Business Benefits of Automation in ERP Systems
Published on : Monday 30-11--0001
ERP, the abbreviation for Enterprise Resource Planning, refers to a system of applications involved with the management of core business processes. The benefits of ERP systems stem from the ability to integrate key business processes and increase operational efficiencies. An ERP system automatically connects spreadsheets and disparate databases from different business areas into one central location, allowing for the creation, storage, and use of the same data across a variety of business processes.
There are two types of automation associated with ERP systems. The first is the automation of traditional business processes by the ERP system, and the second is the incorporation of new technologies into the ERP system in an automated fashion. Both these aspects of ERP automation yield important business benefits, as outlined in this post, enabling you to grow your business and achieve success.
How do ERP systems automate traditional business processes?
An ERP system allows for the automated handling and execution of existing business processes, including traditional business functions and record-keeping activities, among other processes. An ERP system enables greater integration of all processes within a business, facilitating interactions between different areas and departments. The automation of these processes assists in breaking the information silos that traditionally exist within an organisation. These information silos typically do not allow interconnectivity between different departments, hampering efficiency and thus productivity.
With an ERP system, data is stored in a centralised location. This practice allows all data to be easily accessible to all employees throughout the organisation, granted they have the necessary permissions. Additionally, storing data in this way can also provide automated communication between work areas or departments. With this system in operation, workers in several areas can access the same data, with updates in real time. There is no more waiting on other departments for information and updates – all the data is current at all times and stored in one place with an ERP system.
ERP software improves efficiency by integrating many applications including inventory management, sales management, financials, and human resources. The benefit of this integration is the triggering of automated actions, thereby speeding up processing time. An example of this is when the sale department makes a sale. The ERP system would then automatically trigger an order, distribute tasks as necessary to different departments in order to accurately and efficiently process this order. All of this happens immediately, instead of waiting for each task to be manually processed, step by step.
The use of an ERP system reduces the need for manual entry of information and hence the potential for errors. As a result, the automation of processes through the ERP system leads to fewer routine errors and to a reduction in data duplication. The ERP system also streamlines communications between different areas of the business – thereby saving time and lowering operational costs. In addition, the centralised database that an ERP system provides enhances data analytics, providing better support for informed decision-making across your organisation.
How does ERP system automation incorporate new technologies?
ERP system automation enables the integration of the latest technologies within the ERP system, which has the potential to further increase employee productivity. Two of the latest technologies that are integrated within ERP systems are artificial intelligence (AI) and The Internet of Things (IoT).
AI can provide solutions that can read and respond to information, and learn from those interactions, and then can predict and execute transactions. An AI-enabled ERP system can integrate customer interactions with the order management process. AI can assist in customer service, planning and scheduling the earliest and most convenient time to provide service. AI also uses real-time information from various manufacturing sources (machines, sensors, switches, etc), and is becoming popular in predictive maintenance, thereby anticipating equipment issues and allowing for work in order to prevent equipment failure.
IoT technology relays this information back to the ERP system with AI. These types of enhancements are likely to reduce or eliminate the need for routine and repetitive tasks. This is a benefit to businesses because reducing repetition enables users to spend more time on creative activities, allowing them to partake in higher levels of critical analysis. Furthermore, this allows employees to become more skilled and to work on their own professional development. This process also improves employee engagement, as employees are more involved with higher-level thinking on a day-to-day basis, rather than working on repetitive and routine tasks day in and day out.
IoT refers to mechanical and digital machines, objects, computing devices, etc., that are embedded in everyday objects and can send and receive data. This technology can capture real-time performance information to allow, for example, a medical condition to be diagnosed or studied, or for predictive maintenance to be completed on a piece of equipment. For example, preventive maintenance may require that a part be replaced every 6 months; however, you know through an IoT device that the part is starting to malfunction at 4 months and thus needs to be replaced prior to the 6-month mark. The use of the IoT can reduce maintenance down time and increase the uptime of equipment. This can also increase product lifecycles, as the manufacturer learns that the true needs of each facet of the product and how it works in real life, rather than how it is designed and supposed to work.
Benefits from the use of IoT technology for the end user include reduction in product failure rates and improvement to product design. IoT allows you to detect problems early and thus reduce operating expenses. The constant monitoring and reporting of statistics with this technology also enables you to create the best possible design for the product.
ERP systems provide organisations with reports of current business processes using real-time information. ERP integrates information across all areas of the business and departments, thereby streamlining communication and increasing operational efficiency.
Through the automation of business processes or integration of AI and IoT systems, ERP systems further increase employee efficiencies and ensure maximal machinery uptime. Automation reduces errors and allows your employees to focus on critical thinking and professional development instead of repetitive routine tasks, thus improving accuracy and defraying operational costs and increasing employee engagement.