ERP optimization is the process of analyzing an existing ERP to address known gaps in the system or expose unknown ones so they can be addressed. An optimization may reveal productivity issues that an enhancement or development can alleviate, improving efficiency for optimal performance and results.
ERP optimization can help keep your business profitable, on the cutting edge, and ahead of the competition. As with a full implementation, to be successful, an optimization project must have executive sponsorship from the top of the organization. This support must be driven from the top down and is one of the most critical parts of ensuring that everyone in the organization embraces the changes to the ERP that can come as the result of an optimization project.
Mapping your ERP Process
An ERP optimization project requires detailed business process mapping that accurately reflects the current state of the business process, the desired state of the future process, and how the improved ERP fits into that process. ERP business process mapping helps ensure that the goals of the project are universally understood, adopted, and remain in focus from initiation through to the launch date.
ERP Optimization in Phases
Getting the most out of an ERP can sometimes mean phasing-in additional modules after go-live. There are instances where some functional areas or complete modules are not feasible to include in a go-live implementation plan. However, keeping these modules on a scheduled, phased implementation plan is critical to getting the most out of a modern ERP where all of the modules are tightly integrated. Often, modules that are not completely necessary at the time of go-live will be added to a phase two or three list. Beware, though! In our experience, we have found that these additional phases often get pushed out multiple times after the go-live date. To ensure they don’t get lost, post-launch phases should be incorporated into the optimization plan with timelines and goals attached to them.
Production planning is all about dodging the puddles and potholes on the manufacturing road that tend to waste valuable time and resources. By filling them in once and for all, you can streamline the whole process and make the production flow smoother. When the goal is reducing overall manufacturing costs, you should aim for optimal usage of the available resources. Easier said than done? The following guide highlights the core benefits of adopting an ERP / MRP system.
ERP Cost Benefits
Both small businesses and large corporations should look for ways to reduce manufacturing costs while improving overall efficiency. One-way companies can do so by using ERP to combine their operations in one place. Its precise reporting lays the foundation for more accurate planning. The following are specific areas where production with an ERP can save costs.
Managing inventory is a major headache for every business, mainly because of the occasional overstock that takes up unnecessary space. ERP software provides you with data to ensure that you only order the inventory when needed and create a balance between supply and demand to avoid a stock surplus.
Controlled Supply Chain
ERP offers better control over ordering, warehousing, inventory control, and shipping to aid accurate planning and avoid costly surprises. Result? Controlled expenditure.
Fewer Operational Hiccups
It is not uncommon for minor problems to occur in business operations, but those issues can delay the whole production. With the help of ERP, planners can recognize these complications at the first sign of them and stay one step ahead.
Without ERP, businesses would need separate tools and programs to keep tabs on different departments like sales management, manufacturing planning, HR planning, finances, and more. These tools can be quite expensive if bought separately. Since ERP lets you access all the departments from one central hub, you can drastically reduce costs.
With ERP, the information flows more efficiently and smoothly throughout the business, so you cut down on communication delays, improve the accuracy of the information, and, therefore, can better assist planners in making optimal decisions.
ERP Benefits for HR
Manufacturing HR planning, another herculean task, becomes a piece of cake with ERP. An HR module offers tons of benefits that improve overall communication and help managers get a better overview of human resources. Some notable ERP benefits for HR are:
An HR module in the ERP system connects to a database which holds information about all the employees. Managers can use this to assign tasks and manage their workforce. Employees can use this module to raise any issues they might have and get faster responses from the management.
Strengthens Employer-Employee Relationship
ERP allows a direct line of communication between employers and employees, which removes unnecessary hurdles and improves the relationship between both parties.
Helps Employees Grow
HR modules can also be used to share the training information employees need to improve their knowledge and skills further. This includes video or text-based online courses.
Without an ERP, managers would have to gather data from various sources, whereas with ERP, everything is accessible from the HR module. This alone frees up a substantial amount of time to focus on more important matters.
ERP Benefits for Sales
The benefits of ERP go beyond optimizing the production process and reducing manufacturing costs. It also helps businesses achieve their sales goals faster and allows decision-makers to view the accurate cost of a product in one place.
Complete Cost Data
All components of costs for a product can be brought together with the help of ERP. Expenses such as inventory, transportation, manufacturing, and storage can be viewed and modified from a single dashboard. They can be easily shared with the accounting department as well.
ERP speeds up the business cycle through timely invoicing. The faster you send your invoices, the quicker you get paid for every sale.
ERP tracks the quantity of inventory in real-time, and as soon as it is near depletion, ERP automatically triggers the order to the supplier. This eliminates any lag in the manufacturing process and enables you to make timely sales without losing customers.
ERP software package usually has accounting module, so all financials from manufacturing costs to sales and payments are clearly visible.
The Litcom Approach
The Need for Optimization: Why Would Your Organization Require An ERP Improvement Program?
- Your organization has not fully recovered from the post go-live performance drag within six months of the initial rollout.
- Streamlined business processes and anticipated productivity improvements remain elusive, while your organization struggles with informal processes and workarounds.
- Low user acceptance because the ERP system is not meeting the immediate business needs.
- Technical issues with software vendors are unresolved with no resolution in sight.
Litcom has worked with a wide variety of ERP products as well as the various functional areas within them. In order to achieve the desired results, we utilize a structured methodology which breaks projects into four distinct phases:
- Planning and Analysis
- System design and prototyping
- Development and testing
- Training and rollout
Contact us today for additional information.