This is the first in a series of articles that will explain how your ERP system can avoid you from leaving your hard-earned money on the table. This first article explains how an ERP system’s workflow management functionality can have a significant positive impact on your bottom line.
Unless you’ve been hibernating in a cave all winter you know all too well that we are living in the most turbulent and challenging times in modern history. The world has and continues to become increasingly more complex, dynamic, and disruptive due to the turmoil caused by geopolitical issues like U.S. tariffs that are totally out of the control of virtually every company.
What does this have to do with ERP systems?
Success, and in some cases survival, in today’s challenging and ever-changing business climate requires companies of every type and size to embrace modern technology through a digital transformation initiative in order to reduce costs throughout the company and ensure that the right decisions are made in a timely manner. In short, holding onto out-dated and inefficient business processes is both costly and risky!
Over the past quarter century, technology has transformed our personal and workplace lives in so many ways – technologies like the internet, the smartphone, robotics, barcoding, and more recently artificial intelligence to name just a few.
Technology has also had a dramatic effect on the benefits that every company can derive from its ERP system through powerful and user-friendly functionality that for the most part didn’t exist in most ERP systems until the new millennium. One often overlooked and underused powerful feature of almost every ERP system today is integrated workflow automation management.
So here is the ‘$64,000 question’ – are you leaving money on the table by not effectively using your ERP system’s workflow management functionality?
Workflow management functionality allows any company to create, document, monitor and improve upon the series of steps, or workflow, required to complete a specific task within virtually any business process. Simply stated, the goal of workflow management is to optimize workflow to ensure that a task is consistently completed correctly, efficiently, and on-time. The result – cost savings, cost avoidance, increased velocity of business processes, fewer manual errors, and less employee stress.
There are many business processes that can be automated using workflow management software. For example, a business process that every company has, which can be easily automated to reduce costs, errors, delays and workplace stress, is purchase order (“PO”) processing.
In most cases procurement begins with creating a PO. Often a PO generated by a buyer requires approval before it is sent to the vendor. The approval process can be very simple or at times complex with multiple user-defined rules to consider, including who is the buyer, who is the vendor, what item is being purchased, what is the dollar value of the PO, who is/are the approver(s) that need to approve the PO, etc.
Workflow management software allows you to enter all your approval rules and have the ERP system automatically execute and follow up on each step of the approval process. All users involved in the approval process are automatically notified of actions they need to take, alerts on the status of the approval process, etc.
Automating a PO’s approval process will result in less human intervention, less chance of an error being made, and less delay in sending the PO to the vendor compared with executing each approval step manually.
Once the PO has been approved, your ERP system’s workflow management functionality, coupled with a vendor portal that can eliminate most of the manual data entry done by your users today, can be used through each remaining step of the procurement process, including:
· Automatically sending the PO to the right vendor contact and following up to ensure that it was received, and all terms and conditions are agreed to by the vendor.
· Automatically requesting a status update at one or more times as the vendor processes your PO.
· Automatically processing an Advance Shipping Notice (“ASN”) received from the vendor, with alerts being sent to all users who need to be notified that all is good with the PO, or that there is a problem such as the vendor cannot ship the required quantity on-time.
The impact of a quantity or time-based problem can also be easily identified by the ERP system. For example, what impact will the problem have on fulfilling a customer sales order, or on the production schedule, that is awaiting the arrival of a raw material to complete a production work order?
Paying vendor invoices is another example of how workflow management functionality can be used to reduce operating costs by improving efficiency in the workplace.
Traditionally accounts payable departments go through a labour-intensive process of manually matching a vendor’s invoice with the PO sent by its buyer and the receiving report created in the warehouse when the goods arrived. Over the past decade most ERP systems have had functionality that would do the matching automatically, and either approve the invoice for payment or determine if there was a discrepancy that had to be investigated and resolved manually.
This semi-automated process still required a fair amount of human intervention, such as mapping a vendor’s invoice in the ERP system so that it could recognize where the invoice number, invoice amount, etc. appeared. But today some ERP systems are using artificial intelligence and advanced capture technology to automatically determine where the required data is on the PDF invoice the company received from the vendor.
You may be surprised to learn that your current ERP system may be able to be cost-effectively enhanced with minimal disruption to derive many financial and other benefits that you are not enjoying today through functionality such as workflow management. Or perhaps there’s a strong business case with a high return on investment to justify replacing your current ERP system. To find out more about what options are available to you, contact us today and schedule a no-charge, no-obligation discussion with one of our highly experienced and independent & objective ERP system advisors.
About Lawrence M. Young
Lawrence M. Young B.Comp.Sc., C.Adm, CMC, I.S.P., Author
Certified Management Consultant (CMC) and Senior ERP Systems Advisor & Expert Witness
Blue Monarch Management
With more than 50 years of MIS and ERP systems experience assisting 500+ clients across North America, Lawrence specializes in ERP system selection and ERP system diagnostic projects. He helps clients in the distribution, manufacturing, retail and service sectors embrace best-business practices in one of two ways:
1. Select & implement a new ERP system.
2. When possible, enhance the use of their existing ERP system through reconfiguration, additional training, implementing add-on modules, etc., with the objective of improving operational efficiency & control and timely reporting throughout the company.
Lawrence has also provided litigation support services to clients in Canada, the U.S. and Mexico, including mediation and expert witness report & testimony.
