ERP for Beginners: Your 101 Course

If your business is taking the initial steps of a digital transformation journey, there’s a lot of learning to be done. Luckily, there is plenty of readily available information online with which you can educate yourself on the topic and your options going forward, including the many blog posts, whitepapers, case studies and interactive tools in our own Insights section.

What can complicate matters and lead to confusion, though, is the number of acronyms that are used when discussing modern business software. It can start to seem like “alphabet soup,” and more in-depth pieces tend to be geared toward readers that already have working knowledge of the underlying meanings and thus gloss over the basics.

Among the first and most common of the acronyms you’re likely to encounter is ERP, and even if you search around and discover that this stands for “enterprise resource planning,” that doesn’t really explain what the practice entails and what ERP solutions do. Thankfully, you’ve landed on this article, which means you’re about to find out.

So pull up a chair and get ready for class—this is your ERP 101 course, both a great entry point for beginners and a good refresher for anyone who wants to brush up on the fundamentals of this critically important topic.

What Is ERP?

As a practice, enterprise resource planning is the management of all day-to-day business activities—including procurement, production, quality control, inventory management, accounting, sales, reporting and distribution—at a high level. ERP solutions (which are sometimes referred to with just the acronym) are software systems designed to facilitate the process and are popular primarily with manufacturers and distributors.

A good ERP package will unite, standardize and streamline core business functions on a single, centralized platform. It should help your various teams and departments collaborate and integrate with one another while also providing features that make everyday tasks easier to accomplish in a timely fashion.

Take a deeper look at what ERP software is in our guide: What Is ERP (Enterprise Resource Planning) and How Does It Work?

Generic ERPs vs. Industry-Specific ERPs

It probably won’t surprise you to learn that not all ERPs are created equal. There is no shortage of offerings on the market—so many that it can be overwhelming if you don’t know what to look for—but, in general, all can be sorted into one of two groups, those being generic solutions and industry-specific systems.

Generic ERP platforms are built using a “one-size fits all” mentality and attempt to appeal to as wide an audience as possible via their versatility, but in reality, they are limited by their agnostic nature. After all, most manufacturers and distributors specialize in a certain industry or sub-vertical segment, and they therefore need specialized tools for their sector, not just basic, universal functionalities.

Industry-specific ERP software, on the other hand, comes with purpose-built features tailored to the needs of specific industries, often eliminating major customization requirements. The best among them were created by providers with extensive experience in the markets they target and a good grasp of the challenges that their potential clients face as part of their focus on a particular product segment.

Features of ERP Systems

Some ERP features are so central to the concept that they are found in nearly all solutions on the market. These are the must-haves for any ERP system:

• A fully digital, unified database. By storing and updating all of your important facts and figures in a single computerized system, your whole organization shares a “single source of truth.”

• Bidirectional material traceability. With a complete view of your supply chain, including inbound and outbound shipments as well as materials and products as they move within your facilities, ERP platforms let you quickly track goods down to the individual item level—and even the components that make up an end-product.

• Inventory management tools. It’s crucial that you know what you have on-hand and when you need to order replenishments, so ERPs capture all updates to your store of supplies and allow you to monitor stock levels for timely re-ordering.

• Quality control functionalities. All businesses dealing with consumer goods need to have an eye toward customer satisfaction, and an ERP can help in this regard by automating quality checks and flagging deviations from accepted standards.

• Vendor and client relationship management. ERP solutions can digitally maintain all important details associated with your supply chain partners—including contact information and financial agreements—and also track orders associated with them.

• Demand planning and forecasting. By combining historical sales data and recent buying patterns, ERPs can provide reliably accurate predictions for your material needs, as well as production targets you’ll need to achieve to meet the demand.

• Financial reporting and analytics. With all of your financial data captured in a single system and not spread out across multiple spreadsheets, knowing where your business stands financially is simple with ERP software, and most systems can also generate advanced reports and visualizations.

Additional features can be found in industry-specific solutions. For example, the features of a food and beverage ERP platform will likely include expiration date tracking and allergen segregation functionalities; a distribution ERP for consumer goods will facilitate chargebacks and offer integrated warehouse management tools that can alleviate the need for a separate system dedicated to that purpose. Meanwhile, an ERP system for the apparel industry will have a vendor management portal and a module for material requirement planning.

Signs You Need an ERP

Just like someone coming down with a cold tends to exhibit some tell-tale symptoms, companies that are in need of better solutions—or a clearer vision for their digital transformation plan—will show signs that a change is necessary. Here are some of the main issues to look for:

1. Information is siloed due to the use of disparate systems. When key data is locked up in spreadsheets saved to individual users’ hard drives, other key stakeholders lack what they need to make the best, most informed decisions possible.

2. Customer satisfaction is slipping. When your clients aren’t happy, you certainly can’t be either, and this can be another bellwether that you need a solution like an ERP to manage quality, order fulfillment and more.

3. Supplies run short at inopportune times. Not knowing that you’re running low on key materials can leave your business in a real bind and cause you to fall short of goals or miss pre-scheduled deliveries.

4. Concerns arise around product quality and/or safety. While this issue is likely to crop up alongside a decline in customer satisfaction, the concern here is with the methods and/or raw materials used to produce the finished goods, which can only be addressed once the root cause is identified.

5. Waste generated in operations is excessive. Whether it is created as a result of perishable goods spoiling before they’re used, subpar end products needing to be scrapped or items being damaged in transit, waste represents both a financial loss and a drag on your sustainability.

