How ERP can bring medium-sized companies to success

Mention Enterprise Resource Planning (ERP) and most small to medium business sized business owners in Singapore would likely dismiss it as something that only the big companies and big multinational companies need.

For the longest time, ERP has been associated with big companies who view it as a tool that enables them to perform the various complex processes within a large organisation in a manner that is both efficient and effective.

While it may have been borne out of necessity for the big companies because of their size and complexity, ERP is now more accessible than ever and could prove to be the key differentiator for medium sized companies looking to scale up their operations and become more professional.

In Singapore, an SME is defined by SPRING Singapore as 'businesses with annual turnover of not more than $100 million or employing no more than 200 staff'.

Shift in Management Style
As companies grow beyond the small or micro enterprise stage (<30 employees) into a medium sized enterprise, there is a shift in terms of the leadership and decision-making where the creation of middle management within the enterprise leads to a departure from management by ownership where decision-making is centralised and reliant upon the opinion and insights of its owner or owners towards a scenario where middle managers and employees are expected and empowered to make decisions regarding management and operations on a day to day basis.

To prevent overwhelming employees and middle managers with the responsibility and burden of possibly making a mistake, ERP provides a professional foundation and basis upon which these decisions can be guided and justified as there is a clear structure and guideline to the entire process.

ERP is a major enabler and tool for transformation as a holistic approach to decision-making and planning is now possible through the provision of timely and relevant information that can be tracked, relayed and retrieved on a daily basis with greater precision and accuracy when required.

The Role of ERP in Professionalising Medium Sized Enterprises
Medium Sized Companies in Singapore with the following operational characteristics can benefit greatly from the correct use of customised ERP solutions:

1. Involves the use of a warehouse or fulfilment facility (i.e. central kitchen) that deals with a steady and varied volume of incoming and outgoing activities

2. Consists of different departments and functions within the company (i.e. Finance, Accounts, Customer Service, Sales, Design, Printing / Production, Warehousing etc)

3. Has operations in more than one location or would benefit from having information collected, collated and made accessible to key stakeholders whenever required B2B companies engaged in manufacturing, retail and trading activities can expect to avoid costly stock-out and overstocking situations as managers are better able to predict how much new stock to order based on the incoming and outgoing inventory, while multiple deadlines and projects can be better managed with resource planning and allocation guided by accurate information about manpower and resource availability from various departments.

B2C companies such as retailers can look forward to being able to providing consumers with more accurate information about stock availability while F&B outlets can reduce instances of menu items being unavailable through better logistics planning and coordination with their central kitchens.

Conclusion
With the use of technology, the many inflection points such as delays in delivery or unavailability of items on the menu that companies have come to take for granted as an inevitable part of running a business can be drastically reduce and even 'brick and mortar' medium sized companies in Singapore should actively explore the use of ERP systems to implement a more defined and professional structure within the organisation to guide business processes and decision making in order to establish a competitive edge over its regional competitors and grow into a company that can survive beyond its first and second generation leadership.