Business Discipline: How to implement Business Discipline with ERP?
Success is nothing more than a few simple disciplines practiced every day – Jim Rohn
Your level of success is determined by your level of Discipline & Perseverance. This is so true! Not only in the case of individuals but also for businesses! It is often said that business discipline is a good measure to judge whether an organization can be successful or not. Why? Because, just as you need a great product and a great team, you certainly need great discipline at every stage, right from business commencement, to survive competition, and later to scale & grow your organization.
Let us now understand what is Business Discipline with reference to Manufacturing companies & How to Implement Business Discipline with ERP.
What is Business Discipline?
Business disciplines are the functions or operations that are crucial for organizations functioning. These are the foundation stone on which you builds your business.
The major functions of a manufacturing company are Production, Procurement, Inventory, Sales, Plant & Asset Maintenance, Finance, Quality, HR & Payroll Management, etc. It is therefore strategic to determine what business discipline to follow in each of these areas in order to ensure the smooth functioning of the company.
Why is Discipline Important for a Business? Why Implement Business Discipline?
It is said “Discipline is the ability to do what is important before it becomes urgent” Let me share a small example of how this is true.
One manufacturing company, which produces rolled steel products ran out of stock of commonly used bearings. The requisite quality bearings were not available in the local market and had to be sourced from other nearby locations. As a result, the production was stalled for almost 12 hours! Although the cost of bearings was minor, the loss caused due to production halt was huge.
How could this situation have been prevented? This situation could have been prevented if the company had clearly defined business disciplines for inventory control mechanism and defined re-order limits, as well as what to purchase, when to purchase and from whom to purchase. They could have avoided the loss of time, productivity and money.
An organization that sets up business discipline by defining clear guidelines, processes and standards for Production, Inventory, Sales, Procurement, Finance, Quality will be able to achieve consistent results, identify & eliminate problem areas, make optimum utilization of resources, improve efficiency & profitability of the company.
How to implement Business Discipline with ERP?
ERP software integrates all important processes of an organization such as planning, production, purchasing, inventory, sales, marketing, finance, human resources into a centralized system. With ERP, organizations can connect various departments, locations, business verticals, and obtain real-time data with detailed analysis reports to make informed decisions. This serves as a facilitator for establishing and rolling out business discipline in an organization.
With the help of ERP, it is practically possible to define and implement business flow, to define rules & guidelines as well as implement validations and checklists for almost every activity in the manufacturing organization. You can also implement approval workflow, and set up notification & alerts to be sent when there is a deviation from the defined business flow or guidelines.
You can set up Key Performance Indicators(KPIs) to define and monitor success criteria for each function. With the help of detailed analysis reports, you can determine if the process is functioning optimally or there are shortcomings and accordingly devise an action plan on how to overcome them.
When Business Discipline is implemented and rolled out using an ERP, managers can perform day to day checks to ensure if the disciplines are being followed or not. Senior Management can also check the impact of their strategies implemented using various business disciplines, to understand whether there is any improvement in business or not. This becomes the basis for making informed decisions for carrying out continuous improvement.
Examples of how we implement business discipline with Spectrum ERP for manufacturing clients
Here are some classic examples of how Spectrum ERP helped manufacturing companies to introduce business discipline in their operations. Each company can determine which disciplines to implement depending on their business goals and objectives.
- Inventory: Implement inventory control methods, define warehouse management rules, reorder limits to ensure optimum inventory.
- Procurement: Maintain Purchase lead, time, Purchase Order Cycle time, Reduce Purchase Order Cost, Avoid emergency purchase, Ensure a minimum number of suppliers to ensure effective Procurement.
- Maintenance: Define maintenance schedule, set reminders to ensure preventive maintenance.
- Production: Prepare detailed production plan, schedule and adhere to it.
- Finances: Define rules for income receivables & payments due to monitor them closely and ensure timely payments.
- Sales: Define Credit control policy, Pricing & Discount metrics, Define & monitor Sales plan
- Budget Implementation: Define stringent budgets for each unit/department and carry out analysis for a variance.
- Quality Inspection: Define every stage of inspection, ensure proper quality control.
- Gate Control: Link all inward outward vehicle movements with some documentation such as Gate Pass, Sales Invoice, Good received, Rejection Note, etc.
What are the advantages of implementing business discipline?
Companies that have implemented business discipline and followed them religiously have been able to achieve:
- Optimum utilization of resources
- Eliminate Wastes
- Avoid delays & bottlenecks
- Faster Production
- Save Manufacturing Costs
- Strict Quality Control
- Assured Product Quality
- Efficient Procurement
- Optimum Inventory
- Healthy Working Capital
- Positive Cash Flow
- Excellent Customer Service
- Improved Profitability
Business disciplines are a way to transform your business strategy into an action plan. With ERP you can effectively define your business disciplines, rules, guidelines and roll out across locations and organizations. You can also use ERP to monitor the impact of your strategy and can decide and roll out corrective actions through ERP.