What is Enterprise Resource Planning (ERP)?
Enterprise Resource Planning (ERP) is software that helps businesses manage and integrate their core functions, such as finance, human resources, manufacturing, supply chain, and customer relationship management.
You can think of the ERP as a business’s central nervous system — coordinating information across different departments, making sure everyone is on the same page.
The ERP system creates a single source of truth, integrating data from different departments, so employees have quick access to essential information and can collaborate more effectively. This enables companies to streamline processes and information across their entire organization.
Key Features of ERP Systems
Centralized Database
One of the standout features of ERP systems is the centralized database. It allows all departments to access up-to-date information, removing discrepancies that arise from different data sources. For instance, if the sales team enters a new customer order, the finance department can instantly see the data, ensuring both teams are aligned.
Automation of Processes
ERP systems can automate repetitive tasks for eCommerce businesses, which greatly increases efficiency. For example, companies can automate invoicing — once an order is fulfilled, the invoice is automatically generated without requiring manual entry. Automations like this reduce human error and allow employees to focus on more strategic tasks.
A new trend: ERP systems have started integrating artificial intelligence into their platforms, including AI assistants, thus opening the door for more advanced automations.
Reporting and Analytics
ERP systems provide analytics features that allow for comprehensive reporting on various business areas. This helps management make informed decisions based on real-time data. For example, a marketing team can analyze customer trends, purchases, and preferences, helping them tailor future strategies.
If you're an eCommerce business, it’s key to find an ERP system that can track the following:
- Sales analytics: Real-time sales monitoring with the ability to track daily, weekly, and monthly trends, customer segmentation, sales channel performance analysis.
- Inventory management analytics: Stock turnover rates and aging inventory reports, stockout frequency analysis, reorder point calculations based on historical data
- Financial analytics: Cash flow analysis and forecasting, customer acquisition costs, return on advertising spend (ROAS), payment method analysis.
- Operational analytics: Shipping costs and delivery performance, warehouse efficiency metrics, and customer service response times.
Predictive analytics is another powerful component of ERP systems, making it easy for eCommerce businesses to project future stockouts or slow seasons.
Scalability
Most ERP systems are designed to grow with your business. This means companies can add more functions as needed without a complete system overhaul. A business that expands into new markets can add modules for supply chain management or additional compliance requirements without starting from scratch.
Benefits of ERP Systems
Improved Efficiency
With automated processes and centralized data, businesses can experience significant efficiency gains. For instance, ordering systems can be tightened up, resulting in fewer mistakes and faster fulfillment times.
Platforms like DJUST.io leverage the capabilities of ERP systems to streamline B2B transactions, enhancing efficiency across the board.
For example, deSter, a leader in food packaging, used DJUST along with their ERP system to fix their siloed and inefficient order processing and administrative methods. The result? Faster operations and better purchasing experiences for business buyers.
"The DJUST B2B Commerce solution can connect to any ERP, and that was a huge differentiator for us as we’re currently working with an outdated system."
- Rémi Béranger, VP of Global Supply Chain, deSter.
Enhanced Collaboration
Teams can collaborate more easily when all relevant data is centralized and accessible in real time. ERP systems break down silos between departments, allowing for better teamwork and coordination.
Industry benchmark: According to the ERP Project Report, around 48.3% of employees in eCommerce businesses use the company ERP system.
Better Customer Service
Access to accurate and real-time data helps organizations serve their customers better. A customer service representative can see a client's complete order history, inquire about issues in real time, and resolve problems more efficiently.
You can find other customer service tools in an ERP-compatible platform like DJUST.io, which allows for real-time order tracking that keeps customers informed, boosting satisfaction rates. Investing in customer service is paramount, especially when, according to a Salesforce survey, 94% of customers cite a positive customer service experience as a reason to purchase again.
Implementing an ERP System
Assess Business Needs
Before selecting an ERP system, organizations should assess their needs and objectives. Understanding what areas require improvement, such as inventory management or customer relationship management, can guide the selection process.
Note that, according to ERP Research, the average timeline for an ERP project is 3-9 months for small-and-medium sized businesses and 6-18 months for large businesses.
Larger businesses that plan to use ERP for each area of their business may do what’s called “phased ERP implementation,” where they handle one area, like procurement or finance, at a time.
Choose the Right ERP Solution
There are numerous ERP solutions available, so businesses must choose one that aligns with their specific needs. Customization options may also be necessary, ensuring that the ERP can adapt to unique workflows and operational requirements.
Plan for Integration
Integrating an ERP system with existing software is crucial for maximizing its benefits. Prioritize ERP systems that offer out-of-the-box integrations to your key tools, as well as industry-standard interfaces like SOAP APIs.
Many e-commerce platforms, like DJUST, offer features that allow for easy integration of various systems.
DJUST data hub, for example, allows businesses to easily create a centralized database (aka a single source of truth). This streamlines integrations by ensuring all data transfers smoothly and accurately between systems. The data hub also simplifies integration maintenance by giving you one place to manage and update your data across your entire tech suite.
Training Employees
Successful ERP implementation requires comprehensive training for employees to understand how to leverage the new system effectively. A well-planned training program can minimize resistance and foster acceptance of the new processes.
Some larger companies might want to partner with a consultant to develop and run the training program. Others on a budget will want to design their own.
Pro Tip: When designing a training plan, teach employees not only how to use the ERP system and its processes, but also how to use the system to improve at their job. Tying mastery over the system to their job performance (and career success) will inspire them to learn technical skills on their own and to think strategically about different ways to use the system to boost efficiency.
Challenges in ERP Implementation
High Initial Costs
Implementing an ERP system can be expensive, often involving software licensing fees and costs related to hardware upgrades.
Businesses should weigh these costs against the potential return on investment when considering new software.
Change Management
Transitioning to a new ERP system can disrupt existing workflows and processes. Many employees may be resistant to change, fearing increased complexity or additional workloads. Addressing these concerns and ensuring a smooth transition is essential for success.
Data Migration
Migrating data from legacy systems to a new ERP system can be complex and challenging. Ensuring data integrity and security during this period is crucial to avoiding disruptions in operations.
Using DJUST.io to Optimize ERP Functionality
DJUST.io enhances the ERP experience by integrating multiple B2B functionalities into one platform. This allows businesses to streamline their eCommerce, supply chain, and inventory management systems seamlessly. With features such as order processing, extensive reporting capabilities, and automated workflows, DJUST enables organizations to leverage ERP principles for improved operational efficiency and enhanced customer interactions.
In conclusion, Enterprise Resource Planning systems are crucial for modern businesses aiming for efficiency and organization. By implementing an ERP system effectively and choosing a compatible platform like DJUST.io, organizations can streamline their operations, reduce costs, and enhance customer satisfaction.
