Why Small and Medium Businesses Thrive with ERP Systems

Did you know that one out of every five new small enterprises fail within the first year? According to the Bureau of Labor study only 30% of small enterprises make it through their first decade. Small business failure can be caused by many factors, but ineffective planning and resource allocation are on top of this list. This is where effective enterprise resource planning can come in handy.  

Enterprise Resource Planning (ERP) software allows businesses of all sizes to manage a variety of business processes, including accounting, finance, human capital, supply chain operations, inventory, sales, project tracking, and customer relations. It enables firms to focus on what is critical to their success. An ERP system for small and medium-sized businesses has a direct influence on cost reductions and operational efficiency. It enables firms to endure and grow under adverse economic conditions. 

However, it is still a prevalent misperception that only large organizations require an ERP system. In fact, no organization is too tiny for such a service. On the contrary, the smaller the business, the greater the need to make the best use of its limited resources, which is the primary intent of ERP. Some of the biggest reasons small and medium-sized firms might consider adopting an ERP system are:  

• It gives businesses the tools and resources they need to manage their operations, such as tracking inventory levels, processing orders, and organizing customer data.  

• It enables users to access real-time data and make quick conscious decisions. 

• It allows you to change the procedures and workflows.  

• It offers the potential to scale operations as and when needed.  

• It offers the tools and resources required to run businesses and remain competitive.  

Small and mid-sized businesses can use ERP systems to optimize processes, increase efficiency, get real-time data, personalize procedures and workflows, and grow their business. 

According to Allied Research the ERP sector will increase at a 9.8% CAGR between 2020 and 2027, reaching $86 billion in 2027. Most of the predicted increase comes from small and medium-sized enterprise ERP systems. Let’s discuss what value ERP systems can bring to small and medium sized businesses.  

For small and medium-sized businesses, efficiency and agility are critical to survival and growth. However, juggling various business responsibilities with little resources might be difficult. This is where ERP comes into play, providing numerous significant benefits: 

1. Data Accuracy & Access 

ERP’s ability to consolidate and integrate processes and data minimizes data duplication, eliminates manual data entry, and boosts efficiency. Inconsistencies and errors are less likely when information is available to relevant employees and departments.  

ERP enables small and medium-sized businesses to access all their data from a single platform, ensuring consistency and accuracy across departments. This centralization removes data silos, lowers errors, and enables better decision-making.  

Managers may immediately recognize trends, identify possible issues, and make data-driven decisions, resulting in better informed, timely, and successful decision-making overall.  

2. Resource Optimization  

An ERP system increases productivity by automating repetitive jobs, decreasing manual errors, and speeding up procedures. You and your team can accomplish more in less time, leaving more time to focus on building the business rather of getting mired down by the day-to-day grind.  

One of the most significant benefits of an ERP system is business process automation. Data input, invoicing, and report generation were all time-consuming tasks, but they can now be handled in a fraction of the time with minimal human participation.  

In addition, many ERP systems provide workflow management capabilities that help to streamline complex operations. For example, with automated notifications and reminders to keep things on track, on-the-go approval of purchase orders and managing multi-step projects becomes easier and faster with ERP. This means spending less time pursuing approvals and more time on activities that generate income and growth.  

3. Cost Reduction 

ERP is a solution that provides transparency into how problems affect the rest of the process, allowing managers to analyze, get better insights, and make more informed decisions. It gives real-time financial data, giving you a competitive advantage, increasing efficiency, and ensuring cost savings.  

While determining an ERP system takes an initial investment, the long-term savings can be significant. Automating activities and reducing manual labor can help you save money while increasing profitability. 

4. Internal & External Collaboration 

Effective communication is critical for every business, but it may be difficult when separate departments operate in silos. WFX ERP designed the Supplier Portal which allows you to receive real-time notifications for crucial milestones, while suppliers may spend less time figuring out who to contact and more time getting their items to you faster.  

The module aims to strengthen your supplier connections and communication. It contains an automated history analysis, which allows you to examine how your providers have performed at any given time, providing you a clear picture of who needs assistance and what needs to be done. 

ERP systems enable smooth collaboration by providing a centralized platform where all team members can access the same data. This reduces confusion and makes sure that everyone is on the same page.   

