The beauty of ERP software is that it can manage both sides of an organization’s operation: the procurement and accounts payable side, as well as the order-to-cash and accounts receivable side. While both sides of the equation are critical to the financial health of any company, it is the nurturing of customer relationships that ultimately keeps the lights on.
To improve the customer experience, an ERP system is necessary and should incorporate several different modules. Whether each module is a built-in component of the core or an integrated, third-party add-on, it must all work seamlessly from beginning to end.
Good customer relationships don’t just happen. They are a byproduct of strategic actions at several stages of the engagement continuum. Each of these processes can and should be managed by an integrated ERP system. Conducting a technology assessment can help you document your pain points and identify the processes where ERP software can make a difference.
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5 Ways an ERP System can Improve the Customer Experience
Managing customer relationships is a vital component of the order-to-cash process. The best way to handle customer relationships, especially for mid-size and large organizations, is to look for an ERP vendor that incorporates master data management (MDM) and customer relationship management (CRM). While the MDM and CRM can be used together, they could also be two different modules with two distinct purposes.
An MDM module can ensure consistent and reliable customer information is gathered, housed and retrievable by internal stakeholders. That information can include key pieces of data such as order history, company history, credit information, locations, key contacts, annual revenue and more. It can be thought of as a catalog of all relevant data about that customer.
The challenge many organizations have when implementing an MDM module is compiling all necessary data from each customer. The information may already exist in some form but could be scattered in various locations and formats. If information is scattered, then identifying and consolidating that information into a single resource is necessary. Once consolidated, that information is available to all internal stakeholders and modules through integration.
While MDM compiles overall data about a customer, a CRM solution enables sales staff to track prospect and customer interactions in order to identify opportunities. For organizations that have more than a handful of customers, manually tracking of every interaction is nearly impossible. Only a CRM system can consolidate trends, opportunities, preferences and financial data. This allows organizations to better plan revenue projections and budgets.
Many of our clients are seeking better data insights that they can use to improve the customer experience. We often walk these clients through business process reengineering to ensure their processes are aligned with their digital strategy.
Order Management and Fulfilment
An order management system (OMS) allows companies to track the status of every customer order at every stage. By understanding when orders are being entered as well as how and when they will be fulfilled, an organization can better manage customer relationships. An OMS can also help an organization manage different shipping options, warehousing and multiple currencies. During ERP selection, be sure to look for a system that can . . .
- Improve customer relationships – The customer experience can be greatly enhanced by enabling a better ordering process, faster delivery and more accurate invoicing. The more enhanced the experience, the more confidence customers will have when placing an order. If an issue with an order does occur, an OMS allows staff to quickly identify and correct the problem.
- Maximize working capital and cash flow – An OMS reduces errors, increases the speed of order fulfillment and enables more accurate billing. As a result, a company can experience improved cash flow and greater working capital.
- Enhance supply chain efficiency – An OMS can provide valuable insight into inventory, workflow, pricing and market trends. This can lead to greater organizational efficiency and facilitate proactive decision making. From a supply chain perspective, an OMS may help reduce costs due to leaner inventories and an understanding that products and materials can always be sourced quickly from other reliable providers.
- Improve staff management – By allowing customers to place orders online in a way that is connected to an ERP solution, the organization can better manage its staff. Automating the ordering process will funnel customer requests into the operation where resources are then allocated to ensure the operation is properly staffed. Handling orders this way enables organizations to better meet customer expectations.
Incorporating a credit management component into an ERP system allows for transparency, helping an organization adhere to an approved set of terms for each customer.
Without such a credit management policy and overall credit philosophy incorporated into an integrated ERP solution, organizations put themselves at greater risk by possibly extending credit terms to customers that may be unable to pay.
While many companies mistakenly place the responsibility solely on customers for unpaid debts, quite the opposite should be true. It is often the lack of a clear credit policy within an organization that results in late or unpaid invoices.
In the same way that fences make for better neighbors, a clear and actionable credit policy incorporated into an ERP system makes for better customer engagements.
Invoicing and Accounts Receivable
When submitting invoices to customers, leveraging technology and incorporating some form of automation is preferred over manual submission. Automation allows for better tracking and helps organizations get paid more efficiently.
A robust ERP solution should incorporate some form of invoice automation, ideally via a method that submits the invoice directly into the ERP software. This helps eliminate errors and delayed payments.
ERP solutions can provide comprehensive accounts receivable reporting, tracking the progress by which invoices are submitted and ultimately paid. This capability can help organizations identify and eliminate possible invoicing errors well before they get to the customer.
Payment and Cash Application
Almost no other segment of the order-to-cash process requires more attention than customer payment and cash application. These two processes are vital to the health of every business. Leveraging ERP software that can manage these two areas will go a long way in ensuring on-time customer payment and accurate application of that payment to a customer’s account.
While the payment process may sound straightforward, it’s a challenge for many organizations. Even after a new system is implemented, optimized processes may be difficult to maintain. This is because employees often resist new processes and cling to the old way of doing things. We employ change management techniques to help clients mitigate this challenge.
Customer Engagement Affects the Entire Organization
While ERP software can effectively manage multiple operational areas within a company, the area that has a ripple effect across the entire organization is customer engagement. It’s the experience customers have while engaging with their providers that will go a long way in determining whether that customer will continue the relationship or find another provider to do business with. A robust ERP system is an organization’s secret weapon, helping them provide the experience customers desire.
If you’re considering an ERP implementation, be sure to develop a business case that outlines all of the benefits you expect to achieve, especially those related to the customer experience. Our ERP consultants can guide you through the process of convincing executives to invest in ERP software. You can schedule a free consultation below.