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Using ERP to Conquer Inefficiency in Your Business

 
2017-07-31 
John Baxley, CPA 
 
Imagine this scenario: you finally realized your childhood dream of inventing and manufacturing your own line of bendy straws (we are labeling you as a “visionary”). Within months, competition arises, but you believe you have the advantage of product design and costs. Soon enough, you find out your competition is selling their product at 70% of your price. No amount of cost cutting you can think of will allow competition with such a discount and your short reign as king or queen of the flexible-drinking-experience-augmentation market is over.

Now you may not identify with straws but how about computers, furniture, or aerospace? The truth is that competition in any industry will revolve around one central issue: costs. These costs come in many forms but the one most often overlooked is efficiency costs. My priority as a CIO or controller would be: how can I detect inefficiencies and more importantly, how do I fix them? Both questions can be answered through the utilization of Enterprise Systems (ES). ERP affects nearly all aspects of business operations, so it is important to break down its fundamental aspects.

The ERP Trifecta

Enterprise processes such as purchasing or production can have ERP embedded in them, providing valuable assistance to employees. This assistance comes in three forms. 

First is informing users that a task needs completion, such as material orders or product shipments. ERP can also provide relevant data and provide the means to complete a task, all in one instance.

The second form comes through data provision. Using ERP means that data need only be entered once and can be relied on for immediate feedback. If a customer order needs looking up or a shipment needs tracking ERP data is easily accessed by those who need it. Further, this data will be useful for analytic purposes.

The final and arguably most useful form of assistance ERP provides is through monitoring process performance. ERP gives feedback based on established standards which reveals inefficiencies or red flags which need further investigation.

If you had used ERP during your foray into the liquid-to-mouth-transportation market, a report would have been generated showing a gradual increase in lead time for receiving raw materials. This would have prompted an investigation of your vendor revealing they had suffered a warehouse fire, severely limiting their ability to fulfill orders quickly. Had you added new vendors, production would have increased by 20%.

Purposeful Customization

The beauty of ERP comes forth through its ability to be tailored to fit a company or industry specific need. However, straying from the standard ERP format should only be done in areas which present a unique challenge or obstacle. Doing so keeps processes from becoming too complicated and therefore inefficient, a step backward.

Finding out which areas need customized ERP approaches comes down to how you fare compared to competitors. If customer service is lacking, use a custom ERP which brings up pertinent data when necessary and informs service reps when follow ups are needed.

When ERP allows for employees to work smarter and increase the availability of decision driving data, real change begins to occur. Suddenly, employees are initiating proactive solutions to barriers keeping the company from achieving goals in areas like customer service, production and accounting. Turns out that providing the right data at the right time fosters an environment of efficient, active goal achievement.

Eyes on the Prize

A successful ERP implementation will make use of all three forms of assistance that it offers, while customizing certain areas in order to provide deeper insight into issues along with solutions to everyday requirements. Such a system provides a powerful force which zeroes in on a goal and makes achieving that goal very possible.

Using ERP to track performance while seeking to meet goals and objectives keeps management involved on the ground level with what is happening in real time. Production managers can be alerted when materials get low or lead times increase and sales managers can track how long it takes to complete a customer service call.

What does this mean for you and your business? 

Information flows to those who know what to do with it. Data is collected for universal use. Inefficiencies are stopped and processes are improved. In essence, the greatest barrier to success has been removed: your limitations.

In the case of your ill-fated bendy straw business ERP would have identified the barriers preventing cost cutting, giving you the boost needed to rise above and provide superior drinking assistance services across the globe. 


 
 

 

 

 

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