A Comprehensive Guide to ERP Systems

The Philippines is the leading country in the Asian-Pacific ERP market. The annual growth rate is estimated to reach 7.53% by 2028. According to GlobeNews Wire, the global ERP Software market is projected to reach USD 137.7 billion by 2032.

As the statistics suggest, the adoption of ERP systems by businesses in the Philippines has increased. From small to large enterprises, numerous companies are increasingly adopting Enterprise Resource Planning (ERP) systems to streamline their business processes and improve efficiency.

Companies in multiple sectors in the Philippines also adopt ERP systems to stay competitive in the growing Philippine economy. Without centralized systems like ERP, businesses may not be able to stay in the market because they lose valuable resources and growth opportunities.

Therefore, if a company wants to have a competitive edge while improving its business processes, using ERP is a must. However, have you ever heard of the ERP system before, and what it is capable of?

This article provides a comprehensive overview of ERP systems, covering everything from their definition to their various uses. Without further ado, let’s explore!

What Is ERP?

ERP stands for Enterprise Resource Planning, a type of business system streamlining operations by automating processes and providing insights. It uses a central database to gather information from various departments like finance, human resources, customer relationship management (CRM), inventory management, supply chain management, and manufacturing.

In businesses, many stakeholders work together, but problems arise when information is scattered across different systems. For example, the accounting and financial planning teams might use separate spreadsheets with conflicting budget figures.

ERP systems solve this by centralizing data, which allows all departments to see it. This makes it easier to analyze data, fix any mistakes, and improve how things are done. This saves money and makes employees more productive because they spend less time looking for information.

How ERP Systems Work

ERP systems simplify business operations by collecting, storing, managing, and distributing data across all company functions.

These systems merge various reports and metrics from different departments into one platform, offering a complete overview of activities and how resources like money, staff, and materials are used.

With real-time data in one place, companies can quickly gain insights to improve processes or better allocate resources, leading to smarter spending and growth opportunities. There’s no need for spreadsheets or gathering information from multiple business applications; everything is accessible from the ERP interface.

Managing a business becomes much more challenging without an ERP system and effective planning. Additionally, there could be unnoticed areas where the company is not performing well.

Benefits of ERP Systems

Using an Enterprise Resource Planning (ERP) system offers many benefits for businesses in the Philippines. It helps manage data and supports organizational growth. Studies show that ERP implementation results in improved organizational performance. The improvement happens because ERP provides real-time and accurate information.

While there are various benefits to well-deployed ERP systems, they may vary based on the deployment model chosen. Cloud ERP solutions offering distinct benefits compared to traditional on-premise installations.

Below are some of the benefits of an ERP system:

1. Reduced costs

Implementing ERP can lead to significant cost reductions for businesses. Studies show that manufacturing companies implementing ERP systems achieved a 22% decrease in inventory levels and nearly 20% lower overall costs.

2. Real-time insights for data-driven decision-making

ERP systems provide real-time insights into your business operations. You can access up-to-date information on sales, inventory, production, and finances. This data-driven decision-making approach enables you to make informed choices quickly, which increases operational efficiency and productivity.

3. Business growth and expanding operations

Implementing ERP enables businesses to scale and grow efficiently. With streamlined processes, improved data accuracy, and better decision-making, ERP empowers organizations to expand their operations and seize new opportunities.

4. Customization options for adaptable business needs

ERP systems offer customization options to align with your specific business needs. You can tailor the system to accommodate your unique processes and workflows, ensuring maximum efficiency and effectiveness.

If you want to know more about the benefits of ERP systems in detail, you can click on the article we provide.

One of the ERP system providers offering customization that is specifically tailored to business needs is HashMicro. With its high capability to adapt to business needs, as well as being scalable, Philippines companies will reap many benefits from implementing this system.

Common ERP Modules

An ERP system consists of different modules. Each module is designed for specific business functions to help employees do their jobs. Every module plugs into the ERP database, so the system provides a single source of accurate data, even when the company adds new modules.

Below are ERP modules that are commonly used by businesses:

1. Finance module

The finance and accounting module in ERP systems is important because it helps businesses understand their financial situation. It includes features for tracking money owed and money coming in, managing the main financial records, and creating important financial documents like balance sheets and tax forms.

