Competitive advantage of ERP
Businesses today operate in an economy that is structured around being dynamic. We hear technical terms such as “disruption”, “industry 4.0” and “platform economy” on a daily basis. Current market participants opt to play the isomorphism game (status quo), to “innovate”, or to pave the way by extending the fuzzy boundaries.
However, is this really extending the continuum of business opportunity or simply a form of reframing? Innovation is widely mistaken for any technology that changes how firms operate or deliver their product or service. This type of innovation taking place at the early stages, is considered to be inferior. Therefore, what exactly should innovation be and how can companies create competitive advantages?
The answer is not straightforward but lies in a company asking itself three questions as a starting point:
- What business are we in?
- How is the organizational ecology evolving?
- Why do we want end users to utilize our firm?
If a business can adequately answer the above in three sentences, creating an advantage is not far out of your reach. Let me unpack my view on what tenets a firm should adopt:
- The Two C’s: A firm needs to ensure resource Competence and Capability is geared towards ensuring distinct competence
- Focus: A firm with alignment on the needs of its people and customers will never go wrong
- Innovation: This is a process of making use of patterns and adaptive spaces by identifying business opportunities and utilising distinct co-ordination of the business capabilities and competence to create uncaged cognition and value
- Develop a Good “CV”: Businesses need to ensure effective Co-ordination of its internal and external tangible and intangible structures. In addition, they should always Validate every network of their structure and frameworks as complacency skews value
- Strategy: This is where companies fail, as they do not differentiate good strategy from bad strategy. Businesses need to adopt a unique position by aligning, co-ordinating, validating and executing their strategy design by being inclusive and un-caging the cognitive frames.
Companies need to understand that the sources of competitive advantage are changing in the continuum of the economic boundary. Great value can be achieved by adopting a more malleable view on defining processes, effective strategy, and this will lead to innovation and untapped competitive advantages. So how can ERP aid a company in creating untapped competitive advantages? By leveraging on the process capability of a business, ERP transfers insights, which should trigger opportunity creations and thus allow for a constant validation and adaptive ecosystem for a business to adopt an ambidextrous structure.
Let’s look at the advantages:
Shortened Cycle Times
ERP eliminates redundancies. Once information goes into the system, the system distributes tasks to every department that might need that information. This removes duplicated information, which in turn, reduces data errors. Because of this, you can expect to have a shortened cycle time for all of your purchases; these purchases can then be automated to avoid any delays.
Reduced Staff Needs
Inputting data manually can require almost an army of administration and staff, and of course, with so many employees, the chance for human error heightens considerably. With an implemented ERP solution, however, this information is easily accessible to your employees, which means fewer mistakes and less down time. With the ERP solution also automating and simplifying tasks, your employees have more time to focus on other necessary tasks.
Consistency is key! All work sequences follow the same model which means confusion and frustration are eliminated. The ERP solution’s real-time data also allows your employees to access the information they need quickly from within the same integrated system. This means your processes run more smoothly, and any modifications can be done so on the fly.
Better Customer Service
Happy customers mean better business! Many ERP software packages allow employees to access customer information through a client screen. Employees can view past and present billing information, purchase orders, past orders, etc. They will no longer need to seek out the appropriate person to answer the question your client has. This also reduces the amount of time the customer spends on hold–a big difference with customer satisfaction.