Upgrading your accounting software. WHY?
Have you ever been so frustrated with the way your accounting system does something or better yet doesn’t do something you really need.
If so you have probably been to the point where you need to consider upgrading or replacing your accounting software. In many cases people will upgrade the accounting software and possibly consider other tools to manage inventory, schedule, estimate or a host of other possibilities.
The reason they do this often comes back to the fact that the accounting staff is comfortable with the package and would prefer to keep using it. What these organizations don’t realize is that keeping a specific accounting package stunts the ability to grow and prosper.
While the accountants are important to your business, so are the other people. They need tools to monitor and execute their areas of responsibility as well. Production, shipping, sales, purchasing these are the people who do the day to day work. It might be a good idea to bring software to them, to automate and communicate in the most efficient manner. Saying that if all these people need software to help them then why not look at a package that offers all of that. Its called ERP (Enterprise resource planning).
What is the advantage of ERP. Well firstly, everyone is using the same software package. Which means that everybody has access to the information they are allowed to see in other departments. Communication and interaction between departments is a key to growth. With one system information flows from department to department naturally and automatically. So for example when you ship, an invoice is automatically created. Johnny in shipping doesn’t have to tell anybody, the system knows and informs accounting. Further to that the inventory is relieved properly and there is full traceability to what happened.
Without getting into to many gorey details you can plainly see the advantage.
So you say to me well ERP is expensive. And I say well it can be. Especially if you don’t get it right the first time. the reality is you can get an ERP package for the price of an accounting package these days. And consider this, if you avoid ERP you may have multiple pieces of software that either don’t talk to each other or you have to pay to have them do so. Not very efficient or affordable. You run into things like having to enter data multiple times.
Even upgrading from one accounting system to a newer version or a more robust offering, there is much time and effort spent learning and implementing. And the worst part is sooner or later you know you will have to replace it.
So the question I have for you is, if it is time to upgrade your accounting package why wouldn’t you start down the path of ERP.
It doesn’t matter what way you slice it, accounting packages that have add-ons or do some other things are not ERP. They might say they are or even think they are but the proof is in the pudding and I am here to tell you they are not. We make a living off of replacing packages that where billed to do these things but in the end don’t.
Don’t make the mistake of other small business owners, learn from their expereince and ours. Invest in a long term solution and not the “quick” fix.
Maximize your ROI on labour
If your organization has been fortunate enough to make it this long there is no doubt you have went through a thinning process. Reducing your work force has been an important part of why you are still around.
The question now becomes how you get the most out of the employees who are left. Moral is low, orders are not what they once where. What can an organization do to ensure they are getting the most out of their work force and prepare for when the busy times come back.
You must believe the good times are coming back or else why would you still be in business? So again how do you get the most ROI on the investment you make with your existing employees and how do you prepare for when it gets busy again.
In my view the key to enable people to be the most they can be for your organization is to empower them with information. To open the communication lines between departments and individuals within the organization. Knowledge is power and the more an individual knows about their job the more efficient and effective they are going to be.
Your managers need access to information in a timely manner and they need to be held accountable for their results. If you have nothing to track and manage the results on a very frequent basis how will you know who is performing and who is not. The bigger question is how you can hold them responsible if you haven’t given them the tools to manage properly.
Introduction of ERP will allow you to ensure that communication is occurring. If everybody is using the system the work is on display for the entire organization to see and use.
ERP is a platform for your organization to always improve. It gives you the tools to not only track and monitor but also correct broken or clunky processes.
On of the most important paybacks of ERP is to empower your work force to lead the continuous improvement process. Once a user of the system sees how the software can make things simpler and life easier they are big proponents of the software. Leading them down a path of thinking that is “we could do it better if…….”
That is much better than I wonder whose next on the chopping block.
Motivate your staff by showing them that you are leading the charge to make your organization better. Give them tools to be better workers and mangers and improve your customer’s experience.
Get a head start on the competition in 2010
As we embark on 2010 and leave 2009 behind (thank goodness), hope springs eternal that we have gotten over the worst of it. In speaking to and reading about small and mid sized businesses there still is a lot of uncertainty, a lot concern as to whether we actually have come through the roughest times.
On the other hand there are signs of life. The automotive industry’s “Plan” is starting to shape up, with announcements of what is being made and where starting to trickle out. The green industry is still growing and should continue to do so for years to come. Made in America or North America mentality should stem the tide of manufacturing being shipped else where. All these signs are promising.
