Advantages & Disadvantages of ERP

Enterprise Resource Planning (ERP) is an advanced application suite that helps companies to manage and integrate their most crucial functions along with other vital advantages.

What are the ERP Advantages?

Since its introduction in the 1960s, ERP has gone through various transformations. From its earlier analog versions that were no better than calculating machines, it has reoriented itself to present business needs. Today, they are capable enough to store a long list of multiple vendors, build smart contracts, and perform trivial actions without any human intervention. They are fully loaded with digital capabilities that increase business competency. Talking from an environmental perspective, they have reduced paperwork to a bare minimum.

ERP (Enterprise Resource Planning) software is the go-to tool for managing your business needs — right from resource planning, order management, vendor management, account management, human resource management, customer relationships, product distribution, etc. The ERP software streamlines the entire process by packaging all these functions into one system.

Information silos — the confinement of data within a department — that once threatened the survival of businesses, have been uprooted. All thanks to enterprise resource planning software that helps facilitate interdepartmental communication. This allows different departments to collaborate and work as a combined unit for the company as a whole.

What are the Benefits of ERP System?

According to research by Aberdeen, ERP systems significantly reduce operating costs. They improve inventory returns by 57%, increase the cycle time from order to shipment by 20%, grow complete and on-time shipments by 18%, reduce operational costs and administrative costs by 18%, and 16% respectively.

The same research also tells that enterprise resource planning software helps companies grow faster. It helps increase productivity by 73%, make the process cycle time faster by 75%, and increment the customer response time by 75%.

Also, research commissioned by Sage in Europe and North America shows that mid-market companies with improved data quality, usability, intelligence, and mobility register an increase of 35% in their revenue than lower-performing companies. That’s an annual increase of USD 980,000 in revenues for a company that earns USD 42 million in gross revenues.

Sage X3 ERP Benefits

Sage X3 is a full-fledged enterprise resource planning software that provides you an edge in your industry. It’s flexible, faster, and simple to operate and will take your business to the next level. It has been specially designed keeping in mind your business priorities. i.e. getting new customers, reducing your operating costs, and growing your revenue. Our ERP software has proved its mettle by lowering operating costs and removing inefficiencies.

Sage X3 ERP System to Expand your Business

Usability

Simply put, Sage X3 ERP software helps your staff spend less time looking for data and gives them more time to act on it. It provides a simple-to-use yet engrossing web experience with advanced functionalities. One of the reasons why it is being adopted by users at a fast pace is that it provides a multi-browser experience. Thus, it can run on the browser of your choice — Google Chrome, Microsoft Bing, Mozilla Firefox, etc. Another benefit of ERP is that it provides a role-based functionality. This means that users no longer need to depend on different modules such as Inventory, MRP, Ledger, MES, etc. Instead, role-based workflows are defined and are configured for each user’s role. It improves their productivity and allows them to work faster because they don’t have to move in and out of the application now and then. Everything can be done at the click of a button. The following example illustrates this further. Consider you are a customer service representative. Your job is to answer customer queries. To ease your work, Sage X3 ERP software customer inquiry workflow will help you confirm an order, determine the current location of the order, and also confirm the shipment date through the same window.

Mobility

Mobility is one of the most important benefits of Sage X3 ERP due to many reasons. First, it allows users to access the ERP from multiple mobile platforms — including Android, iOS, and Windows. Second, the expense management feature allows users to auto-scan and pre-fill expense details, and upload receipts on-the-go. Third, the customer field allows creating a database that holds account information such as name, address, contact number, and customer financial data. It also tracks key customer sales, order entry, and customer service details. Another application of ERP includes the creation of commission structures based on margin, sales revenue, and quota attainment. Commissions can also be paid a receipt of payment from the customer. Also, it allows sales representatives and managers to gain online visibility of commissions and quota attainment. Additionally, ERP software also manages the purchasing workflow. It handles the stock and non-stock items, allows vendor selection at the item and user level, and documents the presence of capital items or non-stock items. It also provides a 360-degree view of inventory across the supply chain. It groups items under different categories and provides end-to-end real-time visibility for effective analysis and control. The ERP system also provides the ability to create your app with the mobility toolkit.

Control

An ERP system provides control over 5 different features. They are as follows.

a. Accounting & Finance: Sage X3 provides detailed financial reports that include balance sheets, income statements, cash flow projections based on inventory management, account receivables, account payables, order statuses, customer order pipeline, allocations, etc. These reports don’t just provide you a financial overview, they also help you manage your business effectively.
b. Sales: ERP system advantages also include detailed sales reports. It involves giving different prices, quotes, & contracts, taking order entries, giving product configurations, allocating inventory, maintaining delivery scheduling and shipping, producing invoices, recording customer returns, and reporting sales commissions.
c. Purchasing: An ERP system also has purchasing capability. It allows generating purchase requests, creating encumbrance accounting, making requests for proposals, producing purchase orders, designing subcontracting documents, and composing a fast-track and convenient multi-level approval system.
d. Inventory: Your business needs inventory reporting as well. This is where an ERP comes as a savior. It helps to make multi-level warehousing and location management arrangements. It eases movements and transactions of raw materials. It monitors quality control and balances the cost of the entire process.
e. Customer Service: To make your business reach the next level, you need to focus on providing excellent customer service. Sage X3 is an ERP software that provides contact management and warranty management service. It also enables sales representatives to provide better customer support. Additionally, the ERP software also takes service orders, has a big knowledge base, and helps create campaigns.

