ERP, MRP & CRM: Making Sense for Small Business Owners

Confused by all the business acronyms out there about ERP, MRP and CRM software packages? Wondering how these systems can help small businesses, but unsure what they do? Well, for many small business owners, with so many options to choose from, and with so many conflicting testimonials, making sense of it all can often be an exercise in futility. Don’t despair, in their simplest form, all these systems do is improve the access to information from both inside, and outside the company. In fact, it’s the amalgamation of this information that both reduces costs, and improves efficiency.

Companies know that to win business and grow, means to provide real time information, shorten product lead times, and excel at customer service. Customers will always gravitate to those companies that can provide products and information quickly. That includes providing customers with immediate information on delivery delays, new programs and discounts on deals, and up to date information on their account. Delays cost business, but lack of information on those delays, costs more. At the heart of all these systems, is to allow companies to become proactive in the eyes of their customers.

What Does MRP Stand For?

MRP stands for Manufacturing Resource Planning, and is a software package designed around managing production in all its forms. Typically these systems track work orders through production. They dictate the amount of material and parts to use, the number of finished products to make, and track the individual cycle times of each operation during the product’s manufacturing life. More importantly, it allows all internal departments, including customer service and sales, a window into the current status of work, and an estimated completion date for customers.

 What Does CRM Stand For?

CRM is an acronym for Customer Relationship Management. Its approach is to improve the ease of information transfer about customer purchasing patterns, credit information and payment history, contact information, sales leads, and customer service history. The importance of a CRM software is that it allows its users to locate and close on business opportunities, and use existing information to improve customer loyalty, incentivize them to continue purchasing, and improve a company’s ability to reduce sales cycle times. It bridges together a company’s sales, technical support, marketing and customer service functions into on all encompassing information source.

What Does ERP Stand For?

Perhaps no other software package brings together a company’s entire access to information, as does Enterprise Resource Planning. Consider an ERP system as an extension of MRP, in that it takes the benefits of tracking manufacturing activities, to tracking all of a company’s internal activities between its departments. ERP systems bring together a company’s entire internal process into one system, with real time information, that can be accessed by all. In the process, the company reduces operational costs, improves service and eliminates timely work delays.

Companies that use ERP programs might include companies that design, engineer, and manufacture products. The ERP system bridges a company’s entire internal information so as to improve operational effectiveness. Redundant work processes, and lack of information, is one of the largest costs to companies. Regardless of size, if a company has a hard time moving work from one internal department to the next, or lacks real time critical information that all its employees can see, it will simply result in delays, and delays to customers mean lost business.

As for which system is best, it really depends upon the business itself. Small businesses don’t necessarily have concern themselves with programs designed for much larger organizations. Customers must come to see their vendors as on the ball, and ready to help. Lacking the ability to service customers, or unable to provide essential information, is a recipe for an upset and frustrated customer. These programs improve efficiency and reduce costs, while improving a company’s ability to be proactive, instead of reactive.