What is the ERP model? How is it applied in managing small and medium-sized businesses? Are ERP systems really effective? The article below will help you find the answers to these questions!
What is the ERP model?
The ERP model (Enterprise Resource Planning) is understood as software that plans a business's resources. ERP software is a technology model that integrates many different applications as modules of a single package.
What is the ERP model?
ERP automates from A to Z the activities related to a business's resources. The purpose of ERP software is to help businesses collect, store, manage and analyze data from their business operations. This includes product planning, calculating production costs, financial management, HR management... The model helps businesses respond promptly to changes or events in the external environment.
The ERP model in retail
Features of the ERP model in retail:
Retail planning
ERP systems let retail businesses plan according to market demand. Based on data collected in the past combined with current factors, ERP helps businesses form potential strategies to increase sales.
The structural model of ERP and its main modules
Demand forecasting
ERP systems in retail let businesses track past trends and use them as a basis for forecasting future demand. This is the greatest value the ERP model can bring small and medium-sized businesses. ERP solutions enable multi-dimensional analysis of activities, such as profit analysis based on real figures for costs, revenue, output...; potential customers; industry market share; market development trends...
The system automatically updates and forecasts future consumer trends, so businesses can be more confident when making business decisions. This is a positive sign for building the right business strategies without missing any opportunity.
Customer management
This is an automated management process, from collecting customer data to managing customer information. Everything from preferences, activities, transaction history and account information to each customer's special requests is continuously updated to better meet their needs.
The ERP model makes it possible to track, evaluate and increase long-term customer value
The ERP model makes it possible to track, evaluate and increase long-term customer value. As a result, ERP helps small and medium-sized businesses quickly turn new customers into loyal ones who stay with the business for the long term.
Integrating databases
Retail ERP is integrated with, or can connect smartly to, other software systems such as POS terminals, e-invoicing or standalone software systems.
The ERP model lets businesses store data in real time, helping managers analyze and predict consumer trends to set the necessary strategies.
Store operations
ERP helps retailers organize and manage all of a store's activities scientifically, including basket analysis, sales, inventory management, HR management... and many other issues.
Inventory management
This is one of the most important features of ERP in retail. ERP systems help closely monitor and manage the quantity of goods at points of sale or in the central warehouse.
ERP systems help manage inventory
HR management
This model makes it easy for businesses to control staff work. The system stores staff information, including personal details, work history, salary and bonuses, assigned tasks, targets and evaluations of their work effectiveness.
Supplier management
ERP systems make it possible to evaluate suppliers objectively, supporting more effective purchasing decisions.
Supply chain management
With its ability to process huge volumes of data, the system supports managing the entire supply process, from when goods are received from the supplier's warehouse to when they are released to the market. The system then compiles and continuously updates information on goods in stock.
Easy supply chain management with the ERP model
Financial and accounting management
The ERP model organizes the financial flows in a business to ensure cash always circulates properly. It can also identify cost centers and profit centers, so the business can evaluate the performance of each department and eliminate unnecessary costs.
The situation before and after a business uses ERP
The story of Sbiz.vn's customer Tham Tam applying "industrial automation" in its operations is a typical example of what this model achieves in managing small and medium-sized businesses.
The Tham Tam - TN trading and production enterprise is a tier-1 dealer of construction equipment and supplies, including aluminium, plastic ceiling panels, gypsum and construction equipment..., with 20 years of experience in the trade.
The situation before using the ERP model
The business was operated and managed manually using Excel and ledgers, with sales and purchase orders handwritten.
It faced the risk of losing goods and couldn't manage its inventory.
Business processes weren't standardized, and work overlapped.
Is managing a business easy if you stick to the old ways?
The business has 2 stores and 4 warehouses in different locations, so managing goods, inventory... was difficult.
Many sales and purchase orders come in and out every day, making management and processing difficult and time-consuming.
Unit-of-measure conversions were hard to manage; when selling, staff had to use a calculator to convert units into money.
Reports weren't produced or tracked accurately.
After using the ERP model
After using 3 main modules - purchase management, sales and smart warehouse management - the Tham Tam trading and production enterprise:
Standardized its purchasing process with suppliers and recorded all purchasing activity. It compiles the history of purchase orders and reports accurate purchase quantities at different points in time.
Smart management with ERP
Manages products more easily, synchronizing product data from 2 stores and 4 warehouses in the same software system. Products are grouped and managed by internal code, units of measure are standardized and stock alerts make reordering easier.
Manages everything from quotations to creating orders for customers, recording the entire history of sales orders and prices transacted.
Overview reports of the whole process help managers grasp the business situation, such as reports on products, inventory... All reports are shown in real time, timely and accurate.