More often than not, a business’ worst horror stories are a direct result of miscommunication between departments.
Picture a business–such as a catering equipment company that makes industrial ovens, stoves, and fridges according to customer needs and requirements. This type of environment is project intensive and requires many parts of the business to be involved and work together for successful delivery. If the sales department forgets to tell the purchasing department there’s a new project underway, by the time purchasing becomes aware of the project, time is tight and they are forced to use a different supplier from the one they regularly use, or incur late penalties.
The real problem though is that the new supplier charges a higher price than the regular supplier. What’s more, the order incurs additional charges because it has to be rushed in order to deliver to the client on time.
Miscommunication Affects all Business Units
The full burden of these extra costs falls on finance. And while this type of miscommunication may not cause too much stress when it occurs with just one project, it becomes a serious problem when it starts to affect almost every single job. Before the business knows it, the expenses budgeted at the beginning of the year have tripled, and the cost to manufacture has eaten into planned profit.
Often the reality for a business not utilizing an integrated business system like ERP is just that. Every week the finance department would have to track down the purchasing team and find out what they are buying, from who they are buying, and in what quantity. Not only would finance constantly need to be asking these questions, but the purchasing department would also spend a huge amount of time collecting the relevant data to pass onto the finance department.
The Invisible Power of ERP
And this non-stop process would need to be repeated across every single division. It quickly becomes cumbersome to rely on individuals’ remembering to e-mail information, constantly phoning and verbally sharing and checking on actions, updating spreadsheets, ensuring they are updating the right and most recent spreadsheet, and hoping no one messed up any calculations in the spreadsheets. It’s the absence of nightmare situations like these that tell you the invisible power of Enterprise Resource Planning (ERP) is at play across your business.
Because it functions seamlessly in the background, people often simply aren’t aware of the major role that ERP plays in connecting the various touchpoints of a business to create one holistic overview of the company.
When each individual in an organization plays their part by ensuring reality is mimicked virtually in an ERP system, all sharing of information and collaboration is driven automatically, behind the scenes. At the click of a button, teams across the organization, management, and finance have full visibility of the entire business.
In many ways, ERP is the invisible glue that holds a business together.
Planning Required for Growth
It also drives business decisions and enables growth. In fact, without ERP, the planning required for growth becomes very difficult.
Think about it. If you can’t project what your potential sales over the next six to 12 months will be, you can’t determine your profit. And if you can’t determine your profit, you won’t know, for example, whether you can hire two more salespeople to drive more revenue. You’ll battle to determine whether you can afford to expand into new regions. You won’t even know whether your business can afford to take on that next big project, which could have serious implications on your ability to enhance your company’s performance.
It’s easy to forget about ERP because when it’s doing its job properly, everything runs seamlessly and you hardly know it’s there.
But, the truth is – without ERP your business would have many more horror stories to tell. It’s the silent miracle worker no business should be without.