Do SMEs in manufacturing really need ERP solution?

Kenyan workers prepare clothes for export at the Alltex export processing zone (EPZ) factory in Athi River, near the Kenyan capital Nairobi,

In today’s globalized world, SMEs in manufacturing are grappling with many challenges to remain competitive and relevant. With limited time, resources, skills and budget, there is a growing need to demonstrate and derive value from every investment made. Many SMEs in manufacturing may not know the value of technology in addressing some of these challenges. Those that do usually worry about the enormous costs of acquiring and running these technologies.

Poor decision making in IT investments can have a critical impact on the profitability and sustainability of any business. It is no wonder many SME businesses are risk averse to technology and opt to run their businesses the ‘’traditional way’’ where every process is manual and every transaction recorded in books that are kept under lock and key by the owner.

In reality some of these businesses may be making money. So why do they need to invest in automating processes? If as a business owner you want to save time, accelerate your response time to problems and customer queries, plan ahead with real-time data, mitigate wastage and keep the frown lines off your brow, then you definitely need to automate your business processes.

A good way to do this for SME manufacturers is deploying an Enterprise Resource Planning Solution (ERP). While some might be informed on the concept of ERP software and what it can do for them, there is definitely a section of business owners who would like to start with the most basic question – What is ERP?

Let us take a step back and look at all the processes that are central to running a business such as purchasing, production, marketing, invoicing, managing inventory, human resource management, customer relations management, accounting and more.

At the basic level, ERP integrates all these processes into one seamless system giving you real-time information in a format that is easy to understand and interpret. For a business owner this means easy access to smarter information which is a necessity to survive cut-throat midmarket competition. It also means boosting your sales and customer satisfaction rate by having real-time data and avoiding delays spent scouting for scattered records.

Further, it increases business Intelligence support for quick, dynamic decisions and adjustments whenever necessary. Having too many software for different processes can add to the bureaucracy of management in the crucial growing years. ERP system helps to centralize all these processes.

So why do many SMEs choose not to deploy ERP? Some of the reasons I get include, “we are too small”, “we are doing just fine without it”, “it might disrupt our operations”, “it is too expensive to run”, “it is too complicated”, among others.

What is most important to note is that, Big or Small, SME’s to big corporates, all companies derive significant benefits from ERP Solutions.

A good ERP software not only helps with operational efficiency but is also a source of cost savings. SYSPRO an ERP provider, is well known for its cutting edge solution for manufacturers that has a seen a number of companies in Kenya increase their business productivity, turn around their customer response time and even boost their sales. A good example of this is a leading dairy processor in Kenya that has been able to reduce the turnaround time for sales orders from 72 hours to 24 hours.

This was made possible via SYSPRO’s Espresso ERP offering where customers were able to sign for orders directly on the sales teams’ smartphones and the orders transmitted instantly to head office. This means that orders are made in near real-time and the supply chain is adjusted accordingly to accommodate the orders, reducing inventory and ultimately improving cash flow for the business, as well as customer satisfaction.

To further get a sense of benefits a company can accrue from an ERP solution, let us look at PZ Cussons case study. PZ Cussons is by no means an SME but a leading multinational in the manufacture of personal care and beauty products.

The reason I use this example is because this is a company that directly associates the deployment of a scalable and fully integrated ERP solution to its growth in becoming a major retail supplier. The company has grown through a series of acquisitions to become the leading beauty manufacturer it is today and throughout that period of sustained growth, the entire business has been underpinned by an advanced SYSPRO ERP solution.

This ERP solution was able to address the need for PZ Cussons to expand and diversify into new markets, to merge 4 previously individual beauty firms and to manage communications with different systems and different locations. Some of the benefits reported by the company’s Finance Director include: the provision of seamless collaboration tools to assist in trading with major retailers, the elimination of time spent on data input and human errors after automating processes, the streamlining and management of the company’s entire e-commerce activity and enabling communication of every order to the warehouse and distribution centers.

As SMEs in manufacturing aspire to grow to the next level, getting an ERP solution should be top of their list. Just like many other products in the market, ERP solutions vary in cost, capabilities, ability to be customized, ease of use and speed of deployment.

The trick is to find an ERP solution that addresses your specific business needs whilst remaining cost effective to run. Adopting ERP’s standard best practices can be a gateway for standardization and regional or international markets. Therefore there is no better time for SMEs to consider ERP in the view of advantages that come along with it.

(Wilson is the Managing Director at SYSPRO Africa)

Mark Wilson :