6 primary business benefits of an ERP system you should know

Running a company without an Enterprise Resource Planning (ERP) system is like trying to navigate a boat through stormy waters without a compass. You will have to make decisions based on your instincts. Your instincts might be right, but it is always better to have a compass!

Yet according to a buyer report from ERP reviews firm Software Advice, only 38% of the manufacturers and distributers across multiple verticals(like pharmaceuticals, machinery industry, food/beverages etc.) have an ERP system in place.

What are the most important benefits of an erp system for your business?

A robust ERP system has the following primary benefits for your business:

  1. Streamlined business processes
    Modern ERP systems bring all your data together. It improves bottlenecks in your business processes.

    • Centralized data saves money
      Decentralized data is a potential culprit in creating chaos in an organization. Without the ability to have a big picture view of how the organization is performing, it is difficult to make informed decisions. It leads to business processes with inefficiency. Inefficiency in your organization means more cost.

      ERP systems capture the complexity of today’s organizations and make the problems easy to understand. With the help of a centralized data system, you can find out if a problem is your sales team, supply-chain management or resource allocation.

    • streamline-business-processes

    • Opportunity for workflow automation
      An ERP system works like a live diary chronicling every aspect of your business, so you can use that information to improve processes. For example, you can weed out all the repetitive tasks in your product cycle and automate it.

      Depending on your product, it might be machine automation like putting in robots or process automation like putting in electronic forms for quality assurance approvals. Automated workflow of processes can significantly improve product delivery times.

  2. Promotes strongly coupled organization
    Large organizations can harbor disconnect between departments. ERP systems can prevent departmental blind spots.

    • Autonomy and cooperation
      Departments work best when they are autonomous. But autonomy can create the problem of blind spots. Without insight into other departments, an organization can waste resources duplicating efforts to solve the same problem. A central portal helps departments share information, customized data, and generate individual reports. It promotes cooperation and sharing of knowledge and resources.
    • strongly-coupled-organization

    • Collaborative ERP
      Cloud technology has brought in a new era of collaboration. ERP tools are taking advantage of these technologies and incorporating solutions that can even manage work collaboration between remote locations in real-time. It promotes better interdepartmental communication and resource sharing. As a result, departments are building stronger relationships and collaborating on more projects.
  3. Better tracking: more control and tracing
    Whether your enterprise deals with physical or digital products, ERP systems provide an easy way to keep track of your products.

    • Visualizing movement of products and services
      One of the benefits of ERP system is that you can see how your products and services are moving through the pipeline. Raw material management, order tracking, inventory tracking, and revenue tracking are made easier with the help of efficient ERP tools. Transactions from your eCommerce website can be integrated directly into the system to automate the process. There is no need to guess. You can track everything on a dashboard.
    • better-business-tracking-and-control

    • Real-time tracking
      ERP solutions have made it possible to track inventory in real-time. In today’s world, it is impossible to think how an enterprise can implement a fast delivery process without the help of an ERP solution. Companies like Amazon and FedEx are using the latest technologies to move products in real-time with minimum overhead.
  4. Identification of improvements
    Today managing a large enterprise means relying on Business Intelligence (BI). Benefits of ERP system becomes self-evident as you try to plan your next BI strategy.

    • BI dependent on good ERP data
      Without a proper ERP system in place, it is difficult to gather operational-level analytics to form a good BI system. Strategic-level BI analysis can extract data from an ERP system and gain insights about the organization’s overall health and improvement potentials. When you are using your BI to create a future vision for your company, ERP plays a vital role in holding a mirror to the current condition of your company.


    • Fast decision-making
      The integration of BI tools with ERP system means you have the data in real-time to make strategic decisions for the future. Creating a BI plan can require weeks of data gathering. ERP integration simplifies the process. With proper planning, ERP saves time. Your managers can make faster decisions with more accurate data.
  5. Efficient customer service
    ERP provides sales and customer service with a better communication channel. It leads to better customer care and sales forecasting.

    • Customers and suppliers
      An ERP system improves both your front-end and back-end relationships through creating an efficient shipping and delivery system. It streamlines shipping times, creating a much better experience for your customers. Your suppliers are also happy because they get a reliable client. As a result, you are able to align your supply with your demand.
    • efficient-customer-service-through-erp

    • Prioritizing valuable customers
      Benefits of ERP system also includes customer prioritization. The sales information that accumulates over time will give you an opportunity to improve your customer retention. You can reward your best customers to keep them interested in your products and services.
  6. Ensure regulatory compliance and security
    Regulatory compliance is an essential part of a successful ERP tool.

    • Built-in compliance support
      ERP systems can take care of regulation and security issues with efficiency. It can provide a publicly traded company with the necessary Sarbanes-Oxley Act (SOX) compliance to ensure security.

      If you are managing a hospital, your ERP system’s Health Insurance Portability and Accountability Act (HIPAA) compliance will provide you with the necessary safeguards against security breaches.

    • erp-ensures-regulatory-compliance-and-security

    • Compliance gets prioritized
      Regulation compliance often gets pushed to the back of the queue as a low-priority task. By the time, it becomes an issue, it is too costly to implement a good plan. ERP systems set it up from the start, so compliance becomes a non-issue.

A great ERP system ensures your company runs efficient business processes throughout the organization in a coherent manner. It gives you the ability to track changes. It pinpoints improvement opportunities. It helps you build relationships with your customers while keeping your institution compliant with the rules and regulations.

Do you have stories about how implementing an ERP solution has changed your organization? Please feel free to share your comments below.