It’s time you considered an integrated ERP solution
Entrepreneurs are fantastic at creating new businesses. But as they grow, they often end up adding processes and systems in a completely ad hoc way. Not all systems are well thought out and many are inefficient, but at least they’re better than downright chaos, right?
Consider this typical example. An online business starts out manually loading all their products, including images and descriptions, onto their web platform. But as the sales volume starts to increase, the business starts to lose control.
Orders are printed from the website, and the volume of email queries continues to grow. Scraps of paper, spreadsheets with incomplete data and handwritten delivery consignment notes become the order of the day. Stock is kept in a small warehouse, office or garage, and a large amount of time is wasted in trying to find the correct stock to fulfil orders.
At this stage, the owner likely reaches out to their accountant, a trusted source of advice on all things business. The accountant recommends an accounting platform, even offering to install or set this up.
This is great, but many accountants advise an out-of-the-box product they know and use, and may even get a commission for signing up their client. Is this solution right for the business at the outset?
The client is left facing the challenge of reconciling each week’s sales and posting totals to the accounting system, praying the takings match the sales recorded.
While this is happening, the business finds it increasingly difficult to respond to customer service emails, track responses and finalise queries as they scream into their inbox.
The owner and their small team are busy trying to locate stock in the warehouse to fulfil orders, but costs were projected under the assumption that a casual staff member would take just 15 minutes to find a product, then pick, pack and write up a label for $6-9. The owner begins to worry as the expenses mount.
At this point, the owner might speak with a friend who has experienced these growing pains. They are advised to look into an inventory management system, Customer relationship Management (CRM) and email ticketing system, as well as freight management systems that will print the labels. Many online providers charge a monthly fee for their services.
Six months later and after a lot of grief, all these systems are up and running, and though some are integrated, others are not. Things are working better than before, but the owner is still frustrated. They can now print off orders as they come in from their website and showroom, and even look up bin locations for all their stock. This saves time, but it is still too labour intensive.
The owner may even feel they’re a slave to their systems, having to switch between their website, inventory system and freight ticketing system. They’re annoyed they still must create products on the website and again in the accounting software. And because they were nervous to link traditionally inaccurate stock to accounts, they must manually remove stock from the inventory system.
It’s common for entrepreneurs to turn to their friends, accountants, lawyers, web developers, creative agents and others for advice. But while they may all be experts in their own field, they often don’t consider the complex interrelationships that plague a business as it grows and the need for true integration between systems.
There are some wonderful technologies available today at very low cost. As standalone products, they work very well, but when a business gets to a certain size, it often has requirements that can no longer be met by out-of-the-box solutions. It is at this point that a business needs to consider an enterprise resource planning system, or ERP.
ERP systems evolved in the 1960s, with more of a focus on material planning and costing for manufacturing, and were largely a tool available for corporations. But that’s changing.
“With the advent of cloud technology, Service Oriented architecture or web services, costs have plummeted and the technology has become available to small to medium businesses,” suggests Niki Abeyewardene, head of business development at Qdos Technology , a Melbourne-based cloud ERP povider that offers customisable inventory, POS, accounting, e-commerce and CRM solutions in one system.
Whether the term ERP still applies to the category is questionable, as it now generally means a comprehensive order/inventory/accounting-based system that manages the life cycle of inventory from product creation, order, receipt, sale, dispatch and replenishes within one ecosystem including websites.
ERP is quickly becoming a viable option for a growing number of online retailers.
How about you? Have you experienced the pain of integrating standalone, out-of-the-box solutions? Are you thinking about implementing an ERP system, or have you already?
Mark Freidin is the co-founder of Internet Retailing and writes a weekly opinion column about the e-commerce industry.
Have a burning question or idea you want to share? Email Mark at iretnews <@> octomedia.com.au.