Struggle for efficiency in small businesses: The need for a networked ERP

Small enterprises or businesses can serve as the backbone of an economy as they provide necessary cash flow in semi-urban and rural areas. These small businesses are an important source of employment for millions in the country and, therefore, their success is extremely crucial. However, if we look at the problems faced by these businesses, we will learn that they continue to struggle with achieving required efficiency in operations. There are myriad reasons for inefficiencies in small businesses. These are primarily related to inadequate infrastructure, poor flow of information, idle inventory, and improper supply chain management. All these inefficiencies work together to limit the potential of these small businesses. If we want to see them achieve big and grow faster, what is needed is that these inefficiencies are dealt with immediately.

One of the biggest challenges for small businesses is handling key data which flows between multiple stakeholders, within and outside the organization. Since most of these businesses still depend upon traditional methods of data management, they struggle with erratic flow of communication which can further exacerbate the problems with inventory, coordination between departments, and supply chain. At the same time, the businesses already struggle with high cost of operations because of the scale being limited. With these errors arising out of inadequate data and communication infrastructure, the businesses have to incur additional costs due to reduced productivity and waste of time.

So, what is the solution? It is digitalization. Digitization began when companies began storing data and documents electronically rather than manually.  Today, it is central to any business which wants to scale and manage its resources and communication better. The future of business scalability and profitability lies in seamless data sharing in order to facilitate access and exchange with their business partners. Data, discussions and documents can be shared and updated simultaneously across all stakeholders – internal as well as external through digital eliminating the need to update business transaction data and/or scan/store transaction documents numerous times at each end which used to result in data discrepancies, delays, duplication and time and effort wastage.

Once the process of digitalization is adopted, the business can then move towards developing smart networks and have a networked Enterprise Resource Planning. ERP software is a system that is primarily designed to integrate and manage data across many departments within a business. However, it lacks the agility and flexibility needed to meet the demands of dynamic corporate contexts. Traditional ERP processes typically manage and maintain data within the organization and hence different sets of databases are maintained at different nodes of the supply chain / business ecosystem for each transaction.   Therefore there is no immediately updated database available for any important decision to be taken in quick time.  Also, it is  inconvenient and results in data duplication,  errors, waste time and effort, unnecessary stock and inventory buildup and opportunity loss on several instances.

Therefore what is required is a virtual SCM ERP, which creates a smart network of information and data connecting a business’s entire ecosystem.  Virtual SCM ERPs include standardized processes, data sets, and document generation, resulting in a universal data set, easy data sharing, analysis and  forecasting, combined with in-depth industry research and data trend projections that are crucial for strategic decision making. Smart networking eliminates the need to manage several software and data sets and makes it easy to handle business processes, such as customers, vendors, human resources, financial transactions, order processing, and inventories in one shot. Building scalable and high-performance architecture, minimising data duplication, classification of item and supplier master data, holistic and integrated decision making, decreased security risk, and less reliance on paper trail are all advantages for businesses adopting a networked ERP.

Manufacturing, inventory management, supply chain, customer relationship management, audit trail, product management, warehouse management, sales management, distribution management, and many other problems can be solved by a smart and connected network. Small firms that struggle with inefficiency can streamline the bulk of their labour and processes by incorporating digitalization and networked ERP into their operations. This ensures accountability, security, and efficiency. This digital transformation of small businesses  can be a gamechanger by not just cutting hidden costs but actually optimising resources across the system and generating new growth opportunities.

The article has been written by Kamlesh, CEO of Zumbido