Midsize business

How to choose the right ERP solution for your industry

As a business scales to serve customers, grow revenue, and increase profits, it will require new tools and technology to get to the next level. To meet new business needs, companies have looked to enterprise resource planning software (ERP) solutions to help connect disparate business applications, automate back-office workflows, and bring greater visibility to operations across the organization.

The most commonly cited reasons for implementing ERP are:

  • Building an organization-wide business management system for the first time.
  • Replacing an outdated legacy system.
  • Projects that require migrating existing on-premise solutions to cloud ERP.

By integrating all business functions into one digital workspace, companies hope to streamline business operations across departments and geographies, improve decision making, and create greater value for themselves and their customers.

However, ERP adoption can be complex and difficult. According to Gartner, ERP initiatives run a risk of failure due to complexity and lack of organizational preparation.

To oversee a successful digital transformation project like an ERP implementation, it’s vital for decision-makers to first determine whether ERP is right for their organization—and then they must decide which ERP is most suitable for their unique business operations.

Is an ERP right for my business?

A successful ERP system automates all core business processes including financial management, supply chain management, customer relationship management, human resources and payroll, and more. By collecting information from across the organization into one system,, it provides real-time business intelligence insights to improve decision making and drive organizational efficiency.

At first glance, this sounds like an ideal way to conduct business for any organization—and it is. However, organizations must be careful to not bite off more than they can chew when it comes to business management software. At the high-end, ERPs provide all-encompassing solutions designed for multinational corporations. At the other, growing businesses can benefit from adopting modular ERP solutions with the ability to build more functionality as business grows.

For example, an accounting-based software with an ecosystem of plug and play applications for different business functions doesn’t require an expensive rollout with extensive employee training, nor are intricate customizations required.

Which ERP is right for my industry?

If you determine that your business does want to invest in ERP technology, you’ll want to find a solution that is designed for your specific business activities.

A manufacturer, for example, will have much different software needs than a construction business.

Consider the example of two fictional business owners, Kayla and Matt.

Kayla owns a manufacturing business and employs about 100 workers. She is looking to expand her operations and build another factory. But before she does so, she wants systems in place that track her inventory in real-time along with customized advanced reporting to keep her inventory operations as efficient as possible.

Meanwhile, Matt owns a construction business—he’s managed to increase sales by 15 percent last quarter. Despite this, his bottom line didn’t improve as expected. He can recall some cost overruns but didn’t think profits would suffer from a few tentative forecasts. To resolve this issue, Matt needs a better construction job costing tool that allows him to compare estimates to actual expenses so he can pinpoint the exact source eating into his bottom line. Armed with this information, Matt can address the shortfall and prevent the leak from trickling into the next quarter.

  • Kayla and Matt have unique business challenges that both fall under the financial management umbrella. To improve business performance through ERP implementation, they’ll need to choose a best-fit solution that corresponds to their industry’s specific needs. You too should choose a solution designed for your business and industry needs.

Industry-specific ERP software

An ERP comes loaded with end-to-end modules that include vital functions like accountingpayroll systems, human resources, customer relationship management, and more. But will a grocery store have the same need for a spare-parts and supply chain management module as an auto manufacturer? Probably not. By the same token, a retailer will have a stronger appetite for an inventory management system than a construction firm.

Thus, ERP vendors have designed solutions intended to meet industry-specific needs. Here, we briefly introduce the most common purpose-built enterprise resource planning systems available on the market today.

Manufacturing ERP

The key business functions manufacturers should seek out in an ERP suite include purchase order management, production planning, subassemblies and parts management, and advanced inventory features.

With mobile barcoding, manufacturers can cut down on human error and speed up the picking and packing process across distribution centers or warehouses. Tracking orders on a virtual dashboard also helps propel the sales process through each stage of the pick, pack, and ship journey—from point of sale through fulfillment.

