Integrate ERP and CRM for manufacturing

Smart manufacturing firms bring together technology, business processes and people; a critical component in this plan is the integration of ERP with CRM

By Pat Garrehy October 7, 2021
Courtesy: Brett Sayles

Customer relationship management (CRM) software has always been driven by the need to manage relationships with cus­tomers to increase revenue and profits. CRM does this by giving firms access to critical customer and business data to help streamline the sales cycle, identify new markets, build unique cus­tomer histories and support informed business deci­sions throughout the company. Especially critical to manufacturers, enterprise resource planning (ERP) software’s primary objective is to help businesses operate as efficiently as possible.

CRM contains customer information while ERP contains sales, inventory, financial and other busi­ness data critical to manufacturers. Keeping these two systems separate, as most companies have been doing, does not provide the complete view needed to meet customer requirements. Companies have typically purchased and deployed CRM and ERP systems separately from each other. However, inte­grating the two systems can bring substantial ben­efits through faster time to market, improved cash flow and increased agility.

When cloud computing came along, companies realized they could replace their old, on-premise, spreadsheet-heavy systems with on-demand busi­ness apps for manufacturing. These cloud-based systems store big data on servers, don’t have to be maintained onsite and enable increased productiv­ity and business efficiencies. Cloud ERP provides on-demand, real-time access to big data from any device, helps reduce costs, especially information technology (IT)-related costs, and can be scaled up or down to fit changing production requirements.

Industry analysts agree that manufacturing firms need to create a clear ERP and CRM strategy to ensure they are using the latest and most compre­hensive data available. Manufacturers who have integrated their CRM and ERP systems have gained critical insight into what they can offer and deliver to their customers.

Lee Wylie, who as group vice president of applica­tions research at Gartner in 1990 coined the name ERP, said, “Functional departments within an enter­prise had historically implemented their own solu­tions. In the early years, you could find the engineer­ing department on an HP platform, accounting on IBM, manufacturing on Digital Equipment and sales using stand-alone PC-based solutions. Integration was difficult to impossible to say the least.

“Today, the modern cloud platform, with applica­tions designed specifically for the cloud, is facilitat­ing the process of true enterprise integration. In addition to near seamless integration of ERP and CRM, the platform provides a manufacturing enter­prise with the ability to integrate engineering PLM systems as well as move beyond the enterprise with customer and supplier communities.”

Separate versus integrated CRM and ERP systems

Though the two systems can be used independently and can be beneficial for companies, it becomes dif­ficult to maintain two systems’ data simultaneously as the business grows. ERP systems allow firms to get a real-time view of their entire enterprise. But these firms also need a real-time view of their customers. Integrating CRM and ERP systems exponentially increases the value of each system, giving manu­facturers the data they need to drive revenue and increase efficiency from the shop floor to customer relations. For example:

Operational costs. As a business grows, the data generated by its CRM systems increases exponen­tially and needs to be entered into the ERP system for further processing. When CRM and ERP systems are maintained separately, this task requires extra resources and increases operational costs.

But integration automates data transfer from CRM to ERP so it reduces errors caused by manual entry. This reduces duplication by letting employees update a single, central database instead of spending a lot of time trying to manually connect business processes. By removing manual data entry and expensive cus­tomization from the picture, manufacturing firms can lower their operational costs and drive higher revenues.

Communication and collaboration. CRM is used by the sales and marketing departments and ERP is used by departments such as purchasing and produc­tion. Customer data entered into the CRM system must be entered accurately into the ERP system for further planning and processing. But the manual entry required by maintaining two separate systems can create errors which, in turn, create miscom­munication between departments and result in loss of business.

When integrated, CRM and ERP systems store customer details and this data is accessed and used by every department. This results in closing the com­munication gap between departments since they are using the same data. For example, a purchasing man­ager can plan purchases based on the requirements entered by Sales. Or engineering or production can see something entered by the salesperson in a note on a lead or opportunity that wasn’t communicated via some form or procedure when the requirements got to their department.

Business processes. Maintaining separate CRM and ERP systems introduces errors through man­ual entry. When customer leads are converted into accounts, the CRM customer data is updated but, when the two systems are not integrated, data on the ERP side may not be updated at the same time. Not only does this introduce data mismatches between the two systems but it also makes it difficult to track sales and marketing performance.

One of the most significant benefits of integrating CRM and ERP systems is improved productivity by streamlining processes, automating workflows and reducing errors and duplication of data. Employees and processes become more efficient, more produc­tive and increase profitability.

Business decisions. Sales forecasting is a critical function for organizations and it needs perfect data from both CRM and ERP systems. However, those same errors created by having to manually enter CRM data into a separate ERP system can carry over into the sales forecast and cause potentially massive business losses.

Because an integrated CRM and ERP solution eliminates errors caused by manual entry, sales forecasting becomes more accurate. Furthermore, all employees can access critical business informa­tion exactly when they need it. Inventory, ship­ments, customers, order history, returns, payments, pricing and more are available in real time from any device anywhere, allowing the firm to react quickly to the changing needs of the market.

Customer focus. When CRM is maintained as a separate system from ERP, sales departments will have insight into the firm’s customers, but other departments will not. Expensive customization and maintenance must be done to try to let the rest of an enterprise view critical customer data and those efforts do not guarantee that everyone will have the same customer focus.

Every department can track and record key cus­tomer information and make it available to relevant people throughout an enterprise, providing a com­plete view of a customer. The enterprise that wisely integrates CRM and ERP systems gains complete visibility into customers’ needs, buying habits, order history, account standing and so much more. Not only does this knowledge give firms better insight into their customers, it also helps build relationships with customers and focuses the enterprise on areas with the potential for future growth.

Keeping everyone up to date

Manufacturing firms want a robust, easy-to-use CRM application to store and organize customer data and improve the company’s customer focus. They also want an ERP solution that delivers real-time access to critical business and product data for all employees anywhere in the world on any device. Smart companies with a strategic plan for their busi­ness know that a system that integrates their CRM and ERP systems can help deliver the increased efficiencies, productivity and agility needed in the global marketplace.

The ability to integrate CRM and ERP should be an important part of any manufacturing firm’s stra­tegic plan. By combining CRM with ERP and other partner solutions, manufacturers not only receive the benefits of an integrated CRM plus ERP solu­tion, but they can also extend their ERP system to support many other business processes.

Author Bio: Pat Garrehy is the founder and CEO of Rootstock Software and has an extensive background as a software architect and engineer. With more than 30 years of management, sales and technical experience, he brings a unique blend of analytical focus and business savvy to the table.