What is ERP?

At a recent coffee chat, I was asked if all consumers want to know is when their orders would reach them? Should businesses focus investment in technology just targeted towards customer experience — CRMs, websites, outsourced logistics for tracking shipments etc, or should they look to transform core operations that touch multiple stakeholders in their ecosystem — CXOs, suppliers, regulators, customers, employees, etc? I felt tempted to write about ERPs and how they help achieve the latter outcome.

Oracle, a pioneer in this technology, defines Enterprise Resource Planning (ERP) as — “software systems that includes all the tools and processes required to run a successful company, including HR, manufacturing, supply chain, finance, accounting, and more”. It highlights top benefits as improved business insights, collaboration among users and streamlining of processes. I’ll try to explain Oracle’s definition via a hypothetical example of a pizza application — let’s explore how this technology can help its stakeholders.

Imagine a great application like Grab or Dominos that keeps its customer informed about their orders and when these will be delivered. It maintains information about the customer, their preferences or order history. Basis Based on this information, the application recommends new menus, shows exciting and upcoming meal combos, sends time-based notifications etc. All this is made possible by a CRM (customer relationship management) application that holds data about the customer in a clean & managed manner. As intuitive as this functionality sounds, CRMs are a form of enterprise application like ERPs that need implementation and alignment with the business processes. Get the right CRM for your business and you can transform the way you relate with customers. However, the scope of ERPs go beyond just CRMs.

Let’s also imagine the same application was tracking internal operations, predicting demand for the coming weeks, letting managers know whether they have enough dough or other ingredients to meet forecasted demand. Maybe they need to order stock from a supplier residing overseas, a month in advance. The supplier could take a few weeks to deliver the stock. The business can see in real-time how its supply chain affects its customers. The app can track delays of product shipments from suppliers — let’s say vegan cheese. For the business, this would mean striking off vegan pizzas from the menu until the supply is restored

What if the same application was connected with sensory devices like IoT sensors on mixers that automatically knead the dough every night. Businesses can ensure quality & performance of the equipment is maintained & production is efficient. Time-based output can be tracked and spikes in demand can be accommodated — remember the application already has data about customer demand. The occurrence of production issues could drive event-based notification of fulfilment delays to customers. Service agents could get a real-time view of when the issues would be resolved so they can manage complaints and escalations from customers. Hence we have a single platform connecting production managers, service agents, suppliers and customers.

Logistics is an important piece of the puzzle. The delivery of pizzas to customers needs planning. The application could have inbuilt route planning & fleet management intelligence to ensure that the value of each delivery trip is maximised. It would keep customers updated about delivery times.

Finally, the application could allow the business to process all of the operational data to run analytics and insights. For ex example — sourcing from certain suppliers may be cheaper but recurring delays in shipments could lead to customer dissatisfaction. Procurement managers could decide that switching to a more expensive but effective supplier could be a better decision in the long term.

ERPs transform business supply chains to improve the experience of multiple stakeholders in the ecosystem. Customers are an important but single part of that ecosystem. Implementing these enterprise applications makes the supply chain robust, smarter and better connected with service agents, suppliers, CXOs, procurement managers, warehouse operators, planners, contract manufacturers and yes — customers!

Businesses can support their processes with manual coordination, paperwork & excel sheets when their operations are small. However, as they grow, they start realising the need for common operational platforms. Cloud-based ERPs fill this need. A healthy trend is digitally-native companies that host their operations on SaaS from the start. South East Asia’s tech startup ecosystem reached a market valuation of $454 bn in H1 2024, the highest figure year on record and an increase of 20% from 2022. However the scope for ERP adoption remains extensive, and much needed.

You can find further information on ERPs here