Time is money, as Benjamin Franklin stated in his letter Advice to a Young Tradesman, Written by an Old One, and as a Founding Father of the USA his advice still carries weight in the business world today.
One of the greatest tasks for entrepreneurs is to manage their businesses effectively, without cutting corners, to maximize profits and ensure that effective solutions for every aspect of the business are in place. Streamlining management systems is one of most valuable ways to reduce costs, enabling the traditional functions of business, such as human resources, finance, manufacturing, sales and marketing and supply chain management, to be part of a fully integrated system. In this regard Enterprise Resource Planning (ERP) is the ideal tool for an organization to utilize.
What is ERP?
ERP provides businesses with a system whereby all those traditional and usually separate functions are rolled into one. The system is made up of various modules and sub-modules, each representing a specific business element. Entering data into one module automatically updates modules that are related, and does this in real time. Thus, for example, if data is entered into the module for receiving, it will update inventory and accounts payable, removing the need for multiple entries of identical data.
The advantages of ERP
Monetary resources for many businesses can be scarce, especially when economic times are as tough as they are at present. Securing a healthy bottom line is of paramount importance, and by using an ERP system significant cost savings can be made to assist with this. Instead of having several separate cost centers everything is combined into a single system, and with a reduction in the number of machines and servers required there is an immediate cost benefit to the business. In addition, fewer machines means less people needed to input data and thus a saving on the cost of human resources is realized.
Speed is of the essence when satisfying customer demand and using an ERP system means that time can be saved and productivity enhanced. The centralized database allows client details to be found quickly and the automatic updating process takes away the need for error correction. A more productive use of time can lead to earlier project completion dates and, consequently, reduced costs.
All businesses should take a strategic approach to planning, and ERP can assist by storing variables such as demographics and cost implications in the system, giving a range of options to the business and allowing CEOs and senior management a choice of how to move forward. It is essential to train those who will implement and use the system so that there is a real benefit to a streamlined organization.
Building a new enterprise
Entrepreneurs starting a new business can use ERM to help plan how the organization will work most efficiently and effectively. The system cuts out many wasteful areas of running a business, enabling the main focus to be on satisfying customers and making a good profit. When margins are squeezed and time is wasted on laborious and repetitive data entry into a number of cost centers, ERP can help create a smooth-running and slick operation.