ERP and SME

There is a revolution in Information Technology and the reduced prices of computers are making it possible for even small businesses to afford computers. ERP automates the tasks involved in performing business processes such as order fulfillment, order processes, payments, material receipts, material requirement planning, invoicing and makes the same data available to all the other functions. It also optimises the resources available in or to gain advantage in the turbulent competitive environment.

The main bottlenecks in adoption have been lack of awareness vis-à-vis large organisations.

Drivers

• Increase in operational efficiencies
• Increase in labour and capital productivity
• Reduction in fix and variable cost
• Integration with tier 1 supplier, sub-contractors and distributors
• Peer pressure
• Competition

Moreover, the demand from the large OEM players to streamline their operations and drive the demand will wake up the SMEs to streamline their efficiencies. Indian SME will have lot of options to choose from at very competitive prices. ERP vendors are willing to offer packages in 4 to 6 weeks as part of their offer to provide convenience to small traders.

Areas of application

• SCM-Supply Chain Management
• CRM-Customer Relationship Management
• BI-Business Intelligence
• PLC-Product Life Cycle
• Product Data Management
• Inventory and Warehouse Management

Advantage

• Reduced planning cycle time
• Reduced manufacturing cycle time
• Reduced inventory
• Reduced error in ordering
• Reduced requirement of manpower
• Enables global outreach
• Increased customer satisfaction
• Better utilisation of resources
• Enables faster response to changing market conditions

Challenges

• Low level of awareness
• Wrong perception that ERP is meant only for large organisations
• Earlier failed implementation has scared other SMEs
• Low budget
• Limited resources like lack of internal IT team

Conclusion:  The spending on ERP is increasing worldwide and is poised for growth in the next decade. Some of the reasons for this are:

• Vendors are increasing the capabilities of their ERP system by adding functionalities like BI, SC and CRM etc.

• Vendors have shifted to web based ERP
• Perceive benefits of e-commerce
• Several markets are unexplored

As Pankaj Chaddah, COO, Zomato shared, “Even though startups begin with excel worksheets and other temporary ways of organising themselves and their teams, as you scale up the need of an ERP increases exponentially. The upside realised by putting in a two day effort into picking the right solution is really significant”. So, reach out to the nearest vendor and get going if you haven’t installed it yet.