Intelligence

According to the research conducted by Aberdeen, small business managers take about 11.5 days to know about the events impacting their businesses. One of the most important advantages of ERP is that it provides real-time dashboards that help monitor key performance indicators. It helps make better management decisions, increase employee efficiency, and improve overall business performance. It provides a dynamic audit trail that tracks schema changes and before/after values including those items that have been deleted. It provides export units in multiple formats including PDF and Excel for distribution. More benefits of ERP include statistics and inquiries for sales related matters such as total sales amount, total sales cost, the total number of products sold, total sales margin, etc. The ERP system benefits don’t end over here. They also provide self-service analytics. This allows users to perform queries and generate reports through the use of non-programmatic methods. Thus, they don’t have to depend on an IT department to support them. Furthermore, an ERP system also has advanced business intelligence that provides predictive analysis and enables you to create successful strategies for the future. Additionally, it provides real-time data that helps users to make decisions on accurate data rather than intuition. Furthermore, it enables ERP software to build reports in any format that the user requires. Business intelligence tells where the business stands and brings clarity in day-to-day activities.

Responsiveness

Responsiveness is a core element of an ERP system. This is because of the following reasons. First, it provides simple access to inventory by determining the robustness of the SKU item master file. This includes monitoring product costing methods and calculating when a product will go out of stock. It also streamlines the analysis and purchasing functions. Second, it creates quotes by considering various parameters such as accurate tracking of the involved costs — including labor, outsourced operations, materials, equipment, etc. It also eliminates the tedious data-entry process and employees no longer have to complete quotes by hand. The benefits of ERP systems also include seamless group collaboration. This means teams can work together from remote places without any difficulty. Furthermore, it also supports the creation of business process mapping. These maps tell what a business does, who is accountable for what task, and the different steps that are needed to be taken to accomplish the task. The best way to measure the responsiveness of ERP systems is to check how frequently they send notifications and alerts. Sage X3 provides notifications through messages and mails so that you always know the current situation of your business.

Profitability

In the corporate world, if a business isn’t profitable, it can no longer carry on its operations. This makes measuring profitability one of the most important ERP advantages. Sage X3, our leading ERP software takes extensive measures for cost control. It does this by maintaining an adequate amount of inventory, controlling the supply chain — from ordering to warehousing to shipping, and through improved invoicing. ERP software also forecasts stock requirements and purchases. It does this by analyzing historical sales trends, supplier trends, seasonal factors, checking customer reviews, closely watching government constraints, and business rules. Additionally, ERP software also increases the profitability by automating purchase approval. This is essential because there are multiple stakeholders in the document approval chain. If a lot of time is wasted in getting permission, then it will slow down business processes and negatively impact its profitability. Another useful feature of ERP systems is ‘replenishment automation’. The first method to accomplish this is the Reorder point. In this method, the ERP software puts a safety stock level. If the inventory quantity falls below this level, a replenishment order is placed. The second method is called lot-for-lot replenishment. In this method, as soon as a unit is sold, the ERP software automatically replenishes the inventory by the same amount. Sage X3 ERP also supports user-defined dashboards. Users can personalize their dashboards and keep the most important features on the front screen. This helps them to monitor and keep control of business-critical functions. They have to spend less time searching for relevant functions and implementing them becomes quick and easy.

Expansion

Expanding a company’s reach is one of the most important ERP uses. ERP systems do this by ensuring several factors. First, they adopt a multi-company approach. This means that not only do they support a centralized management system for all the companies operating under a holding company. But they can also manage each of those subsidiary companies separately. An ERP software also provides a multi-site functionality. This means that it successfully manages your business if it has distribution or manufacturing facilities across different regions with varied production capabilities. Another plus point of ERP software is that it helps manage businesses on a global level. Businesses need to adhere to both —regulatory and ethical standards — that are prevalent in their industry. This is why a majority of businesses are turning to corporate governance, risk, and compliance (GRC) solutions. With the inclusion of the GRC module in the ERP, businesses will be able to take care of regulatory compliances— Tax compliance, Business Process Automation, Customer protection, Financial Reporting, Audit trails, Sustainability, Value creation, and Traceability—easily. Scalability is one of the other advantages ERP has. They can easily be customized according to the needs and requirements of the company. Flexible parameterization is one of the benefits of E R P that helps companies immensely. They define the responsibilities of employees, assign roles, establish processes, configure interfaces, generate passwords, create warnings, set alarms, and adapt workflows.

FAQ

What is ERP Modules?

ERP software has several modules that perform crucial business functions like finance & accounting management, marketing & sales management, warehouse & supply chain management, customer relationship management, and vendor management to name a few.

What are the four modules of ERP?

Modules of ERP:

1) Finanace and Accounting ERP Module
2) Sales and Distribution ERP Module
3) Production Management ERP Module
4) Human Resource Management (HRM) Module
5) Quality Management System (QMS) Module
6) Plant Maintenance Management ERP Module
7) Supply Chain Management (SCM) Module
8) Manufacturing ERP Module
9) Customer Relationship Management Module

Do ERP Modules Help Businesses?

ERP modules help businesses address their specific industry needs quickly and efficiently. They have a broad array of features that help businesses become more mobile and agile to counter everyday challenges faster and smarter. The best part is that ERP modules are scalable, meaning that they evolve with the changing business needs.