ERP systems empower businesses to streamline processes across all areas of the business, from inventory management and sales to customer service. The convenience and increased visibility ERP delivers has driven massive adoption of the technology; more than 80 percent of organizations have either implemented ERP into their operations or are taking steps to do so.
While ERP systems are becoming much more common, any company investing in a new one should track the software’s impact and return on investment. But businesses need to focus on more than just the ROI.
Organizations can utilize several metrics to measure the value of their ERP projects. Here are five of the best.
1. Customer Satisfaction Scores
No business can afford to underestimate customer satisfaction. Especially not now that consumers have so many choices, and the means to find an alternative with a few clicks.
The value of good customer service is encapsulated in one simple stat: Customers will tell nine other people about a positive experience with a brand, on average, but they will tell 16 people about a negative experience. If that were not enough, more than 90 percent will avoid buying from a company that disappoints them repeatedly.
Your ERP solution should improve the customer experience by boosting the responsiveness and management of customer service interactions. It also helps with better inventory management, order processing and manufacturing, which leads to higher customer satisfaction.
- Cycle Time
Good cycle times are a strong indicator of well-oiled business processes. Measuring the cycle time after implementing a new ERP system provides insight into how efficiently your business is operating, and if your ERP solution is helping.
That’s because ERP plays an important role when it comes to improving cycle time.
ERP keeps track of which materials are available to manufacture products, and ensure they’re ordered before they run out. Supply chains can be managed with real-time visibility, cost estimates and profit margins can be calculated, and prices for BOMs are simple to oversee.
Automation reduces the demand for manual input, too, cutting order and manufacturing times significantly. Not to mention the reduced risk of human errors from not having to manually enter everything into the system.
3. Production Schedule Accuracy
Businesses make production schedules with fixed times and dates in mind. But relying on manual processes or outdated systems can lead to oversights and guesstimates that keep production schedules from being realized.
An ERP platform gives teams access to in-depth planning and scheduling tools. They can monitor order times, BOMs, lead times, capacity allocations and more, all in one centralized system. Projects may be overseen with cross-functional reporting that encompasses logistics management and other key elements.
All of this data and user-friendly automation creates a smaller margin of error, making it far easier to keep production schedules on-track. Built-in analytics also help show where there’s room for improvement.
So if your ERP system isn’t improving production schedule accuracy, something is wrong.
- Employee Productivity and Satisfaction
More than 50 percent of Americans are satisfied at work. But what about the more than 40 percent that are not satisfied?
Employee engagement and happiness are fuzzy numbers, but they have real-world value because employee satisfaction and retention often play a critical role in the long-term success of a company.
ERP plays a role in cultivating this engagement and happiness because manual processes and IT systems that frustrate or confuse employees can be a major source of dissatisfaction. A good ERP system, one with meaningful automation, will boost employee satisfaction once implemented.
It also will make employees more productive, both from automation and analytics, and from having real-time access to the data they need to perform their jobs.
- Cost Savings
Increasing efficiency, productivity, and visibility also should increase revenue over time. But an ERP platform also can help reduce waste by identifying unnecessary processes and inefficiencies.
Inventory management functions within ERP lead to less overstocking, so money isn’t invested into materials and products that sit in warehouses for months on end. Reduction in human error prevents delays, disruptions, and customer abandonment.
Measuring expenditure and income since implementing the ERP is a reliable way to measure cost savings. Changes may appear small when viewed in isolation across different departments, but they add up.
ERP isn’t just a cost of doing business; it should reduce costs as it did for Countrywide Tire and the many other businesses that have adopted it.
An ERP system impacts all areas of a business, so there are many other ways that you can validate your ERP investment. These five areas make for a good starting point, however.
For a more complete picture of ERP implementation, its ROI and how to measure it, consult our guide, Understanding Cloud ERP for Non-IT Executives