One of the keys to a successful enterprise resource planning (ERP) system implementation is to fully understand the specific functionality your organization requires from the software.
Remember, ERP systems are not one-size-fits-all solutions. Choosing the right ERP for your specific needs is crucial.
Prior to configuring and implementing an ERP solution, an organization will first need to define what it actually needs out of the system. This process of documenting business requirements and redesigning business processes is carried out during system evaluation and implementation planning. “We find far too many companies who purchase a new ERP solution expecting it to simply fix existing problems,” explains Brian Potts, CEO of ERP Technology Partners. “Unfortunately, it doesn’t work like this and requires significant effort to define and align the capabilities of the system with the needs of the organization.”
A well-implemented ERP can be a game-changer, streamlining operations, boosting efficiency, and empowering data-driven decision-making across your entire organization.
Core Features Companies are Looking for in ERP Selection
Software Path reviewed 1,384 ERP projects for its 2022 ERP Report and found that while there is no single answer across all industries, there are some core features that a majority of organizations are seeking in ERP implementation.
“86 percent of companies require accounting in their ERP as a core feature. Alongside, most companies also require inventory management, purchasing, and sales as a base requirement for their ERP system,” reported Software Path. “There has been an increase in the number of companies looking for distribution and shipping/logistics as part of their ERP functionality which could suggest companies are combining systems across departments and focusing on one system that meets all cross-departmental needs.”
- Per the study, core features companies were looking for when selecting ERP included:
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- Financial management (accounting, budgeting, and forecasting) 86.55 percent.
- Inventory management 78.96 percent.
- Procurement Process and Purchasing 62.58 percent.
- CRM and Sales features 47.83 percent.
- Supply chain management 46.1 percent.
- Distribution 41.43 percent.
- Shipping logistics 41.21 percent.
- Navigating the ERP market can be confusing and exhausting. There are so many variables to consider such as new and exciting functionality, integration needs, data concerns, etc., that understanding options around costs, deployment options, and time needed to implement a new system can cause companies to delay much-needed technology initiatives. “Don’t risk losing competitive edge by endlessly delaying your digital transformation,” explains Potts, “we are here to help.”
A Closer Look at ERP Core Functionalities
Let’s take a closer look at how ERP systems tackle the complexities of various functions, ensuring seamless operations and data-driven insights:
- Financial Management:
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- Accounting: Ditching spreadsheets and manual entries, ERPs streamline accounting with real-time data on financials, receivables, payables, and general ledgers. Automated journal entries, reconciliations, and tax calculations boost accuracy and save time.
- Budgeting and Forecasting: Gone are the days of siloed data and guesswork. ERPs empower you to build flexible budgets, analyze historical trends, and generate accurate forecasts based on real-time sales, inventory, and cost data. This allows for proactive financial planning and informed decision-making.
- Inventory Management:
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- Real-time visibility: Say goodbye to blind spots. ERPs track inventory levels across warehouses, providing instant insights into stock availability, location, and movement. This eliminates overstocking and understocking, optimizing storage space and purchase orders.
- Demand forecasting: ERPs analyze sales data and market trends to predict future demand patterns. This allows you to optimize production schedules, maintain ideal inventory levels, and avoid costly stockouts or excess inventory.
- Procurement Process and Purchasing:
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- Streamlined workflows: Forget the paper maze. ERPs automate purchase orders, vendor communications, and approval processes, saving time and reducing errors. Automated price comparisons and vendor management keep costs under control.
- Compliance and risk management: ERPs ensure adherence to purchasing regulations and supplier contracts. They track supplier performance and flag potential risks, enhancing supply chain security and compliance.
- Sales, Marketing, and Customer Service:
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- 360-degree customer view: ERPs consolidate customer data across touchpoints, providing a holistic picture of interactions, buying habits, and preferences. This enables personalized marketing campaigns, targeted sales strategies, and improved customer service.
- Sales pipeline management: Track every lead and deal efficiently from initial contact to closure. ERPs automate workflows, assign tasks, and offer data-driven insights to guide sales reps toward maximum conversion rates.
- Supply Chain Management:
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- End-to-end visibility: Gain real-time insights into production schedules, supplier deliveries, and logistics movements. ERPs track and optimize the entire supply chain, minimizing delays, reducing costs, and improving on-time delivery.
- Warehouse management: Optimize warehouse operations with efficient picking, packing, and shipping management. ERPs track product locations, automate tasks, and streamline shipping processes for improved order fulfillment and customer satisfaction.
- Distribution:
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- Multi-channel management: Manage sales across online and offline channels seamlessly. ERPs integrate inventory data across channels, ensuring real-time availability updates and efficient order fulfillment, regardless of the sales channel.
- Route optimization: Plan and optimize delivery routes for maximum efficiency and cost savings. ERPs analyze factors like traffic, fuel costs, and delivery windows to generate the most efficient delivery routes for your fleet.
- Shipping Logistics:
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- Automated shipping processes: Generate shipping labels, track shipments, and manage documentation effortlessly. ERPs integrate with shipping carriers, automating tasks and eliminating manual data entry.
- Real-time tracking and visibility: Track shipments in real-time across different carriers and modes of transportation. This provides customers with accurate delivery updates and allows you to proactively address any delays or issues.
- Manufacturing:
- Production Management: Optimize resource planning and scheduling, reduce redundancy and downtime, and increase efficiency.
- Maintenance and Asset Management: Track and analyze equipment performance data to enable proactive maintenance while minimizing downtime.
- Quality Management: Provides a central source to capture and analyze production metrics, ensuring the products meet standards for certification and regulatory adherence.
Understanding how your new ERP system can enhance the functionality most important to your organization can ensure that the software becomes a strategic asset, contributing to operational efficiency and supporting business goals.