The latest advancement in business reporting software is the development of cloud based ERP solutions. ERP stands for Enterprise Resource Planning, a computer software system that is designed to help monitor every aspect of a business’s processes.
The Gartner Group first used the term in 1990 to describe a new computer system that enhanced material requirements planning (MRP). These systems were built to provide close to real time reporting of the whole manufacturing process, from sourcing materials through to completion of a product. ERP helps to identify bottlenecks in the production line and delays in sourcing materials that can significantly reduce manufacturing output.
Over the next two decades ERP systems became more advanced and started to incorporate all aspects of a business, adding accounting, payroll, customer services and human resources to the software solution. This provides management with an enhanced level of business reporting that can help boost productivity, reduce overheads and ultimately increase profits.
Different types of ERP
There are essentially two types of ERP system. The first, which was once standard, is a bespoke in-house computer system that physically connects each part of a business to the central ERP hub. These systems usually require computer hardware investments and a dedicated IT support worker to manage the ERP system. This format is very expensive and it is for this reason that most small businesses have not implemented ERP solutions.
Fortunately, the Internet has provided a new solution; cloud-based systems accessed via the Internet. A specialist provider manages ERP software and all data is transferred over the Internet. The ERP system is accessed via a standard web browser allowing the front-end user to input data, and management to run reports. Because these are operated in the cloud only normal hardware costs are involved.
The benefits for small businesses
Cloud based Online ERP solutions benefit small businesses for two main reasons. First, as mentioned above, there is no extra hardware cost. Second, modern ERP solutions are modular based, which means a basic package can be implemented and as the business grows, further modules can be added.
Blackwood Engineering succeed with ERP
There are some examples of local businesses that have implemented ERP successfully. Blackwood Engineering in Gwent is a supplier of finished counterweights to the construction, agricultural, access and automotive industries. They source low-cost pre-engineered castings from China and finish the products in the UK in accordance with client requirements.
This is a traditional production line with the sourcing and conversion of raw materials into a completed product. The production line includes project management; engineering, quality control, import, export and distribution, inventory management and finishing operations.
Until 2008, Blackwood Engineering managed this process well; however, the global recession saw their orders and margins decline. Blackwood needed to become more competitive so they arranged to have a fully-integrated Enterprise Resource Planning system delivered that managed Customer Relationship Management (CRM), Inventory and Procurement Management, Operations and Distribution Planning. The ERP provided regular reports for management that allowed decisions to be made more proactively.
When the market started to recover Blackwood were able to take advantage of its reduced costs and increased margins to double turnover. Once again the business started expanding.
ERP can make a real difference. It is often difficult to comprehend how it will work until the system is in place. It helps managers make better decisions at all stages on the production line. It does not only help with manufacturing; all forms of business can benefit.