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