Why small businesses should invest in ERP

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Large enterprises have long understood the benefits of ERP technology in essential processes such as procurement, planning and inventory control, but for smaller businesses, it can feel like an unnecessary or extravagant investment. However, there is a compelling case to be made for small businesses to consider implementing ERP software. By digitising, streamlining and automating business processes, manufacturers can free up time and cut operating costs.

Providing better visibility of business operations

One of the challenges facing small businesses, unsurprisingly, is small, lean teams in which one person may manage multiple business responsibilities. Smaller businesses are also far more likely to run their operations using a mix of manual processes, disparate spreadsheets and accounting software. This mix of processes can impede a clear, company-wide view of operations and make it more challenging to introduce efficiencies. Although it may seem like a costly investment, reducing IT complexity by implementing ERP software can offer significant return on investment by enhancing operational efficiency and providing a better visibility of overall business operations.

Enhancing productivity and efficiency

Some tasks that small business owners routinely manage, such as payroll or inventory management, can be effectively managed by an ERP system, freeing up valuable time for innovation and business development. By centralizing data through an ERP system, SME teams always have the information they need to hand, in one place, which can improve business decision-making because critical data like inventory levels, sales data and financial reports are easily accessible across the business in a standardised format. ERP can also help small businesses more effectively meet compliance and financial standards requirements.

Supporting growth and scalability

Another challenge for small businesses is supporting scalability, something that is often missing in the initial startup phase of any small business. However, almost all small businesses have growth aspirations beyond their current size. By introducing an ERP system that enables small businesses to streamline their operations and increase efficiency, this allows them to handle more orders and customers without having to add costs with extra staff or resources. Companies that have real time access to data can connect directly with customers and suppliers, address immediate needs, and build their business.

Having a system that is equipped to scale up and support new business lines as the business grows, is a must. Opting for a cloud-based ERP product reduces the need for an in-house support structure and saves the cost of server hardware. Cloud-based ERP can be easier to scale functionality and users either up or down as required. And, for companies with longer-term growth ambitions, it can often make it easier to share information across regions or locations.

Data-driven insights and analytics

Real-time access to data is key for manufacturing and distribution businesses to remain competitive. The right information provides the ability to assess current operations, as well as the capability to make the required tactical, operational and strategic business decisions. There has been an exponential growth in the volume and different types of data throughout manufacturing and the supply chain, and this has intensified the need for businesses to invest in technology that can intelligently and rapidly analyze data to extract valuable and actionable business insights.

Manufacturers need to leverage data analytics to access critical insights that allow them to engage in data-led decision making around sourcing, production, fulfilment, cost reduction, and other focus areas. The ability for an ERP system to integrate with other technologies such as IoT devices on the factory floor or within the warehouse is critical. New AI capabilities also have the benefit of making data more usable, allowing manufacturers to interrogate their data in ways that provide a comprehensive picture across the business.

Small businesses must choose with care

The right ERP system will offer manufacturers the capacity to offer much more informed decision-making using data analytics for accurate demand forecasting and supply chain management, along with more informed inventory decision-making and ordering. All of this contributes to more efficient business management.

However, there is no one-size-fits-all ERP system. The requirements of a small business will vary from those of a large and complex operation, while compliance and regulatory issues will vary depending on this industry. Small businesses must be clear about their business objectives and understand what is required from their ERP system. It’s important to ask a potential vendor about IT issues such as ease of use, total cost of ownership, vendor stability, technology flexibility and ease of implementation. The return on investment will be significant if the business objectives are set up front and the operationalization is reviewed against these objectives.

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