Imagine a product that lets you sit at a computer and get the latest information on your products, inventory, logistics and financials - and that could automate ordering when inventory fell to a certain level.
With Enterprise Resource Planning, you can tie in almost every aspect of your business to one centralized system.
Its a category thats only existed for the last two to three years, says Coleman Barney, vice president of marketing for SolutionBank, a consulting firm that helps businesses implement ERP solutions. Companies went from just planning the product to including things like financials. They are now able to plan whats on the shop floor and project a budget. All the systems are updated simultaneously.
ERP originally was only used by large companies making complex, made-to-order products as a means of keeping track of large amounts of information. More recently, there has been a shift to using the system to simplify methods of manufacturing, including those used by small- and medium-sized firms.
You can build in alarms in the system, says Barney. When an inventory of a gasket reaches a certain level, it automatically notifies the supplier you need more, giving you enough lead time to get the product delivered before you run out. ERP can also be used in conjunction with customers, automatically shipping your products when their supplies dwindle.
Flexibility is the key to customer satisfaction, and is a prime component of any ERP system. You can set up your inventory to be customer or supplier controlled, if needed, or use the system to give your sales reps up-to-the-minute information.
Officials from one company thought they were losing sales because it took too long for sales reps to check products specs and inventory levels. After implementing an ERP solution, sales rep now sign onto the companys Web site and have real time data on not only the specs, but inventory levels as well. The order can be processed directly through the site, giving the customer immediate answers and a faster delivery time.
So who should be considering ERP?
Anyone that has multiple steps in their distribution or multiple components might be able to benefit, says Barney. The more complex the product or the more complex the distribution, the greater the advantage will be. If you have a simple process or only one or two components to your product, inventory costs and delivery is probably not a big issue.
To put in an efficient system with a decent return on investment, expect to pay around $100,000 for the smallest system, but that is dependent on the number of stations and the complexity of the software you choose.
Todd Shryock (firstname.lastname@example.org) is SBNs special reports editor.