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The Effect Of An ERP System On The Competitive Strategy Of The Company

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ERP implementation enables the accounts department to function easily as accurate data from various other departments can be accessed from anywhere any time. It has been found in various studies that companies working through ERP system earned better on stock exchange because automated system prevents risks and enhances credibility.

ERP helps a company to stabilize its business and develop in many different areas. It helps the companies to perform their best, be fast in delivery and provide products at a comparative price. A huge amount of hidden expenses on maintenance and data transfer is prevented by using a centralized system.

Competitive Advantage of ERP

Integrated System: All the departments and business units are integrated which helps the accounts department to find out the departmental budgets and to achieve the sales targets. The process can be used to plan future growth and profits. The company can meet the bank forecasts and be prepared for risk.

The manual methods prevent a company to get the foresightedness and it lacks the visibility to make future plans. The accounting systems are delayed and there are many risks of errors in calculations.

Helps to Reduce Price: A number of hidden expenses on maintenance of data is reduced by companies that go for ERP based automation because the tedious data transfer and the manual entries can be avoided. Repeated data entry is also avoided as the data is maintained by the machines and hence the company can anytime get the view of its expenses and profits to see if it can provide discounts to the customers. Accuracy in costing also brings in a valuable ROI.

Improved Cash Flow: Automated financial system can improve cash flow and it will enable the company to pay immediately for the raw materials and prevent expense on storage of stocks. The invoices can be generated in minutes at the time of need and the company can get updated view of inventory which can be used to make future plans.

Easy to Follow Government Rules: ERP can be used to follow government regulations such as Sarbanes - Oxley and manufacturers can pay on time the government dues to prevent expense on penalties. It makes it easy to follow the rules and standards, and to give a timely response for government obligations. For example: the hospitals and drug making organizations can easily maintain the database to find out the products or drugs which comes under special provisions at the time when the product has to be delivered to the customer.

Easy to Manage Multiple Units, Cross Border Transactions: ERP helps the organizations to prevent expense on management of multiple units. Even if the business units are located at various geographical locations - the company can manage it easily and on time. Retail units located in various countries can perform transactions in any currency and it can follow the local regulations - which prevent delays in transactions and provide better customer satisfaction.

Features such as multi languages and multi-currency increases profitability and helps the company to take better decisions and it increases the chance of succeeding and getting more profits as compared to the competitors.

 Read Related Articles

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