The Fourth Industrial Revolution, or Industry 4.0, is all about disruptive technologies. Nowadays, connectivity, automation, artificial intelligence, data analytics, and other digital elements have transformed and empowered business processes, and small business owners who ignore this will eventually fall behind.

In this scenario, technologies such as an Enterprise Resource Planning system, also known as ERP, can be crucial in terms of organization, productivity, and streamlined process. In short, an ERP software integrates data and assists in the business management processes – from order-taking to accounting. Moreover, this system also helps managers to have a business overview and develop strategies from there.

If you own a small enterprise, this software doesn’t have to consume all of your budget. A cloud-based ERP solution allows businesses to access all functionalities via the Internet, making it cost-effective for companies of all sizes. Below, you’ll discover six benefits of using an ERP for small and medium-sized businesses.

1.     Optimized Teamwork

According to the 2022 ERP Report published by the Panorama Consulting Group, 80.6% of organizations realized benefits in terms of productivity and efficiency, and 76.2% of respondents achieved standardization in their processes.

Automating and integrating data from different departments eliminates the need to use other software for every business division. With an ERP, you have a single system with a set of modules that encompass the following features:

• Financial management

• Quotations and orders management

• Inventory and supply chain management

Moreover, the software offers other functionalities, such as managing customers, suppliers, services, and products. For instance, when dealing with B2B transactions, it’s possible to register sales, create contracts, and even issue electronic invoices.

In turn, all of these functionalities generate one more perk: improved teamwork. As it’s an integrated system, all data from different departments is available within the ERP, which enhances internal communication and helps put everyone on the same page.

Let’s see one simple example: With proper permissions, the finance department manager can check the inventory status while the marketing team can review quotations and orders. Also, the person responsible for data analysis can easily generate reports related to these and other areas.

By integrating the business’s financials, supply chain, operations, reporting, manufacturing, and human resource activities, ERP solutions make everything much easier, saving employees’ time, allowing them to focus on strategic actions, and improving collaboration.

2.     Reduced Errors

With an ERP system in place, there is a significant likelihood of making fewer mistakes. Here are a few scenarios in which errors are reduced:

  1. Accurately recorded data helps identify and fix potential issues.
  2. Conflicting information between different departments can be quickly reconciled through the reports provided by the system.
  3. Having an integrated online calendar that allows sharing appointments makes the team less likely to make mistakes regarding common daily tasks such as paying accounts, ordering supplies, and scheduling meetings.

In short, the optimization of processes combined with efficient managerial planning and competent team performance ensures fewer administrative and operational mistakes, leading to improved customer service as well.

In addition to the points mentioned earlier, an ERP software optimizes internal processes and assists in reducing errors through:

• Report generation for sales, financials, and other departments.

• Improved administrative procedures.

• Standardized management.

Besides automating daily tasks, an ERP solution offers a streamlined flow of updated information, which allows operational visibility across your company. In this scenario, this solution also helps reduce errors caused by manual practices and outdated information.

3.     Accurate and Up-to-Date Data for Strategic Planning

By far, this is one of the greatest benefits of using an ERP for small and medium-sized businesses.

Entrepreneurs and small business owners who seek to enhance business performance and achieve better results have powerful allies when they use tools that store up-to-date data, organize internal processes, and assist in creating strategic planning.

By storing information from all departments, the ERP system enables managers to create strategies based on precise key performance indicators. For instance, analyzing operational, financial, and administrative data assists in identifying bottlenecks in the workflow, as well as identifying areas that need improvement and require more investment. This empowers your company to establish a strong market presence and stand out among competitors.

Another advantage is that a cloud-based ERP system is compatible with mobile devices and can be accessed and updated anywhere. In short, when you and your team are able to see the big picture through the most up-to-date information, you can make informed decisions and change direction based on sound data.

4.     Optimized Inventory Control

What does your team do as soon as suppliers deliver materials? Do they take them directly to the storage area or record the quantity of items in notebooks/spreadsheets?

With ERP, inventory control is easily optimized: in such a situation, for instance, the quantity of items can be inserted into the system with just a few clicks before being stored.

Managing inventory is crucial since stagnant products — representing a portion of the company’s capital — can lead to various losses. The ERP system enables complete inventory control through different features such as:

• Inventory tracking

• Goods receipt and issue control

• Comprehensive product registry

• Stock transfers between stores

• Online quotations

You can visualize the registration date, stock quantity, minimum and maximum stock levels for each item, cost, and description, among other elements. The team can also generate customized identification labels to further enhance inventory control.

5.     Increased Productivity

By automating manual processes, the management system simplifies repetitive tasks and, consequently, boosts the team’s productivity. Let’s consider another example related to inventory: instead of employees interrupting their work to check what is still available in the company, they can easily check the ERP and quickly visualize the quantity of products available.

Moreover, the system helps increase productivity for various reasons:

• All purchases and sales are recorded in the system, enabling monitoring of the materials and a faster collaboration.

• Data analysis facilitates the identification of operational bottlenecks.

• Available resources are utilized more efficiently.

Small businesses that don’t have an ERP solution often struggle with time-consuming manual work using separate systems or even spreadsheets to record essential data from each department, which slows down the team’s productivity. With an ERP solution, you simply automate several tasks and gather all processes into a single system.

At the end of the day, this boost in productivity also leads to improved customer satisfaction. When you optimize business processes, you allow teams to work smarter, not harder. In turn, employees can give more attention to your clients, which means that ERP software allows your staff to focus on the customer experience. And happy clients lead to great results.

6.     Lower Costs with cloud-based ERPs

Still according to the 2022 ERP Report, 65% of organizations prefer cloud software. This study emphasizes that the cloud is not the ideal option for every company, but it shows that the majority of businesses choose cloud solutions.

Different from on-premises systems, cloud-based ERP solutions are often affordable and don’t require additional hardware, installations, and a dedicated IT staff. Data is stored on remote cloud servers, which is another advantage of using an online ERP in terms of economy and security.

To sum it up, cloud-based ERP systems are more affordable to small organizations due to a range of factors:

  • No upfront software licensing costs
  • Lower operating and electricity costs
  • Low maintenance costs
  • No need to pay for modules or functionalities that you won’t use

Scalability is not an issue with cloud ERPs. In general, these systems are modular, so each application can be implemented one at a time according to your business needs. This pay-as-you-go system allows you to expand functionalities over time as your company grows.

Cloud-based Enterprise Resource Planning vendors host and manage the system on their own servers, besides providing ongoing IT support. This way, small businesses don’t need to face high upfront infrastructure costs, not even expenses related to maintenance, updates, security, and a dedicated IT staff.

Moreover, it’s easier to integrate cloud-based ERP software with third-party solutions in comparison with on-premises systems, which often requires the installation of add-ons. This way, you have a streamlined process when accepting new applications whenever your business needs change. Finally, on-premises solutions need to be replaced after a few years, which results in additional costs.

As you can see, these six benefits of using an ERP for small and medium-sized businesses show that this online management software offers more than just comprehensive management. By optimizing the team’s work, assisting in error reduction, providing accurate data for strategic planning, optimizing inventory control, increasing productivity, and reducing costs, internal processes are streamlined in no time, resulting in immediate improvements, greater profits, and a solid foundation for the future.

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