6. A lack of actionable insights limits improvement. Without one comprehensive system that can provide the data necessary to evaluate performance across all operational areas, you can be left guessing as to what needs to be addressed in order to boost results.

If your company is experiencing one or more of the above, now may be a good time to jumpstart your modernization initiative by shopping around for an ERP system and working with potential providers to assess the fit of their solution.

Benefits of ERP Systems

The improvements that can be unlocked through the deployment and use of ERP software are far-reaching and varied. All can have a substantial impact on your business’s overall success, including boosts to both your bottom line and brand reputation:

• Faster, data-driven decision-making. Both the “single source of truth” and analytics features that ERP systems offer together can yield the insights you need to take action for improvement—for example, optimizing a manufacturing process or alleviating a bottleneck in the warehouse.

• Cost savings. ERPs can help your organization minimize unnecessary waste and scrutinize margins to ensure you’re maximizing your profit, and they also help alleviate the need for expensive rework due to faulty production runs with their quality control features.

• Increased process efficiency. The standardization of your processes that an ERP solution facilitates can increase productivity, and advanced platforms—like Aptean’s ERPs—allow you to automate certain tasks and free up your personnel for more critical responsibilities.

• Enhanced interdepartmental collaboration. By breaking down the barriers between your teams and acting as the central, go-to database of record, ERP software keeps everyone at your company working from the same “playbook” and facilitates stakeholder communication.

• Complete scalability. Growth is likely one of the most important priorities for your business, so you need a solution that can scale as you add capacity, personnel and facilities. ERP solutions expand as you do and facilitate the rollout of new product lines as well.

• Improved profitability. The combined effects of saving your company money and driving efficiency, coupled with financial analytics that help you determine which of your products or lines are most profitable, allow ERPs to have a significant positive effect on your bottom line.

• Better customer experiences. More effective resource planning helps to ensure orders are fulfilled on time and in full, and good production planning can allow you to provide customers with accurate delivery times.

This isn’t an exhaustive list of the benefits ERPs offer—industry-specific solutions can unlock additional advantages for companies operating in the markets that they’re tailored to. For example, a food and beverage ERP can help improve food safety and compliance outcomes by automating important checks and maintaining all pertinent traceability and product details in a highly accessible digital format.

Choosing the Right ERP for Your Business

The process of researching your options and evaluating ERP systems to decide which fits with your operations can be daunting due to the sheer number of available alternatives. You should begin internally by defining both your goals for your digital transformation as well as your most critical business processes.

Next, determine whether you’re looking for a generic solution or one that’s industry-specific, keeping in mind that the latter is the preferred path in the vast majority of instances. From there, begin researching the different offerings on the market by searching the web, speaking to vendors and consulting with peers outside of your organization who have experience with ERP platforms. You can also schedule a demo to review functionality.

You might choose to use a request for proposal (RFP) to assess the various packages you’re considering in a more quantitative and deliberate way. Aptean offers comprehensive RFP templates for both the food and beverage ERP and industrial manufacturing ERP selection process.

Finally, don’t forget to gauge the cultural fit between your company and your potential providers, and aim to work with a partner that knows your industry well and understands your unique challenges. Your teams will be working together regularly going forward, so choosing an organization with similar priorities and values will give you the best chance for success.

Best Practices for Implementing an ERP

Deploying your chosen ERP can seem like yet another monumental task to accomplish, but it is certainly manageable, especially if it is broken down into phases. It’s also crucial to communicate openly and honestly with employees, involve stakeholders across a number of functional roles to generate buy-in and approach the step of data migration with the care it requires.

Assuming you chose a well-established provider—like Aptean—you should rely on their expertise and seek their guidance during implementation. This will be far from their first time helping a client through the process, so they’ll know some of the roadblocks that can occur and how to avoid them, and they’ll also have best practices knowledge to streamline each step and achieve optimal outcomes.

As for your deployment method, you can choose on-premise or cloud. On-prem is the more tradition setup—which may require the purchase of additional hardware and maintenance by internal IT staff—where as a cloud implementation via a Software as a Service (SaaS) model is a modern approach. Today, the latter is typically recommended, as it helps save money up-front, ensures greater flexibility down the road and allows you to leverage the dedicated IT teams of your provider for support and updates.

Discover Our Unique Advantages

Here at Aptean, we’re proud of our long track record in the industries that we serve. Our dedicated professionals have decades of collective experience and have worked with many clients facing a variety of challenges, so we know well the hurdles that manufacturers and distributors must clear to maintain high performance in operations day after day, as well as the best strategies for maximizing your ROI.

Additionally, we strive to act as a partner for each and every business that chooses us for their software solutions, helping to guide the implementation process and create a roadmap with observable milestones to reach in a given timeframe. Our ERP platforms are built with the end users in mind, so you’ll find their interfaces to be approachable, intuitive and configurable for your needs.

Finally, we know you may still have some lingering questions about ERP systems, or perhaps you’ve heard some common myths surrounding ERPs and want to discuss them. Our experts are eager to help you get started—or accelerate the process—on your digital transformation journey, so reach out with any queries to start the conversation.

So, want to learn more about Aptean’s ERPs for the food and beverage; process manufacturing; industrial manufacturing; importing, distribution and retail; or fashion and apparel markets? Contact us today, or request a personalized demo to see the software in action for yourself.