In many of the companies we talk to there is a lot of quoting going on, activity is rising, granted maybe not at the pace we would all like to see just yet but it is definitely getting better. Lets face it if you are still in business in the manufacturing sector that is an accomplishment in itself, but what are you going to do for your next trick?
Activity will pick up this year slowly or sharply either way it is going to get better. Saying that you must ask yourself are you doing everything you can to prepare for things when the business comes back?
Down times are a perfect opportunity to improve your communication, efficiency and organization as a whole. While the sales staff is out there pounding the pavement looking for work, the administrative and operational people should fill in excess time by streamlining and updating business processes.
The thought here is that while all your competitors or at least those that are left are waiting to see the evidence of the resurgent economy, you should be preparing for it. Waiting until you are at your busiest to install an integrated business solution or improve your business process taxes over worked employees even more. On the other hand if you improve the flow of information and general business process, with the use of something like ERP, while you are slow then when it gets busy you can focus solely on producing and meeting customers demands.
All businesses have been through a process to trim excess or cutback. The question remains though have these business done anything to improve themselves during this time. In many cases people have been let go or layed off, those that remain have taken more responsibility. Helps the bottom line but have you really improved your business in the eyes of the customer? Are you providing a better experience for your customer? On time deliveries, timely answers in the customer service area. Can your people get the answers they need quickly to make the daily decision they need to. How much inventory of product x do you have. If someone still have to go out a physically look, your business is not as efficient as it could be. There are hundreds of examples from double entry of data due to fractured systems to did we make any money on that job.
When times are good and the margins are there the details aren’t as important as long as at the end of the year the number looks good, but when times are tight and the numbers start to get ugly, there is no better tool on the plant than ERP system with the data you need to make informed decisions.
3 key reason’s for SME’s to acquire ERP
As a business owner you may not be sure why you need ERP. What will it do for me and my company?
You may even ask what is ERP? For those that don’t know ERP stand’s for Enterprise resource planning.
Business management software for the whole company. If you still don’t get it spend some time on the ERP123.biz site to educate yourself further.
In my opinion there are 3 key reason’s why SME’s (Small-Medium Enterprise) need ERP. Each one is equally important to the health of your bottom line and quite frankly if you don’t have a handle on these things your business is not likely to grow any larger and may not even survive. Now saying that you don’t necessarily need ERP to do these things but there really is no other more efficient way than having one business system for the entire organization.
#1 Key reason for ERP
Communication
Can there be anything more important in your business than everyone communicating with each other in an efficient, concise manner. In growing companies we often see silo’s of information, meaning each department has there own “software tools” like an accounting package or a scheduling package. This set up also tends to feel like each department is a silo not connected and communicating with the rest of the group.
The communication in an ERP system is not only for each department to share information with one another it is also to communicate to workers and management. Every body sharing the same information, seeing only what they are allowed to see.
As an owner or manager the way to control your business is through effective communication in all directions, ERP gives you the tool do do this.
#2 Key Reason for ERP
Control
If you are not in control of your business who is?
Do you understand what things cost to manufacture ? Do you know what your margins are? Are you sure things are being done the way you expect them to be?
All good questions and ones any business owner should know the answers to.
ERP can help you set up, monitor and correct procedures and processes to ensure things are done in the most efficient manner and the way they are supposed to be done. Setting up an ERP system should ensure you have the level of control you need for your business not only today but in the future as well.
Of course one of the luxuries of setting up an ERP system is that you take the knowledge out of people’s head and putting it into the system, this is to allow the key people in the organization to free themselves of being the only person who knows. Having control of what goes on even though your on vacation in Barbados is something many small business owners can only dream of.
The other issue of course is that if the people with the knowledge in the organization aren’t part of the ownership group, that can pose a problem. ERP is a tool that will harness that knowledge for all in the organization to use both today and in the future.
#3 Key reason for ERP
Continuous improvement
It today’s society anything that stays the same gets past by. As an organization you must always look for ways to improve processes and make things more efficient. There are always ways to to do this when the right ERP package is acquired. One that you can grow in to and utilize in diiferent ways as your business grows and changes. Those in the automotive industry have spent a lot of time trying to improve processes, reduce waste and cost over the years a tool like ERP helped them do that.
