26 May 2017

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ERP-Business Planning Redefined

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It is high time for SMB organisation to look at the take-aways of economic slowdown. So that it could gear up itself for next business growth wave. Managing the business growth was always a challenge. Automation of business processes can help to handle the challenge in a big way. That’s where solutions like ERP come into picture.

Moving forward, the overall market has started showing positive signs of growth. With a smile on face and shine in the eyes, we all would like to be part of ‘Boom 2.0’ regime. This will take us to many newer heights of business growth in next two years.

Now, the positive question is, what are the take-aways of slowdown? Ideally the experience of tough time and the boom time is to get structured in internal automation. This mandate will lead the SMB organisation to register growth in a structured manner. Handling business growth in a systematic approach will make the business growth long lasting and redundant-proof.

Automated Business Process

What is that we infer from ‘automation of business processes’? From an IT perspective it means a lot of solutions getting used in the organisation by the sales, marketing and other employees of the organisation. One of the major important aspects of automating the business process is the use of ERP (Enterprise Resource Planning) solution.

By taking an example of SMBs from the services industry of India, specially focusing on the manufacturing, automobile and infrastructure industries, it is found that these segments need to automate their business processes and need to gear up their IT infrastructures to manage the business growth.

Barring last eight to ten months, the Indian manufacturing segment was registering a positive growth. However, the industry experts hope that the market would bounce back. Lets all hope that it should be so!

But, the main concern we have now is, to be prepared for managing the next business growth regime. The engineering services companies across India operating in business verticals such as, manufacturing, electrical, mechanical, electronics, infrastructure, construction, and architecture execute projects wherein tracking project budget and actual for material, labour, revenue and other expenses are essential. These companies execute a wide range of projects across industry verticals which make it important for them to adopt best practices through an automated solution like ERP.

To deliver results within the budget, the SMB need to have effective co-ordination and communication among the various departments involved. Besides they require a strong project management and job costing mechanism built into a robust accounting system. Here comes an alternative like ERP, which can take this responsibility in an automated manner.

The Process Challenge

For each and every project, post analysis and requirement scoping, a detailed design and component selection is undertaken and this should be handled carefully. A Bill of materials is then created which goes to the purchase department wherein it has to be logged in against the specific project.

In such a complex scenario there is a major challenge in material management, tracking and planning. Since there are various costs that have to be incorporated into the project billing, such as material cost, time cost of man hours spent by personnel from multiple departments, you require a system that  ensures accurate time and materials costing while providing estimates to its clients. The billing process is also quite complex as invoices need to be raised at any phase of the project, hence it is essential for project cost visibility at all times in the project cycle.

Apart from a project job costing solution, there is also a requirement for accounting software that could meet your financial requirements, ranging from Indian tax compliance and payment, accounts receivable and accounts payable, bank reconciliation and general ledger.

All small and mid-sized companies are concerned about the impact that growth would have on its technological investments and would want a modular, scalable solution that would adapt to its unique business requirements.

However, their main agenda is to deliver their business to the customers and drive their business growth. So, this entire internal process becomes a back end process which often gets neglected. But, technology adoption by means of tools like ERP can take care of this back end process in a proactive manner to enable the businesses to remain focussed on their goals.

Automating the Process: The ERP solution

An ERP system having a strong project job costing module that integrates with the financial modules and purchase order addresses rigorous business requirements.

A sophisticated, robust operating and accounting system, the project job costing module makes the estimating, tracking, costing, and billing of projects easy and manageable, thus simplifying the cost control and planning. Project job costing connects project activities with company financials, provides extensive inquiry and reporting capabilities and helps ensure accurate and timely accounting and billing processes throughout the life of a project.

The powerful features incorporated in project and job costing help in identifying potential issues, tracking costs, ensuring profitability and determining success factors for any project. The automated billing features in this job cost accounting software streamline customer invoicing and reduce the time spent managing this process.

Benefits

The project and job costing module in an ERP enables you to place orders, receive materials, track materials and assign manpower against specific projects. Since it automatically tracks the project cost throughout its life cycle, it allows the managers to keep track of project profitability at all times.

The strong reporting feature avoids delays in the project work flow due to communication lapses, prevents misallocation of materials and ensures effective utilisation of manpower and resources to guarantee profitability.

By providing a greater understanding of the profitability and multi-level costing of projects, the ERP also helps you to estimate costs better. Since it helps in tracking arrival and dispatch of materials at all times, it also facilitates supply chain management.

Apart from these hard core business processes benefits, the ERP enables the sales and marketing team of the organisation to remain focused on their core competencies by supporting all their back end information delivery. With information getting delivered on timely manner and systematic monitoring of what’s going on, the smile and shine in the eyes of SMB entrepreneur will continue to remain.

 

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