ERP Can Improve Customer Service

January 1, 2011
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Customer service is more than how you treat the customer in direct interactions at the point of sale. Customer service is also delivering a quality product, at a fair price and delivering it when it is promised. Modern Enterprise Resource Planning (ERP) systems are designed to help improve customer service in those key areas.

There are many ERP systems on the market today. Some are designed to be used by Fortune 500 multi-nationals and some are designed to be used by small specialty manufacturing companies. What all the best ERP systems have in common, no matter where they fall along the size scale, is they are designed to provide all the functions that a manufacturing or distribution company needs to run the business in a single, integrated package. The typical lists of functions contained in an ERP system include the classic plan, source, make, and deliver functionality. The best new systems also include design, sell, assess, and account functionality and some even have post-delivery customer support functionality. You can find a fully functional ERP system to support any sized company.

There is a wealth of literature that documents the improvements that a modern ERP system can provide a company. Chief among them are reduced inventory and work in process (WIP) and reductions in direct and in-direct labor. Reduced inventory and WIP levels lead directly to two of the customer service benefits. If there is less inventory in the pipeline when a quality problem is discovered then it will affect fewer items. Having fewer items affected by a defect reduces rework costs and reduces the chance that defective material made it out to a customer. Reduction in rework costs and reduction in labor costs allows a company to price their product more aggressively. Thus ERP systems help companies produce a quality product at a fair price.

Other well documented benefits expected from implementing a good ERP system include increased material availability, improved shop floor visibility and the ability to more accurately schedule work. Combining those benefits gives companies the proven ability to more reliably predict delivery dates. In the make-to-order, configure-to-order and engineer-to-order business, reliable promise dates are a key component of customer service. In the make-to-stock business the ERP driven ability to reliably predict delivery leads to fewer stock outs and higher fill rates, key measures of customer service for that type of business

But it is the integration of all the data that makes ERP such an effective tool for improving customer service. In an integrated system there is only one data base; data is added only once and there is no disagreement about which system has the right data. Everyone has instant access to the latest information so business processes focus on execution not data collection, works flows seamlessly between departments and decisions are more likely to be the correct and timely. This efficient operation enabled by a good ERP system leads to an increase in quality, reductions in cost and more accurate delivery promises all of which add up to better customer service.

Companies usually implement new business systems for internal reason. Typically they are trying to either to solve problems with their legacy systems, to improve ongoing operations, or to integrate disparate parts of the business. They believe that by addressing any of those three issues they will improve profitability and in most cases they are right. What is also true is that by increasing the quality of their products, reducing costs and increasing delivery reliability they also improve customer service. Modern ERP systems help improve customer service.

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