ERP provides organizations with tools to improve process in every area. As a small organization you start with basic ERP functionality, maybe sales and shipping, inventory control, accounting as time goes you start to do more things, or want more things out of the system. Bar coding, shop floor reporting, website interfaces, EDI whatever the requirement is the point is that as time moves on you must always look for ways to do things in a more cost effective manner. ERP provides the tools to identify, correct and monitor the poor preforming areas.
If you have been thinking why do I need ERP, think about these 3 C’s communication, control, and continuous improvement. You can do these things with our ERP but not as effectively.
Think of it this way you can use a screw driver to put in a screw or you can use a drill. Both work one is much more efficient than the other.
Visit our site to get more information on ERP at erp123.biz
Do you know what that costs? Well do you.
In the world of business knowing your costs would seem to be very important. After all, how do you know what your margins are or what your making on certain products or product lines if you don’t understand how much things cost to make or buy.
When the economy is booming and margins are high how much things cost is not as important to some. They are making so much money on the product that if they have uncontrolled or unbridled costs it is not as noticeable. But when the bottom drops out and the competition rises, then what happens. Margins shrink, sales dry up. Understanding your costs becomes imperative.
Knowing where you can cut costs and what products or lines are most profitable becomes ultra important.
Whether you make the same widget over and over or a different thing every time there is no reason not to understand the cost of your product. The process of tracking your costs is slightly different in these varying manufacturing scenarios but the results are the same. How much labour, material and overhead goes into making this.
ERP or enterprise resource planning as it is called formerly, can go a long way to aiding you in tracking and monitoring costs. Of course if you read this blog regularly you will know that ERP alone is not the answer. Sound processes that trap the data you need and no more, and a diligent work force that communicates with the software in an efficient manner must be employed as well.
It sounds complicated but it is not really. Using ERP you will Purchase and receive goods into the system. The costs of those purchases will be trapped in the system. The labour will be tracked and input into the system. Employee rates, cycle times and quantities will be recorded to calculate labour and possibly overhead. So not only the finished goods or the product you are selling will be costed, but the raw materials and work in process or WIP will be calculated.
What do you get out of all this. A true understanding of our costs of course but other side effects are;
- Inventory value including work in process
- A schedule for production
- Manufacturing or production targets
- Production comparisons by employee
- An integrated system that enables departments to communicate seamlessly
- Reports to easily access crucial company data
The reality is the list above can go on and on. Not all facets of the list will be useful to all organizations but there are many benefits for every business.
Mind your business using ERP, the easiest way to control your costs.
What’s the difference between MRP and ERP?
If you work in manufacturing or distribution and are looking for software to help you manage your business your hear the terms MRP and ERP often. How do they differ? What are their benefits?
The first thing to note is that MRP is designed for a specific thing. Inventory and Production control. On the other hand ERP might have MRP as a part of it because it is designed to incorporate all areas of your business. So not only inventory and planning but also costing, accounting, sales, CRM, engineering and more.
MRP or Material Requirements planning is a tool to aid you in the processing of orders. What is does effectively is looks at your demand ( sales orders, forecasts) and your inventory(the stuff you already have), and then tells you what you need to make or buy and when based on the demand. It looks at things like lead times, order quantities, safety stocks and again calculates what you need to make or buy. MRP is very useful for the inventory people and the production people but not so much in accounting and sales because it is not designed for those groups.
Not all business will find MRP useful. If your product is always different or if your order volume is low there are other ways to achieve the same results with out using MRP software.
MRP will generally by utilized by those with repetitive purchases and/or larger order volumes. But again the reality is that MRP is usually part of a larger ERP system, much like accounting or sales.
ERP (Enterprise resource planning) is also a tool but one that is useful in all areas of the business.
It will have things like MRP, Accounting, Sales and more all in the same package. These modules, as they are called, should all be connected having information flow from one area of the business to the next automatically. So saying that ERP is much bigger than MRP and does a great deal more. The benefit of ERP is that all areas are connected eliminating the need for entry of information more than once. The flow of information is seamless and everyone knows what is going on in all other departments because the are all connected to the same information. There are many benefits to using ERP, for example the automation of creating invoices from shipments automatically. The management of inventory simply by reporting production, shipping and purchasing.
There is no doubt that these tools can be used to create efficiencies in your business. The caveat here is that they must be used correctly. Like anything else you do if you put garbage in you will get garbage out. So while the terms ERP and MRP generally refer to software, don’t make the mistake of thinking that is all there is to it. You must learn to use the software correctly, develop processes and procedures to ensure that both new and existing employees understand the process that must be followed to generate good numbers.
