Is an ERP System right for you?

Is an ERP System right for you?

An Enterprise Resource Planning (ERP) system is a business process management software that allows a manufacturing company to integrate a number of applications to more effectively manage their business and automate many back-office functions. With an ERP system, you no longer have to work with multiple systems for manufacturing, inventory, and accounting, as it houses all of these functions in one place. The benefits of an ERP system for a manufacturing company include:
• A global, real-time view of company data,
• Improved financial reporting and compliance,
• Increased internal controls over core business functions, and
• Enhanced customer service.

Real-time Data

Access to real-time data is a must for most manufacturers in today’s fast-changing markets. Real-time data eliminates lag time and creates a more agile organization, and eliminating the delay between data collection and data analysis helps improve productivity. When data is not available in real-time, it can take days, weeks, or months before you can review information and analyze it, which could push you behind your competitors. Having real-time data helps your company make more strategic decisions that keep you in front of your competitors.

The real-time data from an ERP system also improves financial reports, as it eliminates the delay that often accompanies financial reporting. The financial reporting process of non-ERP systems can often hold up financial planning and lead to missed business opportunities. ERP systems have a high degree of synchronized reporting and automation, which reduces the administrative time needed to pull reports.

Enhanced Internal Controls

ERP systems also offer enhanced internal controls, which can help with proper segregation of duties. Through user security features, access can be granted and restricted based on duties. One option is the availability of electronic signatures. User profiles can include authorization functions that allow individuals to electronically sign and approve sales orders, purchase orders, and electronic payments. In addition, most ERP systems allow for transaction backup materials to be scanned into the system, allowing for better tracking and keeping everything organized to better respond to inquiries.

Automated accounting features are another way controls can be enhanced through ERP, as account reconciliations, reoccurring journal entries, payroll, and inventory adjustments can all be automated. The ERP system automatically reconciles subsidiary ledger accounts with general ledger accounts and provides reports to the users. Journal entries that are posted manually, daily, weekly, or monthly can be set up to automatically post by the system. Employees can enter their time into the software through an employee module that is directly linked to the payroll module to process paychecks, eliminating the need to enter timesheet information into the payroll system by the payroll processor and reducing the possibility of the payment to non-existent employees.

ERP systems can also manage inventory by tracking incoming items through purchase orders and outgoing items through sales orders. Parameters can be set up to automatically generate the required items that need to be counted that day, which can then be approved in the system by the manager, and any necessary adjustments are then posted by the system.

Overall, ERP systems can automate a variety of internal control functions, decreasing the risk of misstatement and fraud due to human error and lack of controls.

Enhanced Customer Service

ERP systems go a long way toward helping manufacturing companies provide great customer service. They help streamline many operations, which leads to faster delivery of goods and improved productivity, by:
• Better managing supply and demand, based on defined settings for each customer. Once the settings are defined, the system can automate fulfillment based on the preferences for each customer;
• Centrally housing important information for each customer, such as the items that the customer regularly purchases;
• Automatically sending reorder reminders;
• Generating customer satisfaction surveys, to understand the customer’s experience; and
• Tracking leads and quotes for potential new customers.

Take Your Manufacturing Business to the Next Level with an ERP system

Manufacturing businesses should take advantage of the benefits an ERP system has to offer. Between the streamlining of processes, better internal controls, and delivering greater customer service, ERP systems can set your company ahead of your competitors. If you would like additional information about ERP systems and which system could work for your company, contact the MKS&H business consultants today!

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MKS&H is committed to providing personalized tax and accounting services while developing a deep understanding of you, your culture, and your business goals. Our full view of financial systems and the people behind them allow us create and evolve the best solution that will help you and your business thrive. The accounting experts and consulting professionals at MKS&H work together to help you achieve the financial results you want.

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