ERP benefits & goals

Comprehensive summary

Freddy Czaja

The goals & benefits of an Enterprise Resource Planning (ERP) solution are basically the same. An ERP helps companies map, control, and store information without using a variety of software and manual manpower. The following is an overview of the objectives and benefits of enterprise resource planning softwares and the explanation for this.

Contents

Lowering costs
Efficient use of resources
Minimize IT costs
time savings

Better overview of the company
Better evaluation of Key figures
Faster information retrieval
Uniformity & transparency

Optimization of processes
Improvement of planning quality
Improvement of process quality

Central data storage
DMS documents
Common database
Secure administration & data

Fewer software and interfaces
Less effort through interfaces, adjustments, migration

Improved collaboration
Better employee knowledge & employee motivation

Lowering costs

Lowering costs is one of the key objectives of enterprise resource planning software. Almost all the goals and advantages of an ERP have something to do directly or indirectly with it. It is achieved, for example, by reducing administrative overhead, optimizing processes that would otherwise be manual, saving administrative, staffing, and IT costs. Another key point in cutting costs is optimizing warehouse management.

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Use resources efficiently

Resources in the company are material, capital, personnel or operating resources. The efficient use of resources is synonymous with efficient Company governance. Let's say a company can optimize the storage so that the materials and products permanently available in the warehouse do not exceed EUR 7 million (and earlier 10 million EUR), without any restrictions on sales or production. This would mean that by reducing the capital tie-up by 30% (3 million euros), more money will be available to other divisions. How can this be achieved? Through optimized minimum and maximum storage quantity regulations.

Minimize IT costs

Clearly, the introduction and management of an ERP costs a lot of money. By combining several IT software in the ERP, costs for IT specialists or for the software itself can be saved. This is even simpler today than it used to be, because software is offered as SaaS (Software as a Service) in the cloud and there is no need to purchase the hardware.

Time savings

ERP saves time! Whether in the automatic creation of orders, returns slips, delivery notes and invoices or the elimination of other complex, manual processes - with an ERP can a processes efficiently mapped and controlled.

Better overview of the company

ERP systems provide a better overview of the entire company, subsections or individual processes. The converging data in the ERP is necessary to make informed decisions in the company. This concerns small things like the dispatch of articles and big decisions, like high investments in the enterprise.

Better evaluation of Key figures

The evaluation of data is a big issue in companies. An ERP makes it easier to generate evaluations and reports from the data obtained, in order to make informed decisions. You can create a variety of diagrams, lists, pivot tables and much more. Also, data can be compared over a long period of time, which also helps to make the right decisions.

Faster information retrieval

Another great advantage of ERP systems is that all business units are networked and data is available in real time. This makes it possible to make informed decisions on short notice without having to wait for tedious evaluations and reports.

Uniformity & transparency

In medium-sized and larger companies, it is not always easy for managers and bosses to closely monitor all divisions. The transparency of enterprise resource planning software makes it possible to obtain information transparently and assess the situation of the company within a short period of time.

Process optimization

Process optimization is one of the main tasks of corporate management and an ERP system. It starts with small things like using master data for all ERP areas and goes to the full automation of processes that are far from standard. ERP systems can be differentiated into customizable and not customizable; Companies that only have standard processes should opt for a simple ERP. Companies with special processes should opt for a customizable ERP or industry solution.

In summary, the advantage of an ERP for many companies is the ability to use software to map, control and optimize processes that are normally done manually.

Improvement of planning quality

With the help of an ERP, the planning quality in the company can be decisively improved. In production, the good overview in the ERP always helps to have available a certain number of employees  for the individual production steps and, of course, that the materials and products are delivered on time, in the right quantity and in the right place be available.

Improvement of process quality

Example: By using barcode scanners, mistakes can be avoided even before the start of production - which naturally happens by humans. So it is the task of an ERP to decisively improve the process quality during production in order to avoid costs wich happend through mistakes in the production. The process quality in the production concerns the development, production planning, management, administration and procurement processes.

Central data storage

The central data storage in a software offers many advantages. It facilitates collaboration, saves costs, avoids redundancies and enables consistent storage and mapping of company data.

DMS

An electronic document management system offers advantages that manual documentation in many cases can not offer. It manages all data centrally, provides information immediately, can - if it is wanted - be used worldwide and can be secured "easily". The electronic DMS also avoids high costs in the paper-based storage of data and supports the statutory filing obligation.

Common database

A common database avoids redundancies, prevents errors in the transfer of data and improves the cooperation of the different areas in the company. By redundancy, it is meant that the same data is entered and available multiple times. Errors occur when, for example, master data is transferred from one software to another.

Secure administration

It's easier to manage a system than 10 systems. While it seems easier in days of cloud offerings and SaaS solutions, the complexity and time to spend on administrative work (creating backups, checking for security breaches and deficiencies, etc.) can not be ignored. The same goes for the security itself. So the risk of stealing important data is much higher for multiple software.

LESS SOFTWARE

The reduction of the used software in the company, has positive effects in the most different areas. The key benefits are that all the information in ERP is converged, mapped and managed without that to much softwares makes the managing of the business inefficient. Further, the focus on one software correlates with the previously mentioned advantages of an ERP such as: reducing costs, reducing administrative overhead or reducing complexity.

Interfaces, adjustments, migration

Through reducing of softwares & isolated solutions within the company, the cost-intensive creation, adaptation and migration of interfaces to the individual software solutions is also reduced. But that is only one point of the "three" sides of a coin, because also the ERP and the connected software itself must be regularly updated and maintained.

Improved collaboration

Work that can not be completed because, for example, information has to be requested inconveniently obstructs one's own and cross-departmental workflows. An ERP supports cooperation on all levels through a common database. As a result, all information can be retrieved, documented and shared in the system - which makes collaboration much easier. See paragraph "Central data storage".

User knowledge & Employee motivation

If the number of software solutions is reduced, employees can specialize in one or a few software. This has twofold advantages: First, employees master the softwares better because they basically specialize. Secondly, employee motivation increases because ERP reduces manual, time-consuming work, and because focusing on a few (softwares) mentally relieves employees.

About Freddy Czaja

SEO is the air he breaths. If it has a bit of Oxygen, he doesn't care/ He likes his coffee black and cold.