ERP systems can significantly simplify a company's operations by serving as the backbone for cross-functional business procedures spanning multiple departments. Such practices serve a purpose beyond satisfying individual departmental needs: they consist of steps taken in order to complete operational or financial workflow across departments - something you cannot achieve with ERP modules, which you select separately; instead, when implementing processes, it must also address dependencies with other processes and modules in the ERP.
However, many firms struggle to comprehend the significance of ERP operations. Without understanding this critical data, businesses often experience operational snags and inefficiencies due to departments operating independently without adequate connections among departments; hence, it is imperative that companies understand these fundamental cross-functional procedures for optimal operations.
Top 10 Core Cross-Functional ERP Business Processes
These are the top 10 core cross-functional business processes connecting different departments.
Cash Order-To-Cash
The order-to-cash process is a comprehensive business practice involving an organization's sales, operations, and finance divisions. It encompasses every stage, from customer order submission to collection of payment. When someone submits their request to purchase products or services, sales teams need to record order details such as product or service specs, quantity pricing information, and customer contact information from these details in their order registers.
Orders are captured, validated, and then forwarded to the Operations department for processing. Here, operations staff members ensure product availability, inventory levels, service delivery timetables (if relevant), work orders, and picking lists meet client needs; in some industries like manufacturing or service-oriented enterprises this phase ensures goods or services meet order specifications exactly. Based on order details, the Finance department then creates an invoice on fulfillment as well as monitors customer payments once sent out.
Purchase-To-Pay (PTP)
An ERP system is integral in streamlining one core cross-functional ERP business process - procure-to-pay (PTP). PTP involves various departments within an organization, such as finance, accounting, procurement, and warehouse management, in its execution; to start this process, the procurement department captures a purchase order to initiate this multi-stage procedure.
Inventory is delivered to the warehouse following the capture of a purchase order, while vendor invoices containing billing information for goods or services supplied are then forwarded to the finance department for inspection and comparison against purchase order and receipt data in ERP systems. Once accepted and accepted by both departments, payments begin accordingly.
Inventory/Production Scheduling
Businesses requiring precise forecasting and inventory planning before production should pay special attention to the plan-to-produce/plan-to-inventory business process. Common in consumer-centric and commodity industries, S&OP begins by analyzing past sales data, market trends, customer demand forecasting data, and other relevant factors to predict product demand.
Report-To-Record
The record-to-report process, led by an organization's finance department, is an essential business procedure. Accurately recording non-operational transactions is its primary aim. ERP systems play a crucial role in many firms when managing financial data; however, they may not automatically register every financial transaction due to non-functioning software; in these instances, the finance department takes over this part of the process by manually notating all financial transactions that must be manually recorded manually by finance personnel. The record-to-report process starts by recording these financial transactions over a set period.
Payment Source
An ERP system's source-to-pay business process encompasses tasks related to procurement. Organizations use this procedure to efficiently manage their procurement cycle by going through a series of courses, which include defining requirements, reaching consensus among staff on them, finding eligible vendors, and making payments - typically starting by identifying products or services required for purchase by their business.
Concept-To-Offering
A corporation's idea-to-offering business process is integral in developing new products. From marketing research and analysis and consumer preferences analysis to manufacturing planning, this step-by-step approach ensures the go-to-market fit is determined before manufacturing begins. Identifying possible demand is achieved with market research conducted to examine consumer wants and preferences to improve the idea and make it more customer-centric.
Count-To-Reconcile
As the primary source of truth for inventory in an ERP system, counting-to-reconcile is an integral inventory management component. This systematic process begins with inventory reconciliation planning: choosing which items, warehouses, or locations will be included in the counting process and when they will occur (daily, weekly, or monthly).
Items are frequently divided into different classes according to their value, criticality, or other essential characteristics to speed up inventory counting operations. Standard item categorization systems include A-Class: High-Value or Critical Items, B-Class: Moderate Valued Item(s), and C-Class (Low Value/Less Critical). This forms the ABC categorization system.
Predict-To-Observe
A forecast-to-monitor business process is critical for financial planning and management. It involves taking specific actions to ensure every account and department's budgets are managed effectively and continuously monitored. The first step of this process involves planning different financial situations.
Examine-To-Accomply
Within the quality management process lies an examination-to-comply business process, usually starting with an extensive test strategy plan to outline all quality requirements and criteria that must be fulfilled by any product or substance being put through testing, in addition to which aspects will be examined, tests that will be run and how the tests can be carried out efficiently.
Acquire To Retire
The cradle-to-grave/acquire-to-retire process is an approach to asset management that spans an organization's entire asset lifecycle. It entails various stages, spanning from acquisition through retirement of assets. Typically, this begins when new assets are added to an organization and typically involves purchasing orders, contract negotiations, and financial transaction documentation to ensure smooth operations during acquisition and beyond.
Also Read: Unleashing the Power of ERP: How This System Benefits Users in an Organization
How Can An ERP System Facilitate Collaboration And Communication?
By sharing resources and information, ERP systems enhance company cooperation and communication by streamlining and unifying operations. With ERPs in place, departments may access real-time data easily to work collaboratively towards one goal.
Here are a few ways ERP systems improve departmental cooperation and communication.
Centralized Data Management
An ERP system gives every department access to accurate and up-to-date information from a central point of truth, acting as the single source for reports, analytics, and performance metrics, sharing this data among departments worldwide. By sharing messages via reports, analytics, or performance metrics, there can be greater cooperation and decision-making across time zones or locations based on trust in the security of this data.
Collaboration Tools
ERP systems provide real-time communication and collaboration for remote teams on urgent projects. These tools include video conferencing, document sharing, messaging, and a shared project management platform that makes resource allocation, progress tracking, and monitoring economical.
Automated Workflows
ERP automated workflows improve accountability, collaboration, and mistake reduction by streamlining team communications, facilitating role-based access to data and procedures, and expediting interdepartmental activities. As part of these automated workflows, which automate repetitive operations and deliver notifications, team members have instantaneous visibility into the progress of tasks and processes.
Standardized Processes
An ERP system may guarantee that activities are completed consistently, dependably, and efficiently by standardizing and optimizing business processes. Teams can foster shared knowledge by documenting industry standards and best practices and disseminating them among themselves.
Planning And Forecasting
Stakeholders may make better judgments and adjust plans as necessary with real-time insight into the organization's activities. ERP systems facilitate stakeholder testing and effect evaluation across departments by providing tools for modeling and scenario planning.
Customer Relationship Management
In addition to providing a thorough picture of customer contacts across departments, an ERP system with a CRM module includes specific information on consumer preferences, trends, and behaviors. Departmental teams can work more efficiently if an organized platform that promotes complete client interaction is created.
ERP systems, in general, provide a centralized platform for data interchange, automated processes, and collaboration capabilities to enhance communication and teamwork in today's businesses. By creating a single data hub, efficiently automating operations, and promoting collaboration, ERPs can dissolve organizational silos and foster cooperation and communication across teams. These advantages have been shown to boost cooperation and coordination while producing better outcomes.
Conclusion
Cross-functional ERP business procedures are necessary for any organization to run successfully. They carry out several essential tasks, such as handling procurement, processing customer orders, estimating demand, keeping an eye on finances, and creating new products. They also act as a conduit between the various departments which make up an organization.