5. Scalability & Agility  

As small and medium sized businesses expand, their business processes get increasingly complex. The benefit of an ERP system is that it evolves alongside you. ERP systems are built to expand with the business, allowing firms to add new features and users as needed without interrupting existing processes. 

Whether you’re adding more items, expanding into new markets, or just managing more transactions, an ERP can scale to meet your needs without a hitch because these business solutions are designed to last and develop with you.  

Scaling a firm entail managing complexity as well as handling more transactions. As your business grows, you will certainly face additional obstacles, such as managing several sites, dealing with international consumers, and adhering to various rules. 

6. Robust Reporting & Real-Time Tracking  

ERP systems provide a centralized database from which firms can access real-time data on business activities such as accounting, client data, project details, and employee performance. For example, you can track, save, and analyze financial data from various accounting procedures. This includes accounts payable and receivable, general ledger, forecasting, and budgeting.  

Organizations utilize reporting to track key performance indicators (KPIs) across all departments. If one department or functionality falls behind, the others may suffer as a result. However, you cannot create useful reports without a good structure.  

An effective ERP solution generates reports that clearly show where you are now efficient and where there is room for improvement.  

7. Customer Relationship Building  

Customers are the lifeblood of any business and keeping them satisfied is essential. A good ERP for small and medium-sized businesses improves customer experience by ensuring that orders are handled fast, inventory levels are precise, and customer information is conveniently available. When everything goes perfectly, your consumers notice—and they keep returning.  

Let’s imagine a consumer calling in to inquire about the status of their order. With an ERP, your staff can rapidly access their information, identify where the order is in the process, and provide accurate updates. No more searching through emails or calling various departments for answers. This level of efficiency not only amazes clients, but also fosters trust.

Before adopting WFX ERP, Pro Sports, a leading Vietnamese garment company established in 2007 was trapped by a manual management system that was difficult to use and provided little visibility into business activities. This meant that employees had to squander time and money on activities that could have been done more efficiently by another person or department. Managers also struggled to manage their teams since they had little visibility into what was going on within their team and throughout the organization.  

After implementing WFX Apparel ERP, Pro Sports was able to automate most of their day-to-day activities, such as inventory management, production planning and scheduling, and cost control. WFX’s analytics dashboard and business intelligence (BI) tools enable Pro Sports’ team leaders to make data-driven business choices. They can better control inventory levels and approvals throughout their supply chain, lowering costs and ensuring crucial milestones and deadlines are reached on time.  

As an end-to-end integrated solution, WFX has been able to assist Pro Sports expand dramatically without investing in unnecessary hardware.  

Similarly, fast-growing Sri Lankan manufacturer Rainwear’s growth was hampered by ERP-related problems. The lack of synchronization between Cost Sheets and Bill of Materials (BOM) resulted in mistakes, compromising budget control and style uniformity. Manual methods hampered color-based cost capture, trim management, and sample order tracking, resulting in errors and inefficiencies. Vital data could not be connected to purchase orders or specifications, complicating record keeping. These challenges drove Rainwear’s search for a modern ERP system capable of accelerating expansion by streamlining operations.  

Application of WFX’s ERP software consolidated Rainwear’s cost sheets and BOMs, eliminating discrepancies and saving time. Also, budgetary constraints became enforceable, providing Rainwear with order insights, profit, and loss transparency. Their efficiency increased and they were able to set exact profit and loss targets as their reports were up to date.  

Rainwear found it easier to create sample orders and manage attachments for specifications and reports as reporting and analysis were optimized. In the words of Nipuni Kumarapeli, Manager – Key Account and Development, Rainwear, “WFX allows us to capture all requests, entries, and other activities, properly monitoring them through the system, so we can get in-depth reports about our processes.”  

Enterprise Resource Planning (ERP) software is a powerful tool for small firms looking to simplify operations and prosper in today’s competitive market. ERP software improves efficiency, provides real-time visibility, and supports long-term growth by centralizing and automating key business activities. 

ERP is no longer limited to huge organizations; it is a strong tool that SMEs can use to alter their business processes. ERP solutions assist SMEs in operating more efficiently, making better decisions, and remaining competitive in an increasingly tough market by centralizing data, automating operations, and giving real-time insights. 

Contact our specialized digital consultants for a free ERP demo.