Construction ERP

Construction firms and contractors business models are generally project-based and thus tend to focus on cash flow as a fiscal metric. Hence, the most important feature in a construction ERP would be effective job costing functionality. To achieve sustainable growth, contractors need the ability to ascertain which projects are most profitable and which are in the red. To that end, they should seek out an ERP solution with construction-specific reports such as cost-to-complete, cost-by-job, expenses assigned vs. not assigned, unpaid bills by job, and other industry-specific reports.

Construction firms can benefit from an ERP with a payroll module that enables them to track work hours as well as pay both W2 and contingent workers from the same platform. Finally, construction firms should consider an ERP system with strong mobile applications so workers can access the information they need in the field.

Retail ERP

Whether it be brick and mortar or eCommerce, at the heart of any retail operation are inventory, sales, and customer information. A retailer should seek an ERP with features that correspond to these core business functions.

An effective retail ERP has features for easy pricing management, integrated inventory management, customer relationship management, customer and business intelligence, and accounting. Pricing management that takes into account fluctuations in demand and seasonal trends should be given special consideration. When it comes to reporting, retailers should seek a solution that helps them expose any inefficiencies in their product mix and financial management. Industry-specific reports may include gross margin by item, monthly sales by customer, purchase volume by vendor, and returns by vendor.

ERP for wholesale distribution

Wholesalers and distributors need an ERP to help them manage the full life cycle of the supply chain—from the purchase of goods, to order processing, and delivery. The most important ERP applications for wholesalers and distributors are vendor management, inventory management, and order management.

Wholesalers and distributors can benefit from an ERP with a centralized platform for vendor management that enables them to compare contracts, price lists, delivery times, and other vendor-specific metrics. The inventory management system should enable them to easily transfer inventory items across locations and track goods in storage, in staging areas, in warehouses, and even out on consignment. To promptly distribute their goods, wholesalers and distributors need ERP software that can help them swiftly determine which orders should be prioritized, which can be filled, which can be partially filled, and which need to be back-ordered.

To best maintain profitability, wholesalers and distributors should seek out an ERP that provides analytics that can help them set prices based on markup and margin. They can also make more informed business decisions with special reports such as sales by profitability, sales by month, product, customer, and sales rep.

ERP for professional services industry

Professional services like law firms or medical professionals often carry little to no inventory, but they still need to collect profitability data and estimate the cost of projects. To accurately monitor costs and project profits, they need to track billed and unbilled hours and expenses by project. They also need to set different rates for different service types.

Professional service firms should seek an ERP with the functionality to help them create more accurate project costing estimates, format different billing frameworks, track project progress, and monitor cash flow.

Some professional services businesses, like those that offer HVAC services, do carry inventory and should look for software solutions that offer inventory management, time tracking, and payroll functionality.

Other helpful features in a service industry ERP software system include the ability to generate invoices with multiple payment options, project status tracking, and reporting for open balance and profitability by customer and project.

ERP for nonprofits

Nonprofit organizations like NGOs face challenges like managing donors, staying current with IRS regulations, and the database management that comes with it. Nonprofits should seek an ERP software that is calibrated for compliance, has advanced donor management, and a high standard of data security to protect confidential donor information.

Nonprofits can also benefit from customized payment receipts that include donor language, and industry-specific reporting features like biggest donor list, contributions by donors vs. grants, and more.

Considerations for choosing the right ERP solution

The common business quest for viability and profitability are shared goals, but the path to those destinations is different for each organization. Whether that path may be via fully-featured ERP or a flexible business management software, it’s safe to say that most all organizations will find the need to trust some of their core functions to software.

From manufacturing processes to wholesale order processing, new technology has the potential to help businesses of all sizes and industries automate processes, facilitate the flow of information, and make better business decisions. Before deciding on a new business management software, consider the following:

  • The size of your business and complexity of your business activities
  • The investment required vs. expected time-to-ROI
  • Internal enthusiasm and resources to migrate systems
  • Potential impacts on the employee and customer experience

No one knows the intricacies of your business better than you and your team. Focus on the solutions that will help your company make more informed financial decisions and efficiently support your business growth.

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