This module also automates tasks like billing, paying vendors, managing cash, and balancing accounts. It helps the accounting department close their books quickly and follow revenue recognition rules.

The finance module provides data for financial planning and analysis. It helps prepare key reports like profit and loss statements and board reports and runs different financial scenarios.

2. Procurement module

The procurement module, also known as purchasing, helps organizations buy materials or products for making or selling goods. It keeps a list of approved vendors and links them to specific items. The module automates the process of requesting quotes and analyzing the quotes received.

After selecting a quote, the module helps the purchasing department create and send purchase orders. It tracks the purchase order as the seller turns it into a sales order, ships the goods, and updates inventory levels when the order arrives.

3. Manufacturing module

ERP’s roots lie in material requirements planning (MRP) systems, originally for manufacturers, and manufacturing remains a core aspect of ERP. Modern ERP systems typically include a production management or manufacturing execution system (MES).

The manufacturing module helps plan production with Robotic Process Automation (RPA), ensuring the availability of raw materials and machinery. It tracks goods-in-progress, compares actual output to forecasts, and provides real-time shop floor insights, calculating average production times and aligning supply with demand.

4. Inventory management

This module keeps track of how many items are in stock and where they are located, including individual product codes, to manage inventory levels. When connected to the procurement module, it gives a full view of current and future inventory. This helps control inventory costs by ensuring there’s enough stock without tying up too much money.

By analyzing sales patterns and available products, businesses can make better decisions to improve profits and how quickly inventory is sold. It also helps avoid running out of stock and delays, which improves customer service.

For businesses that don’t have other supply chain modules, this application can handle buying, selling, and shipping products. Larger organizations require a version that tracks inventory movement across multiple locations.

5. Supply chain management

A supply chain management module keeps track of how supplies and logistics move from suppliers to customers, including returns. It works alongside modules like procurement, inventory, manufacturing, and warehouse management. These systems might also have extra features.

6. Customer Relationship Management (CRM)

The customer relationship management (CRM) module stores customer and prospect information, including communication and purchase history. It helps improve customer service by making relevant information easy to find.

CRM systems also help manage sales leads and opportunities with sales modules, track communications, and find potential customers for promotions or cross-selling. Some advanced CRM modules can even help segment customers, manage contacts, and generate reports.

 7. Human Resources Management

The human resource management (HRM) or human capital management (HCM) module includes all the features of a workforce management application and more. It serves as a kind of CRM for employees, with detailed records and documents like performance reviews, job descriptions, and offer letters.

It tracks hours worked, paid time off (PTO)/sick days, and benefits. By centralizing employee information, the HRM module eliminates duplicate or incorrect data often found in spreadsheets.

8. Point of Sale

The Point of Sale (POS) module is important for businesses that sell directly to customers. It helps automate sales by recording transactions, managing stock, and connecting sales data with other business activities. With POS, businesses can track customer purchases, process payments, and update inventory quickly.

9. Asset management

This module helps businesses manage their assets effectively, from when they are obtained to when they are disposed of. This includes tracking physical and digital assets, scheduling maintenance, handling depreciation, and ensuring compliance with regulations.

Good asset management reduces costs, extends the life of assets, and improves investment returns by keeping accurate records and using assets wisely.

If you want to know more about the different modules of ERP, you can read our article and discover the best ones for your business.

ERP Deployment Models

There are various types of ERP systems available to cater to different needs and types of deployment options. Understanding the different options can help businesses choose the right ERP system that aligns with their requirements and goals.

Below are ERP deployment models that companies can use:

1. Cloud ERP

Cloud ERP is a type of software that is hosted on remote servers and accessed over the internet. It eliminates the need for on-site infrastructure and offers flexibility, scalability, and cost savings. One major advantage of cloud ERP is that it’s accessible from anywhere, at any time, making it great for businesses of all sizes.

2. On-premise ERP

On-premise ERP refers to ERPs that are installed and hosted locally on the company’s servers and infrastructure. This model gives businesses full control over their ERP system and data but requires significant investment and maintenance costs. It is suitable for businesses with complex operations or strict rules about data security and compliance.

3. Hybrid ERP

Hybrid ERP is a combination of both cloud ERP and on-premise ERP. Businesses can leverage the benefits of both deployment models with this approach. With this model, businesses can keep sensitive data and critical operations on-premise while benefiting from the flexibility and scalability of the cloud for other functions.

