won’t know unless the sales team tells them. Also, the marketing department won’t know that a collection has already been made so they can pitch your other products.
This situation will require your teams to devote staff who’ll constantly update their data and numbers separately. They would also have to check and review whether the data encoded is accurate, and this can take up a lot of company time. Fortunately, an ERP system can solve this inefficiency. Any update on your ERP will reflect across all units since their applications are integrated with each other. Aside from that, review of the data set would be easier and more efficient, too, since they only have to check one data set.
You Always Seem To Have Inventory Issues
When a company doesn’t have an ERP, it’ll often experience issues with accuracy in inventory data management. Having too much inventory ties up the cash flow of a company. If you have too much raw materials in stock for a long time, too many work in progress (WIP) items, or even too much finished goods in your warehouse, these are indicators that you’re not able to track inventory efficiently. It means you’re producing too much before your marketing, sales, distribution, and logistics teams are able to sell and move them.
Inefficient inventory management will have effects down the line whether the company has excess or deficient inventory. When there’s too much raw materials or inventory in stock, too much money is tied down and warehouse space taken up. If the raw materials were on credit, the money tied down would also entail interest expenses.
When there’s a lack of raw materials, production would dip. The production units won’t be able to meet the purchase orders of customers. This would affect the targets of the sales teams. Some customers might be forced even to buy from other suppliers. This could cause issues in the production or distribution schedules of the customers or clients. Some of them may opt to change suppliers if these issues of delayed deliveries persist.
By employing ERP, the integrated data management framework and applications will allow your different internal teams to work with one data set and streamline the inventory data management and operations. The production department can forecast their need to purchase raw materials and supplies based on the forecast and reports of the marketing and sales teams. Accounting and finance can forecast the budget requirements of the production team based on the sales reports and the production forecast.
Troubles In Meeting Schedules And Deadlines
Companies that don’t have their own ERP often encounter problems and issues in meeting schedules and deadlines. Startups don’t have these issues yet since demand for their products is still not that huge. But, when a company starts to attract more clients and get more orders, that’s when the troubles in meeting schedules and deadlines start. This is another sign and operational indicator that a company is already feeling the need to adopt and install an ERP to replace their systems.
Here are some of the specific practical indicators that a company is experiencing numerous troubles in meeting deadlines and schedules:
- When there are increasing incidents of customer complaints about delays in the delivery of their orders
- When there are increasing instances when the production unit reports that it doesn’t have enough raw materials
- When your internal teams are spending too many meetings trying to coordinate daily business operations
Too Much Time And Effort Spent On Information Management
When a company doesn’t have its own ERP, their internal teams and departments tend to set up and maintain separate information and communication silos. The effect of this is that different departments will develop their own separate and distinct databases and workflow systems. Updates in one department or information silo won’t be automatically and simultaneously reflected in the database of another department.
The effect of this is that all departments would have to devote a considerable amount of their human resources and company hours toward maintaining and updating their data management systems. They would also have to update their databases after receiving their copies of the reports and updates from the other departments. By contrast, if they had an ERP, once a dataset is updated, the changes will be accessible to all and reflected in the copies of every department.
Conclusion
A growing company will often encounter numerous issues, challenges, and difficulties. These issues could be in keeping the inventory at pace with the production capacity and the sales performance or keeping the collections in step with the financial requirements of production and operation. Most of these signs could possibly mean that it’s time for the company to have an ERP system set up.
I am Tristan who loves to ride and spend time with my jenny (horse) and my love Mark. After completing my graduation, I have been working as an accountant in a private firm in Cologne.
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