Six Signs You’re Ready for an ERP

Do you really – really – need an ERP system? Peers have probably recommended it and you’ve read articles touting the benefits, but maybe you’re still wondering if it’s what your job shop needs. If you’re not certain a cloud-based ERP system is a tool that will help your job shop be more efficient and make your efforts to grow more effective, read this post. If you recognize your job shop as we describe the best candidates for a system, then you’ll know that your answer is “yes!”

You probably know, as a member of management or the job shop’s owner, how you’re doing this month and what orders are in-house that will affect next month; you may even be able to project three months into the future. But do you know what your average sales margin is? Are you aware you currently have inventory excess of “Product A?” Or that you’re losing money each time you sell a XYZ widget to a customer because of shipping costs?

 

An ERP system gives you 360-degree visibility to the granular detail of your business and provides the insights that allow you to see the cause-and-effect of every move you make, while helping you make better decisions based on what you see.

 

Many job shops operate with a convoluted, pieced-together set of tools; one software product to do accounting, Excel spreadsheets to manage inventory, an old version of another software for payroll, a third for accounts payable and accounts receivable. They function “okay” but most people working with this type of system say it’s a process of applying bandages and making quick fixes to make up for what they don’t have. Staff members probably do a fair amount manually, too, which is time-consuming and likely to cause costly errors.

 

This approach also means that your various front- and back-end systems aren’t talking with one another, so what you put into one system doesn’t affect any other. Plus, you’re undoubtedly doubling or tripling your efforts in some cases, entering data from one system into another (and crossing your fingers that what you enter is accurate).

 

A cloud-based ERP system is capable of monitoring and measuring most every business process in your job shop — from accounting and customer service to inventory, transportation, purchasing and labor — and all are integrated. If you have excess inventory in the warehouse, purchasing, transportation, sales and every other functional area knows it and can act accordingly.

 

3. “Doing the Books” is a Painstaking Task

How long does it take you and your team to do end-of-month reporting? Is it something akin to extended water torture? With Excel spreadsheets, paper invoices and orders, and disjointed software programs, it’s usually something to be dreaded. When you’ve got a cloud-based ERP though, everything is in one spot, reported in real time and simple to reconcile. Most ERP users say that using their ERP system for reporting reduces the time it takes – some up to half – compared to old methods. That’s a lot of time to get back – time that can be spent on more productive activities. Not only that, but optimizing your accounting processes speeds the order-to-cash cycle by up to 50 percent (Nucleus Research and Hurwitz & Associates).

 

Satisfying your customers is the “make or break” that determines if your customers will keep returning; if they don’t get their products when they need them, and delivered to where they need them, they’ll find another supplier. But managing inventory levels isn’t easy when you use outdated methods — you often end up with shortages or overstocks, so either you’re not delivering or you’re paying for stock to sit on a shelf.

 

With an ERP system you have up-to-the-minute information about your customer: when product is sold, when it’s being delivered, when it’s been paid for (or when payment is overdue) and how issues are being handled. Customers, too, can access their account to review their most current data.

 

The only thing scarier than working with outdated business management tools today is working with them tomorrow. As you grow, get new customers, and expand into new markets with new products, how will your system keep up? The errors and missed opportunities you’re experiencing now will be compounded with growth – just when you need it most. An ERP system is a scalable solution that grows with you. In fact, it’s going to make growth possible because the insights you get from the visibility will open doors and allow for profitable growth.

 

Many job shops say they’re not closing enough quotes; others say their estimates are frequently wrong because the quote was based on missing or inaccurate information.

 

With an ERP system you can build detailed estimates that incorporate pricing, sales tax and discounting rules automatically. In addition, components of your pricing are automatically added, including material costs, process operations, margins and commission. You can then convert quotes into sales orders and route them to the finance team for invoicing and revenue recognition.