Hybrid ERP is a suitable option for businesses that require a high degree of customization or have specific regulatory compliance needs. Two-tier ERP is also a good option for ERP deployment.

Signs That Your Company Needs an ERP System

Recognizing signs that indicate your business could benefit from an ERP system is crucial for operational efficiency and growth. Inefficient manual processes can hinder productivity and lead to errors. Here, we outline key indicators that suggest it may be time to consider implementing an ERP solution:

1. Lack of Data Visibility and Accuracy: When your business struggles to track data or see the overall picture in real-time, an ERP system can be the solution. It centralizes all your data, ensuring it is always up-to-date and accurate.
2. Inefficient and Fragmented Processes: If you often perform manual tasks and use different software for various functions, an ERP system can streamline operations. This reduces errors and saves time.
3. Difficulty Meeting Customer Demands: If keeping up with customer demands is challenging, an ERP system can help manage orders and enhance customer satisfaction.
4. Insufficient Reporting and Analytics: When your current systems lack the necessary reports and insights, an ERP system can provide detailed analytics for better decision-making.
5. Limited Scalability and Growth: As your business expands, existing systems may become inadequate. An ERP system can scale alongside your business, accommodating increased transactions and users.
6. Inadequate Regulatory Compliance: If meeting legal requirements is a struggle, an ERP system can ensure compliance. It enforces standardized processes and maintains detailed records to help you avoid legal issues.

How to Select an ERP System for Your Business

When it comes to selecting an ERP system for your business in the Philippines, you need to consider many options. Choosing the right ERP system is crucial, because it can significantly impact your overall business performance. Below are some key considerations to help you make a good decision:

1. Identify business needs

The first step is to assess your needs. Identify what your business requires and what’s most important before choosing an ERP system. This helps you evaluate ERP vendors selection and their solutions more effectively..

2. Evaluate ERP vendors

Next, you need to evaluate ERP vendors based on various factors such as experience, industry knowledge, and customer feedback. Select vendors with a proven track record of successfully implementing ERP systems in your industry.

3. Consider scalable and customizable systems

Another important factor to consider is the ability to customize and scale the ERP system. It should allow for customization to match your business processes and be scalable to support your organization’s growth and evolving needs.

4. Do a cost analysis

To make sure your business stays financially stable, it’s important to do a Total Cost of Ownership (TCO) analysis. This helps you estimate the long-term costs of setting up and keeping the system running, like licensing fees, making changes to the system, keeping it up-to-date, and getting support.

By doing these steps—figuring out what you need, checking out different vendors, seeing if the system can be changed to fit your business, and doing a TCO analysis—you can pick an ERP system with the right features to make your business work better in the Philippines.

Now you know the general idea of choosing the right ERP system. However, thoughtful consideration and careful planning are what make your choice worth the effort. Aside from that, you should also know which ERP vendors are trustworthy and can fulfil your needs. To get the big picture, you can read our recommendation for ERP software in the Philippines.

ERP Implementation Challenges

Implementing an ERP system can be tricky, and a few problems can arise. It’s important to know what these are and how to deal with them to ensure everything goes smoothly. In this section, we will discuss some common ERP implementation challenges and strategies for overcoming them.

1. Budget constraints

One big problem in ERP implementation is not having enough money. Organizations need to set aside enough money to cover everything, like paying for the software, upgrading hardware, and getting advice from experts. It is essential to carefully figure out all the costs and make a realistic budget.

2. Employee training

Another major challenge is making sure everyone at the company can use the new ERP system. Employees need to be trained on how it works and what it can do. Investing in good training and support can help people get used to the new system and be more comfortable with it.

3. Data Conversion

Moving data from old systems to the new ERP can be tricky and take time. The key is to make sure the data transfers accurately and completely while keeping it all reliable. Planning and carrying out a good data migration plan is vital to avoid issues and keep the data consistent during the switch.

4. Change Management

When implementing an ERP system, it’s common for employees to resist change. They might not want to use new processes or technologies, which can make the implementation less successful. To tackle this, it’s important to use good change management strategies, like clear communication, thorough training, and involving employees in decisions. This can help get employees on board with the changes.

