The ROI goal for any company by implementing ERP is not just financial gains. Return of investment can be in the form of improvement in productivity, competence and overall enhancement in company’s performance. It can also be operational transparency and improved user satisfaction. ERP also helps in better communication between various departments within an organization and this in turn helps to change the work culture in the company.
How ERP can help improve ROI?
Any ERP software does not directly result in more sales but it helps improve ROI by making the organization fitter to generate more business. The ERP software makes accurate information available at the right time thus facilitating organizational efficiency, which in turn results in improving return on investment.
Functioning of ERP Software
As a preliminary step, ERP software analyzes present organizational structure and identifies redundant, duplicate or unproductive processes currently running. As these unproductive processes are replaced with more efficient ones, the company notices a visible positive change in productivity, time saving and better ROI.
ERP systems can automate many processes in the company and such automation can help reduce mistakes, saves labor, cost and wrong entries. By eliminating the mistakes and using work force more productively, the organization can cut down on repetitive tasks, lower production cost and increase productivity. Profit margin start to rise as production cost is lowered and gives the company positive ROI on its investments.
Benefits of implementing ERP in SCM
The following benefits of ERP help in simplifying handling of supply chain management and had direct influence of return of investment.
- Streamline supply chain management (SCM)
- Superior inventory management
- Better consumption of production units
- In time finished product supply
- Identify vendors which are offering better offers
- Improve relation with suppliers
Better customer relationship
Using ERP software the customer relation department gets easy access to all the data about any particular customer like customer’s credit limit, payment history, shipment date, whether stock is available to deliver the product to customer and other details. All this data helps the customer relationship personnel to build better relation with the clients and solve their queries in real time leading to more satisfied customers. Using feedback received from customers the organization can work on improving and adding new features in their products, which results in improving client base.
ERP software has a very important role to play in improving ROI for an organization. Proper implementation of ERP can lead to better efficiency of the workforce and reduction in cost.