Does SME's need ERP???????????

Does SME's need ERP???????????

Does SME's need ERP???????????

DO SME'S NEED ERP?

By: Tayeb Barodawala(Director, AAKIT Technologies Pvt. Ltd)31stMarch, 2011Mumbai, IndiaQ. With the Indian Economy growing at such a splendid rate do you feel IT plays a primary role to this growth?Tayeb BarodawalaYes Off course, I.T has helped organizations in all sectors like public services, manufacturing, retail, financial services, hospitality, and transportation. Every Organization wants to manage their growth. And for that they need to establish processes and put systems in place to meet the internal and external demands. IT helps them to automate their operations and creates a robust foundation for its business analysis. Companies use IT not only as a back bone but also to deliver services to their customers who belong to all sections of the society.IT is an important factor in the growth of Indian companies and also the Indian economy.Q. What is the role of SME's in this growth?SME's contribute between 18-20% in India's GDP. They are responsible for contributing 45% in industrial output, 40% in exports, employing 60 million people & create 1.3 million jobs every year. It is evident that SME's are giving power to the Indian Economy. We all know of companies which started off as SME's and are now large enterprises. It is heartening to see that the rate of companies that are moving from the SME's to larger segment is increasing every year.Q. With the SME expanding geographically how important is the Integration of their business operation nowadays?When I talk to the management of top companies, the very first point in their wish list is to have integration and collaboration amongst the different departments. They do not want to duplicate the records kept at the stores in the factory, nor in the accounting system at the HQ. Integration brings about simplicity and faster means of handling every department under the same roof.Q. How does ERP help for the same?ERP applications bring about transparency and visibility in the business. Companies having operations across multiple locations are able to manage their inventory, track dispatches, plan purchases, and monitor their financials. Standardization of all processes across the organization is achieved and data accuracy is also enhanced. This leads to tangible business benefits and directly improves the bottom line. Studies have also found out that ERP implementations have been effective in the optimization of the business process.Q. Can you elaborate how ERP solutions help in Inventory Management? Having a visibility of inventory is necessary whether it's in the factory, ware house, or depot. ERP systems track raw material, packaging material, consumables, manufacturing and sales or finished goods at all stages of procurement. Analysis of slow moving, perishable, unused inventory can help managers decide to come upon on a suitable decision. This reduction of inventory by a few percentage points can release cash to the business. It can also lead to a reduction in working capital requirements. Better inventory management reduces plant shutdowns due to shortage of required material. Procurement planning is dependent upon accurate information about inventory at each location where as Finished goods inventory management is important to service customer requirements.Q. On what parameters should SME's decide whether to go for ERP or not?The very first thing companies have to determine is the Return on Investment. They must have a tangible justification for the investment they propose to make. There are other factors as well which they have to consider, some of which have been mentioned earlier such as integration, visibility, process standardization. Companies also need to consider aspects such as the scalability as their operations grow, whether they can be dependent on the data and whether the statutory and regulatory requirements are being met by their current systems.Q. How do you see SME companies adopting ERP by next 2 years?SME's in India have been quite aggressive in spending on IT. This is mainly on hardware, connectivity and stand alone applications. There is now awareness that such applications do not meet their growing demands. There is a huge potential for SME's to adapt to ERP's and bring about a transformation in their business. I see that the number of companies making an investment in ERP will increase by atleast 25-30% every year.ABOUT AAKIT: AAKIT is an I.T consulting & services company providing effective reliable and comprehensive solutions to enterprises. AAKIT is SAP partner providing Implementation, Application Management, Upgrade, Roll out and Enhancement services to organizations. Supported by over two decades of business expertise, AAKIT's comprehensive cost effective solutions based on SAP Technology are used by companies across industry verticals.http://www.articlesbase.com/technology-articles/does-smes-need-erp-4510327.html

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