WHY AN ERP SYSTEM ISN’T “ONE SIZE FITS ALL”

Have you seen the phrase, “One Size Fits All”, marked on different types of clothing? Most items labeled as such usually are very plain and have a standard size to accommodate most. Of course there are outliers and truly not everyone can fit in a one sized option. This is also true of  ERP systems; they cannot be “One Size Fits All” due to complexities.

ERP Background 

Before jumping into why ERP systems are not “One Size Fits All”, let’s first discuss the background. The ERP acronym stands for Enterprise Resource Planning which doesn’t give a clear definition. But, to really understand what ERP applications are and how they benefit your business, you need to think about your business processes. This includes accounting, order management, inventory, distribution, manufacturing, operations, production, job costing, reporting, e-commerce, HR, marketing, sales, customer service, and more. The principal function of ERP is to integrate these various functions into one efficient system, automating where appropriate, in order to streamline processes and information across all departments and functions. Now that we have a general background of the function ERP provides, let’s discuss why these systems cannot be “One Size Fits All.” 

  

 

By Industry

To start off,  no system can be “one size fits all” if companies are in different industries. Let’s take a look at a few examples. 

Manufacturing

Let’s say Company A manufactures t-shirts. Well, there are many moving parts in the manufacturing industry. You may need a Bill of Materials, where you can plan and manage your inventories, costs, and manufacturing processes. The Bill of Materials is vital in the planning portion of manufacturing. The next module necessary for Manufacturing ERP is Production Management. Here you can control the entire production process and minimize job costs from components to finished goods. As a manufacturing company, you will need to keep an accurate balance of supply and demand. This is where Material Requirements Planning comes into play and can enable your organization to satisfy customer requirements and maintain optimal inventory levels. Already we can see three modules that are specific just to the manufacturing industry. 

 

Distribution 

Now Company A’s t-shirts are being shipped to Company B’s distribution center. Let’s say Company A delivered 100,000 t-shirts. That is not a feasible supply to manually track. By using distribution specific software, you can gain control over inventory by managing processes in real-time. This system can give you real-time visibility of available inventory, inventory in transit, reorder quantities, and inventory costs. One of the most important components to have for distribution software is being able to manage many moving parts like multiple warehouses, returns, credit limits, and drop shipments. Distribution ERP software allows streamlined sales order management by reducing order times and minimizing costs by optimizing manual processes. Obviously, there are differences between the distribution and manufacturing backing up the claim that there is no such thing as a common ERP or a “One Size Fits All.”

 

Field Service 

Company C is a trucking company that pickups and delivers the t-shirts from Company B’s warehouse. Truck drivers must be assigned to the specific warehouse to pick up the t-shirts, an easier way to do this is by optimizing schedules. To keep a competitive advantage amongst other companies you can easily manage inventory across multiple vehicles and warehouse locations using this cloud based software. . 

 

By Application

Each company implementing an ERP solution will need unique applications to fit their needs. From above, we can see the differences of technology for each industry; this can be broken down further by the applications needed for success. 

 

Financial 

Companies need to track financials by upgrading to an updated solution, they can eliminate manual processes. Financial applications could include the following:

  • General Ledger
  • Accounts Payable
  • Accounts Receivable 
  • Bank Reconciliation 
  • Compliance 
  • Budgeting and Planning 
  • Fixed Assets
  • Human Resource Management 
  • Payroll & Direct Deposit

Will every company need the aforementioned applications? The answer is no as each organization will be given the applications needed for a successful operation. No two companies will have the same exact financial situation, so no two companies should have the same ERP financial solution. 

 

Inventory and Sales and Order Management 

As discussed before, depending on the industry not all companies will need to track inventory or sales and orders. 

 

Business Performance tools

Another application that can be unique to a company are business performance tools. These tools are designed to give you insight into your business’ performance in order to empower decision makers with actionable insights. The best part of these tools are customization and how easy they are to use. You may use these to track specific KPI’s or give more visibility into your company’s operations. 

 

By Customization

Finally, no two companies can have a common ERP solution due to customizations each organization can deploy. 

 

Add-Ons 

One benefit of ERP systems is the ability to customize. ERP companies offer a plethora of tools to make your experience even easier. For example, if you are a distribution company, you may benefit from the NetStock add-on. NetStock can diagnose, forecast, and manage your inventory. With its easy-to-use dashboard, companies are able to identify and track orders, stocks and lost sales. These features make the distribution process even easier. Another example is Avalara. If your company does sales in multiple states, it is the most accurate way to calculate sales and use tax and much more. These are just two examples of the many add-ons available to you through your new system. Add-Ons make businesses run even more efficiently, maintain accuracy and can help eliminate manual processes thus saving time. 

 

Access 

There are three ways to host your ERP system: on-premises, hosted and cloud. An on-premise solution, you purchase the software and license, install it on your server and are responsible for maintaining the software. A cloud is different in that you pay a monthly fee and the supplier provides everything; i.e. software, updates, server, maintenance, etc. There is a third option that acts as an in between, it is a hosted solution. With a hosted solution, you still provide the software, license, and maintain it yourself but someone else provides the server it runs on. The way you deploy your software is up to your company.  

 

Number of Users 

Each company will have a different number of employees. Depending on the solution that is right for you, you may pay per user or per license. This changes the price and installation. ERP systems can limit access to certain departments. For example, the sales team will not need access to the financials. Number of users also limits the possibility of two ERP systems being the exact same. 

 

From the information above, it is obvious that the phrase “One Size Fits All” does not work when it comes to an ERP solution. Industry, customization and add-ons all contribute to making the system unique. Are you ready to start your ERP journey? We are here to help! We offer the best solutions to meet your company needs through industry knowledge and our software expertise. Please contact us today and let’s start this journey together.


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