When should an organization start in computerization or ERP implementation?
We’ve been encountering potential customers who are trying to simplify their operation by thinking that a business software will solve all their problem. But the fact is, an ERP is only a tool for executing a defined business process and not the solution itself.
The following are our some indications to start implementing an ERP solution:
- Frequent stock shortages or missed sales. This can be solved by having reorder points based on sales and/or stock consumption.
- Over inventory stock and inventory handling/carrying cost.
- Frequent product or material obsolescence. ERP can have a facility to generate sales performance per product and per profit center.
- High overtime, material, labor, and overhead (negative) variances. Automated production reports on a per job order basis can simplify decision making real-time.
- Frequent arrears in accounts receivable. ERP can generate Aging reports and automated SOA and dunning.
- Over customer invoice deductions/credits. These credits are effects of delivery inefficiencies.
- Over staff. ERP may result to potential headcount reductions since it increases the “throughput” within the business-time to produce one unit of output is less using the same number of employees (in both administrative and operational areas).
- Consistent Pilferage. An organization can employ automated accountability forms and audit trail to reduce pilferage and establish more control.