Enterprise Resource Planning (ERP) systems combine one or more of these elements:
Finance and Accounting
Sales and Service
Customer Relationship Management (CRM)
Human Resources (HR)
Supply Chain Management
..to enable management to maintain an understanding of each and at times help management understand how these elements impact one another for better workflow and more revenue.These systems are part of a larger stratagem that is called Six Sigma.
The Six Sigma methodology (DMAIC and DMADV) emphasizes on the fact that a business’s quality and output can be improved by changing the process within the company to such a point that errors or mistakes within the processes are minimized or outright eliminated. The degree of efficiency that Six Sigma requires is that, out of a million outputs (products manufactured, services rendered), only 3.4 will turn out defective. This translates to roughly 99.999966% error free operations
It is simple math to any business owner how management employees who need to manually run and maintain awareness of company operations is expensive to a business, is a hidden cost and takes a lot of time away from a business sales – if sales is important to a company. Time spent by upper management and middle management on future sales and markets can drive more revenue when these people have quick access to operations facts and figures. The time fed into employee-to-employee or employer-to-employer accountability (simply keeping track of vendor relations using manually collected reports and pie charts) is no longer a competitive business. These employees should be using computer technologies to leverage process flow management and keep track of quality and materials. You may read this and think it is old advice, but many manufacturing companies lack this organization and fail by not upgrading to a new business process approach).
The improvements to big business ERP is now evolved into something called Business Process Management (BPM) and much of it is moving to the ‘cloud’. With the installation and proper operation of an ERP or BPM system, CEO’s, CFO’s, COO’s, etc. gain fast and accurate snapshots of corporate operations. This upgrade to a business provides a means to quickly prioritize what needs to be handled and in turn structure and forecast revenue potential.
ERP was once offered only to big businesses that could afford the huge costs to designate, design, build (which requires over sight), integrate and deploy these systems. Technology providers like IBM, Perot Systems and EDS would quote enormous fees to put together a solution like this and maintain it.
Today this fee structure of ERP has changed because of both advancement in hardware and software, more effective software development options and cloud availability. ERP has dropped in prices especially due to the competition against one another, to gain market share. This has now been going on for a long time, and gives small businesses that run manufacturing great detail and control for a very low cost.
Menlo Technology Consulting works with partners to help Small Business designate workflow, as well as design and install ERP and BPM solutions to help operations and revenue of manufacturing facilities.
Not all ERP consultants and vendor contracts are alike. Businesses needs outside advocates to help assess and upgrade these systems, to replace them with better less costly technologies. Ignoring these advancements in the BPM and ERP worlds will drive crucial customers towards a manufacturer who is more responsive and better equipped to handle their needs. Loyalty will eventually disappear based on a lack of performance overall.
The upper management attitude that simply ‘hiring the right people’ is no longer enough to sustain revenue and market share. Just as off-shore manufacturing is a reality, so is the need to drive improvements in work flow and business practices. New and clever small businesses have already adopted these systems in some form, and continue to have the upper hand in growing their companies with less staff and more accountability. The additional factor of the retirement of Baby Boomers will require younger people to replace strong company players.
If business is not automated and reports can not be given to upper management in a timely manner, the entire company will deteriorate quickly in today’s business environment.