Why people do business? Simple answer is getting profit. Business person increase their sale to get more profit. But it is not the only way increasing profit. If we can decrease system loss, it will also help organization to have positive impact on bottom line. Enterprise Resource Planning (ERP) system is a good business tool that can help organization for getting more profitability.
Top 10 reason for using Enterprise Resource Planning (ERP) system is as follow:
1. Activity Tracking
Your organization has different department and many people perform their daily activity through out the year. As CIO or head of the department, its not possible to track all activities personally. In this connection you need to depend on our subordinates. Enterprise Resource Planning (ERP) system can help you to track all activities electronically.
For example, one of the important KPI for organization to send product in market in due time. So you have to finish preparing all invoices in due time. Your delivery van need to load and unload product timely. If all activity using Enterprise Resource Planning (ERP) system, you will have log on each activity. You can setup a threshold to identify your activity performance. If you find, your delivery person cannot meet the threshold , you can take necessary adjustment/tune-up to rectify the situation.
2. Financial transaction Tracking
Beauty of a good Enterprise Resource Planning (ERP) system it is integrated so all operational works involved with financial transaction automatically flow into financial modules like Accounts Payable module, Accounts Receivable Module via General ledger module.
For example Sales Representative collect order from customer and captured it into his mobile sales Module. Availability of the product automatically checked and shipment entry automatically produced with a mouse click. Accounts department also convert this shipment entry into Invoice entry with some few clicks. After receiving money against that invoice cash receipt entry done. As all these transaction stored into a database, management can get any type of information like
- How is the customer?
- What is the frequency of purchasing habit for the customer?
- Who is the sales Representative, working for the customer?
- What is the outstanding and how long this outstanding is remaining?
- What is the location of that customer?
- How much discount he is getting?
- How much money company has already spent for the customer?
- How much inventory available for the particular warehouse?
- When the product delivered?
- Is there any product return (Credit Note) tendency?
- Sales Person Performance?
- Delivery Expenses
- Product shelf life?
This is how all operational activities can be recorded including financial amount.
Business operational tasks are little complex and often involve with multi person. If they keep record individually, there is a chance to occur mismatch. Following Example will be helpful for understand the situation more clearly.
Mr. Raven have created a purchase order and gave a reference number POD-00037. Now accounts department has created invoice and use reference number POD-37. In this case it is really tough to get the Purchase order status automatically. There are hundreds and thousands of transaction take place every day. So some mistake is very natural. and reconciling these numbers manually is a long term process and engaging manpower for this type of unproductive job is really expensive. Even inaccurate figure can lead a unfavorable decision.
Another example: Mr. Raven is Store in charge. His store keeper didn’t informed him that there are huge number of product are going to be expired on next week. One week is very less time to sale all f these product as a result company faced financial loss. If Mr. Raven could informed the matter to higher authority, they could make some promotional plan to sale all product with short life.
A standard Enterprise Resource Planning (ERP) system always give you flexibility to provide you accurate result for efficient decision making.
4. Omit redundant work
This is one of the to reason for using Enterprise Resource Planning (ERP) system. It can help to save 20%-65% working time.
Example: ABC pharmaceutical has 1200 sales representative around the country. everyday they cover 60,000 client and submit order to warehouse. If company don’t use integrated Enterprise Resource Planning (ERP) system some huge number of workforces need to be involved to prepare 60,000 document (Shipment & Invoice). Its really time consuming and expensive. But Enterprise Resource Planning (ERP) system help user to convert those order entry into shipment and invoice within a mouse click. thus it saving time omitting redundant job/tasks. to get more tips to omit redundant work, please click here.
5. Ratio Analysis
Ratio analysis involve with financial figures. it helps management to understand the health of financial condition of a company. Enterprise Resource Planning (ERP) system always keep the financial figure updated. Thus it helps management to get their required KPIs instantly.
Its not possible to monitor all activities very closely. Enterprise Resource Planning (ERP) system help us to get alert on different occasion. For example You don’t want to give any credit to those customer who have outstanding amount more than $5,000 . If the system configured, it will alert the user if the credit limit cross the threshold.
7. Internal Control System
Enterprise Resource Planning (ERP) system keeps all activities done by the user. Audit trail log saved into database. Management can use this log for future reference. Thus it help to create transparent Internal Control System.
Enterprise Resource Planning (ERP) system keep all data in structured format. So any type of trend analysis is possible using these data within few click. Thus it helps forecasting.
9. Information Security
In an organization everybody don’t enjoy the same privilege in case of getting business data. Enterprise Resource Planning (ERP) system has provision to secure data from unauthorized access.
It also secure data from physical disaster. Database can be stored in different location which help the company for disaster recovery process.
10. Paperless office
All document can be signed electronically. No need to print office memo or invoice. thus it help growing paperless office which is aligned with Go green business ethics.
We are working on customizing ERP system for last 12 years. If you need any help, please ask your question into our comment section, we will try to help you.