If you are implementing these tools, see this as an opportunity to standardize and improve your business. These process and procedures should be designed with the goal of providing the information needed in the most intrusive way to those that have to use it. Remember the idea is to improve your operations not weigh down your staff with extra tasks.
The last point I will make is this and it holds true for any package. You can buy an MRP software or your can buy an accounting software package, but the reality is sooner or later you will have to change it because you will out grow it. Your staff will spend time, your organization will spend money. Why put you people through all that?
ERP is affordable and you can grow into it. Don’t waste precious time and money. Look at an ERP package today!
Erp advice: Erp is not just software
ERP ( Enterprise resource planning) is not just software. You hear a lot about the software but the reality is that there are other facets of an ERP project that are just as important.
The fact that you say ERP project tells you this is not as simple as installing a piece of software. So what else is involved you ask?
At a macro level or at the highest level ERP is
- 33 % software
- 33% Implementation/training/ process
- 33% guidance
The software provides that foundation, it is basically the tool to process the information. The best software system is the one that does what your organization needs it to do. Keep in mind that even the best system doesn’t work if you don’t set it up and use it properly. That’s why it is only 33% of the equation. Don’t get me wrong the software is important but not everything.
Implementation/training/process
The portion of the equation is very important. How are you going to set-up, use and train on the system. A solid plan is needed here. Whether you use your vendor or your internal resources, the person or people you lean on here should
- Have a deep understanding of your business and the flow of information through it.
- Understand the group of employees that will be interacting and using the system
- Deliver training in the method that best suits the individuals users.
- Understands the way the software works
Guidance
If you have never used or seen an ERP system and don’t have anyone internally who has, you will need to rely on your vendor here. Many organizations think they don’t need this but the reality is the project will cost less and take much less time with the proper guidance. There are many decisions to make when installing ERP, many forks in the road, choices are great but if you can’t visualize the outcome decisions become difficult.
Exposure to setting up and using systems here is critical. If you don’t have anyone internally to provide this for you make sure you do your homework with the vendor. Make sure the have the technical ability to understand your business and how information should flow.
ERP is not just software it is a combination of software, processes and procedures used to reduce waste, create efficiency and provide a platform for growth.
ERP advice: What makes a good ERP vendor
You don’t have to look very far to find an ERP vendor or business management consultant these days. Let’s face it there are thousands of software programs and even more vendors.
So what makes a good ERP vendor. The answer is different for every customer expect for a few basic things.
A good Enterprise resource planning software vendor will;
- Ensure their system fits your business process
- Understand your business or the flow of the information in it
- Manage your expectations in regards to your budget and scope of the project
- Empower your facility to solve problems without the vendors help
- Monitor your performance and provide feed back for improvement
Every organization is different. What they need and should look for in a vendor differs based on the internal and external requirements. Saying that the points above should be good for everyone.
The first point is critical and you would be surprised how many software vendors don’t ensure that the system actually fits your business. Beware of the software salesman who shows you how the system works but doesn’t show how your data works in their system. Also never buy a software package you have not tried before. Would you believe people buy software only to realize after it is paid for that it doesn’t do Accounting or some other important part of their business.
The second point above also emphasises the need for trying out the system with your data before you buy. If your vendor cannot demonstrate to you how the system will work with your data there is a good chance they do not understand what you need and how you will get it.
ERP software can do a lot of things, in a lot of different areas. Massive amounts of money can be spent to customize the system to the nth degree. The question you must ask your self is what is the pay back. Just because it would be nice to press a button to do something rather than go through a process to achieve the same goal doesn’t mean you should do it. Your vendor should help you identify what provides value. Prior to paying for the software you should have a shared understanding of what you will get and how much that will cost.
A vendor should be a partner, one that empowers your people or organization to manage and correct issues by themselves. When you are first learning this might be difficult but as time passes you shouldn’t have to rely on your vendor for every little thing. A good partner will give you the tools to monitor and correct processes with out their help every time. That’s doesn’t mean your on your own it means if you have the internal capability they should teach you to be self sufficient to the level your organization can handle it.
Many people in the organization may not like this part but a vendor who has an organizations best interest at heart must monitor and provide feed back on the project and those involved. Often times when you get a new ERP system, new processes and even roles can be developed through the company. Many people do not like change and don’t conform as much as or as quickly as they should. The vendor needs to identify and point out these people to the Owners’/managers of your company. The importance of this is that projects can be delayed greatly by one or 2 individuals in the company. Delays cost you money. The vendor wouldn’t be doing their job if they did not report such behaviour.
