When should an organization start in computerization or ERP implementation?

We’ve been encountering potential customers who are trying to simplify their operation by thinking that a business software will solve all their problem. But the fact is, an ERP is only a tool for executing a defined business process and not the solution itself.

The following are our some indications to start implementing an ERP solution:

  1. Frequent stock shortages or missed sales. This can be solved by having reorder points based on sales and/or stock consumption.
  2. Over inventory stock and inventory handling/carrying cost.
  3. Frequent product or material obsolescence. ERP can have a facility to generate sales performance per product and per profit center.
  4. High overtime, material, labor, and overhead (negative) variances. Automated production reports on a per job order basis can simplify decision making real-time.
  5. Frequent arrears in accounts receivable. ERP can generate Aging reports and automated SOA and dunning.
  6. Over customer invoice deductions/credits. These credits are effects of delivery inefficiencies.
  7. Over staff. ERP may result to potential headcount reductions since it increases the “throughput” within the business-time to produce one unit of output is less using the same number of employees (in both administrative and operational areas).
  8. Consistent Pilferage. An organization can employ automated accountability forms and audit trail to reduce pilferage and establish more control.

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