5. IT Resources

Having dedicated IT resources is crucial for a successful ERP implementation. Organizations need skilled IT professionals who can manage the technical aspects of the implementation, troubleshoot issues, and provide ongoing support. Adequate staffing and resources should be allocated to ensure the ERP system is implemented correctly and maintained.

6. Process Improvement

Implementing an ERP system provides an opportunity to review and improve existing business processes. However, organizations may face challenges in identifying areas for improvement and implementing process changes effectively. It is crucial to conduct a process analysis and involve key stakeholders to identify process bottlenecks and areas for optimization.

Study Case: Success Stories

In this section, we explore interesting case studies demonstrating how businesses have successfully used ERP systems. These two stories provide clear examples of how companies use ERP solutions to streamline operations, encourage growth, and achieve significant success.

Jollibee: maintaining excellent service with ERP

Jollibee Foods Corporation (Jollibee Group), a major food company with 17 brands and over 5,800 outlets in 34 countries, has chosen a cloud ERP system to manage its resources. The company switched its IT setup from data centres in different locations to the ERP system.

The move, led by Jollibee Group’s global headquarters in the Philippines, involves closing on-site data centres and transferring important work in less than 24 hours. This has helped save money, simplify IT management, and offer new services.

This change makes Jollibee more flexible, especially in responding to changes in how people order food, like the increase in delivery orders during the pandemic.

During the COVID-19 pandemic, Jollibee Group had trouble predicting how much food people would order because of social distancing and lockdowns. To fix this, the company’s operations in the Philippines used advanced features of the ERP system. They watched sales closely and made accurate reports using a strong database and analytics.

Jollibee’s new ERP system also helped create operational dashboards that give instant insights into restaurant operations. They can monitor food inventory, make more food when orders go up, and more efficiently send food to their restaurants all over the country.

ERP has been really helpful in changing how Jollibee works, letting them quickly change how they do things as eating habits change. Advanced features, like analytics, are very important for Jollibee to come up with new ideas in all parts of its business, from how it gets food to customers to how it runs its restaurants and drive-thru lanes, to make sure customers have a great experience.

Marikina Food Corporation: optimizing growth and minimizing errors

Marikina Food Corporation is well-known for making top-quality food products, especially machine-processed and bihon noodles. They offer a variety of products besides their popular HOBE noodles, including snacks, fruit preserves, shrimp paste, and condiments.

The company is committed to serving Filipino consumers with innovative and cost-effective food products. However, their reliance on old ERP software and Excel spreadsheets was holding them back.

Their outdated technology led to many errors in financial statements, difficulties in updating business data, and limited user access. To address these issues, Marikina Food looked at different ERP options and chose a new system recommended by their tech partner, Vantage Consulting and Solutions Inc.

Upgrading their ERP system has brought many benefits, like improved accuracy in orders, inventory, invoices, and payables. They now get updated data in two days or less, compared to the old system’s seven days, making decision-making faster and giving them an edge in the market.

The new system also provides useful reports, making employees more efficient with actionable insights available on interactive dashboards. Marikina Food can now spot areas for improvement, track costs, and make decisions based on real-time data, improving their overall decision-making.

As Marikina Food grows, the new ERP system has made them more efficient, reduced downtime, and allowed for easy expansion by adding more employees.

Choosing the Perfect ERP Vendor for Philippines Business

When it comes to selecting an ERP system for your business in the Philippines, partnering with the best ERP software vendor is crucial. Choosing the right ERP vendor is necessary for the smooth functioning of your business operations. Reputable vendors bring years of experience and expertise to the table, ensuring your system’s seamless integration and functionality.

HashMicro stands out as a premier ERP provider in the Philippines due to its comprehensive and integrated ERP software, tailored for seamless business management. This software is good at simplifying complex processes. Furthermore, HashMicro also has a proven track record of successful implementations and can offer industry-specific solutions tailored to your unique business requirements.

Reach out to our customer service team today and take advantage of our no-cost product tour. This is your opportunity to explore our system in depth, understand its features, and see firsthand how it can benefit your operations.

Our knowledgeable representatives are here to guide you through each aspect of our software, answer your questions, and help you see the value it can add to your business. Don’t miss out on this chance to make an informed decision about how our solutions can meet your needs.