A good ERP vendor is some one you can trust, who understands your business needs and wants. The reality is a good software vendor can take a bad package and make it work well in your enviornment. It is not the ideal situation but when you are buying business mangement software the providers are just as important as the software.
ERP advice: Knowing your strengths and weaknesses
Knowing what you do well and what you don’t can be a very useful piece of information when shopping for and implementing ERP software.
There are a million vendors out there with thousands of different software package. Before you can decide what is the right package for your organization you must know what to look for. Knowing what you need is kind of important. Not only in functionality but also in services and support.
In larger organizations you are more likely to have people who are used to handling big projects, however in small and mid-sized companies the likely hood of some one having the time and experience needed is smaller. Understanding if you have the man power and skill set to lead this project is very important. There are all kinds of task when implementing ERP software but none are more important than the project lead.
Many times in SME’s (small to mid-sized enterprise) we see this task shared between the vendor and a key person in the organization. The point here is if you don’t have the internal knowledge or exposure to ERP systems you will need the aid of the vendor. In this case you want to be sure the vendor has a deep understanding of how your business runs and how the software can be used to benefit your business. The important thing to note here is that the technical people should be involved in the process right from the beginning. Access to them as you progress through your installation should be easily achieved. Dealing with a sales person is not what you are looking for.
Conversely if you do have some exposure to ERP systems your organization may not need as much help from the vendor. In that case you might look for software the offers more flexibility and opportunities to do things yourself, without relying on the vendor. In this case you will be looking for a vendor who can supply you with tools like videos for self teaching, report writers so you can create your own reports or any combination of tools that your organization could utilize to keep the implementation and training costs down.
Business management software is just that, designed to manage your business. Before you install a new system with new and improved processes you should understand what processes currently are making you money, or providing a unique advantage over your competition. If you have a process that work very well for the way you do business, you may not want to change them. Be sure to understand if the new software package can handle your good or unique business processes.
Understanding your needs, your strengths and your weaknesses will allow you to ensure you are talking to the right people about ERP software. Using this information to find the right partner with the right solution will go a long way to ensuring your organizations success in implementing and properly utilizing an ERP system.
Next to ensuring there is buy in from onwership and the executive group there is no more important issue then understanding what you have and need internally.
ERP Advice: Its all in the way you build the trap.
That’s right you heard it here first, in order to catch the best ERP system you need a good trap. Not a mouse trap mind you but a data trap.
Its is not only what you trap but how and when you trap the data the is critical to your business. Every business has key information they must process to turn a sales into revenue. Some people want to know every detail down to the last screw. Others want to know as little as possible.
So how does ERP fit into both of these business philosophy types. Well it is all in the way you set it up.
The first thing you need to know is what data is important to your organization now. In many small businesses these are things like;
- Inventory levels and raw material costs
- Sales volume
- Labour costs
- Order status
Also things like
- Lot and serial numbers for traceability
- safety quantities
- lead times
All these and more are types of data you may want a system to track or process. So the key is to ensure you know what you need. It is generally not hard to figure out, what are your biggest problems, what data would help you manage these problems.
The next thing to do is to identify a piece of software that is capable of handling what you need. Be sure to make sure it handles what you need but in a process you can live with. It is one thing to get the data but if it makes more work than you save then it doesn’t make a lot of sense.
The key is in how you trap the data you need. The idea behind a system is to stream line your operation, your entire operation not just one function. So that means that one department or another will not get everything they want they way they want it. Especially if you are coming from a previous system that does not have as much structure.
A real example of too much information is this.
A company that manufacturers furniture had some engineers that wanted a lot of detail about a particular process. So much so that they created a work order or job traveller that would stretch from the ceiling to the floor in a building with 10′ ceilings. Asking operators to report after each screw was inserted into the piece of furniture. In that case the employees would spend more time reporting their work than actually working.
Be wary of all parties who will use the software, how will the interact with it, what data will they need. Then design a process that ensures your business is on the road to peak efficiency.
Your not building a better mouse trap your building a trap the is designed for you business and its needs.
And remember there is no need to start out going whole hog. Take cares of your biggest issues first then spread the use and integration of the system to other areas. As knowledge of the software grows, the learning curve for future projects becomes shorter.
