Advantages of ERP Systems for Small Businesses

Here are 10 Advantages or Benefits of an ERP System for Small Businesses:

1. Process Integration

Once implemented across the enterprise, an ERP system can easily integrate and streamline all internal applications or processes on a single centralized platform. This helps business teams across departments to share and collaborate on their work efficiently.

Using shared information, the company’s departments now have the same “snapshot” or view of their business data. Hence, they can coordinate their actions or responses more efficiently than when using “siloed” systems. For example, when a customer places the purchase order (PO), various departments, including sales, production, and dispatch teams, can access the same PO details without manually entering any data.

2. Improved Inventory Management

Small manufacturing companies can incur many expenses in efficiently handling their inventory or stocks. Excess stock levels can add to the overall inventory costs. On the other hand, low stock levels can hamper productivity and customer fulfilment.

Among the major ERP system benefits, small companies can streamline their inventory systems for optimum efficiency. ERP systems ensure that companies carry inventory stocks based on their daily requirement without incurring any additional storage costs. Additionally, ERP systems can help companies improve their inventory planning based on market demand and implement efficient procurement of required materials.

3. Better Decision-Making

An ERP system provides small enterprises with a consolidated view of data, enabling them to extract valuable and accurate insights. Users across business functions have real-time access to data whenever they need them. This helps them take the right actions or business decisions.

For example, production management teams can quickly identify any process bottlenecks impacting production or delivery times. Similarly, finance teams can improve financial planning with access to the company’s latest financial data. Besides, project managers can decide to allocate funds and resources based on the progress of their projects or changing market requirements.

4. Business Transformation

With a deployed ERP solution, small enterprises can automate multiple aspects of their business operations, thus enabling operational efficiency. ERP systems can integrate “siloed” data from various sources or disparate systems, thus enabling data-driven decision-making and transformation.

Additionally, ERP’s real-time reporting capabilities give business executives complete visibility into their company’s business processes. By streamlining business processes like order processing, an ERP system can free up human resources from manual work and focus on more critical tasks. Besides, employees can improve their productivity with access to powerful ERP tools and functionalities.

5. Digital Transformation

In the wake of the 2020 global pandemic, cloud-powered ERP tools have emerged among the essential pillars for digital transformation. For instance, ERP solutions can seamlessly integrate with digital technologies such as Artificial Intelligence (AI), machine learning, and the Internet of Things (IoT).

Organizations can accelerate their digital transformation with an efficient ERP system by automating their back-end operations. By unifying all business operations into a centralized system, ERP can automate the flow of information across departments. Additionally, cloud-based ERP systems provide valuable analytics for enterprises to determine potential areas of improvement.

6. Cost Reduction

As a comprehensive system, ERP solutions eliminate the need for small enterprises to invest in separate independent tools for their business functions. For instance, it combines CRM and inventory management modules. This effectively reduces software licensing costs along with the associated training costs.

Similarly, with ERP-enabled automation, companies can reduce operational and administrative expenses. A comprehensive ERP system eliminates the costs of duplicating data entries across the disparate system. This can reduce the cost associated with manual data work and human errors. Overall, companies can do with fewer human resources without compromising work productivity.

7. Operational Visibility

Operational visibility is another advantage of ERP systems for small businesses in any industry domain. For instance, purchase managers have real-time visibility into the status of purchase orders in their warehouses. This enables them to avoid any overstocking or understocking. Operational visibility also improves the business decision-making process, as decision-makers have all the ERP data for assistance.

Also Read: How to Create Bin Locations in SAP Business One for a More Efficient Warehouse

With real-time visibility, operational teams can perform their work more efficiently. They no longer must spend time and effort searching for crucial information.

8. Scalability

One of the major advantages of an ERP system for small businesses is that they do not need to change their ERP as their business begins to grow to the next level. They can effectively use the same ERP tool to add more functionalities and capabilities. Besides, ERP solutions can also support more users with the growth of business teams.

Cloud-powered ERP systems offer the best scalability as small enterprises can simply allocate more cloud resources to support their growing demands. This, in turn, reduces the work pressure on in-house IT teams and also streamlines cloud expenses.

9. Accurate Reporting and Data Analytics

As a centralized system, ERP acts as the “single source of truth” for the entire business operation. This means teams no longer have to depend on manual spreadsheets for updated data. With ERP solutions, business executives can easily generate custom reports based on the KPIs that they are tracking. With data-driven reports and analytics, organizations can improve decision-making and identify areas of improvement.

Also Read: How to Create KPIs in SAP Business One

Additionally, ERP systems with business intelligence (BI) capabilities simplify the process of generating accurate reports used for business forecasting.

10. Improved Mobility

With the increase in remote working, most employees prefer to use their smartphones or tablets to complete their assigned tasks. With mobile-friendly ERP solutions, they can retrieve real-time ERP data while on the move.

This is also useful for frequently travelling business executives or sales professionals who need access to the latest data to answer their customer queries or address their concerns. Mobile-friendly ERP applications can also accelerate business approvals and cash flow.

Conclusion

In this blog, we have discussed the advantages of ERP systems for small business enterprises. Are modern ERP tools beneficial for small companies or startups? Absolutely, yes. Most ERP implementations have delivered results in various business areas for small enterprises.

Companies must partner with the right ERP solution provider with the technical expertise and industry experience to achieve a good ROI from their ERP implementation. As a recognized SAP business partner, Praxis Info Solutions has enabled customers across industry domains to leverage the ERP advantage for their business growth. Here’s our published blog on the best practices and tips for a successful ERP data migration.

Are you interested in knowing how an SAP-based ERP system can benefit your business? We can help you out. Contact us today with all your business queries. We will be happy to answer them.