A series of projects characterize business operations. For projects to be successful, careful planning is necessary. Where the planning process often goes wrong is in the predicted use of different resources. These include land, labor, time, capital, information, and human resources.
All the different resources need to be accounted for during the planning and execution phases of a project. Mismanagement of resources leads to delays, wasteful expenditure, loss of a valuable client and even a total business failure.
Resource planning is one of the most crucial business functions. However, it needs a holistic approach, which is where ERP systems come into the process. Here’s why:
1. Efficient use of resources
Some resources are scarce, and some are expensive. Most are both, which is why any unnecessary wastage puts a dent in a company’s bottom line.
The information needed to make sound resource acquisition and usage decisions is scattered among different operational sectors of the company. An ERP system collates all the data so that planners can see at a glance what is needed and what isn’t.
For companies with multiple sites, ERP allows planners to see if there are excess resources at other premises. It is cheaper to ship them to another location than it is to buy additional supplies.
2. Anticipating needs
ERP software allows the analysis of resource usage patterns. A study of these patterns will enable planners to predict what resources are needed and in what quantities they should be ordered.
One of the most convenient ways to streamline resources is to make sure that they are never in great excess.
When there is too much of a specific resource, it isn’t converted into a product. This affects the company’s bottom line. It has spent money on the resource but isn’t seeing the reward from it. Physical resources sit in warehouses taking up space that could be better utilized.
3. Understanding resource needs
An ERP system’s ability to help with the prediction of resource needs gives planners a better understanding of how resources feature in the production process. This allows for the making of conscious resource acquisition decisions.
Being aware of the need for resources ahead of time gives planners time to shop around for lower prices from different suppliers. They also get to look for alternative resources which may be more sustainable than those currently in use. When the buying of resources is not done at the eleventh hour, more forethought is possible.
4. Greater control
ERP systems give project planners and managers more control over resources. They have a lot more information about where resources are located, how they have been used, and whether a new supply is needed. This ability to track resources can save an organization a great deal of money, primarily when expensive resources are utilized.
Supply controls such as these also make it harder for unnecessary resource loss through theft, which is a common problem in many companies. Greater control over the purchase and use of resources allows the company to waste less money on resources.
5. A connected staff
Any project requires the involvement of more than one department in an organization. The use of resources in making a product doesn’t only affect the manufacturing department.
It also affects the finance department, which needs to know how to price products according to the cost of resources used in the process. This then affects the sales and marketing teams which need to start contacting clients and planning campaigns to generate interest and sales.
Instead of monthly meetings where this type of information is shared, there is real-time information that is easy to access. This cross-pollination of information helps departments to work together more effectively.
