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1. ERP Helps Implement Standard Operating Procedures

With ERP software, you can define and implement standard operating procedures.Describe precise step by step workflow, define rules and guidelines. You can prepare detailed checklists andvalidations for each & every activity of every function. ERP generates SOP related documents or formats and provides relevant reports to concerned managers to verify whether best practices are being followed or not.

Standard operating procedures ensure consistency & standardization in the company, reduce or eliminate errors, improve communication & coordination among departments & teams, improve efficiency & productivity. This reduces idle time, minimizes wastages thereby reducing costs & improving profitability.

2. ERP Helps to implement Financial Discipline in an organization

ERP software helps to implement financial discipline by defining a set of rules, policies relating to every financial aspect of the organization, and ensuring that these rules are followed by everyone in the company.

With ERP you can set up specific budgets for each department, unit, cost centers, based on your business objectives. You can setup the “Dunning Process” an easy and effective way to manage the accounts receivable effectively. You can define the credit control policy. ERP automatically sends reminders, notifications, and alerts to ensure payments are received on time.

Thus, you can exercise stringent control on spending, avoid unnecessary or unplanned expenses, ensure positive cash flow, and Healthy working capital.

3. ERP helps implement Business Discipline

You need good business discipline in every function of your business and at every stage if you want to scale & grow.

With ERP Software, companies can set up business discipline by defining clear guidelines, processes, and standards for Production, Inventory, Sales, Procurement, Finance, Quality. Read more specific examples of how to implement Business Discipline for each function. Business Discipline enables optimum utilization of resources, eliminates wastes, avoids delays & bottlenecks, strict quality control, assured product quality. This helps to speed up production, ensure faster time to market, save costs and improve profitability

4. ERP helps achieve Cost Reduction

Cost Reduction is the process to identify and remove unnecessary expenses from businesses to increase profits without impacting product quality. Companies should identify the Biggest Costs and mark cost-cutting areas for continuous improvement. With ERP Software, companies can achieve cost reduction in areas such as Procurement, Inventory, and more.

Procurement Cost: Implement a companywide procurement policy, aggregate demands, perform bulk procurement, with staggered deliveries, increase supplier base, improve negotiations, to achieve optimum procurement costs

Inventory Costs: ERP software ensures accurate demand planning and provides real-time accurate visibility of inventory. ERP helps implement inventory classification, inventory valuation & inventory control methods. ERP helps to specify Lead Time, Reorder Points, Safety Stock of inventory. Thus companies can set up alerts & notifications for just in time purchase of inventory. This ensures funds are not locked up in inventory and also saves on inventory holding costs.

Measure & Monitor Costs: ERP provides Specific KPI based reports & insights for measuring & monitoring various costs in the business. This helps to keep a close eye on the manufacturing cost per unit. Based on the reports and insights companies can take corrective measures to reduce manufacturing, administrative, operational costs across the organization.

5. ERP helps define KPIs & monitor Performance

Every organization should focus on the KPIs to achieve operational efficiency, improve profitability, and grow and scale business.ERP Software enables defining appropriate KPIs to monitor, control, analyze, and optimize the processes. You can ensure optimum utilization of the resources and consistent quality to customers. You must monitor and review KPIs weekly, monthly, or quarterly as agreed upon.

Read more about how to define, measure KPIs for Plant & Machinery, Inventory, Procurement, Sales, Quality, Customers, Employees here.

6. ERP helps improve Employee Productivity

ERP Software is a great mechanism to improve employee productivity. ERP software reduces paperwork & manual work by digitizing & automating routine tasks. It eliminates employee efforts in gathering & reconciling data across locations. Improves Employee communication & coordination with Alerts, Notifications, Reminders, e-Approvals. ERP software makes reporting easy & fast, at the click of a button. This saves a significant amount of time and employees can make data-backed, timely, decisions.

Employees will then be able to focus on value-added activities such as designing better business strategies for bringing speed in business, acquiring more customers, and superior organizational performance.

7. ERP helps become a customer-centric organization

Always put yourself in the customers’ shoes and see what they need. If you can become a customer-centric organization and provide maximum value to customers, you will surely

gain “Happy Customers” who spread the good word about your company and it will become easier to acquire new customers.

Salespeople can use insights from ERP CRM Module to provide valuable advice, personalized recommendations as per customers’ needs, this helps build trust, credibility, and establish long term relations. ERP provides a close watch on the supply chain and ensures the timely delivery of products to customers.

ERP enables us to inform customers about order confirmation, share details about dispatch, email invoices. ERP tracks their service request, complaints, and enables companies to provide prompt service and action to ensure customer satisfaction. Based on customer feedback, companies can provide innovative products to meet their requirements better. This helps to achieve, customer retention & addition, which is most crucial to improve your profit margins and grow your business.

Summary

If you are looking to grow your business & increase the profitability of your business, be extremely vigilant about every area of your business. Define KPIs and monitor your performance religiously. Keep a close eye on any signs, symptoms, indicators that can help you Plug the Leaks. As they say, A Stitch in Time, Saves Nine.

You can consider leveraging ERP Software & technology to digitize & automate your business to achieve the above-mentioned objectives.