In this article, you will learn what kind of benefits that ERP can offers in a construction company, so if you’re happened to be in a construction business then you should read this article and know all the things that your business can benefit from implementing ERP system.
ERP Benefits for a Construction Company
Construction industry in India has traditional had quite unstructured approach to business for various reasons. Main reason for that has been the accounting practices partially driven by the laws of the land. That scenario is changing now and more and more construction houses are looking at structuring their business practices to gain better market share. There are many other reasons why construction houses in India are now looking at Enterprise management tools to fuel business growth.
This article discusses some benefits one can expect as part of implementing ERP for a construction business
* Waste Reduction: ERP implementation allows generation of information that always MUST help reduce waste. 5% waste of cement and 3% steel waste has been accepted by the industry. Since ERP allows material reconcilation process to be fully automated, organizations can easily reduce this waste by using various easy to implement tools and processes. Businesses, due to large amount of data involved but small value associated, does not focus on material across the board. ERP allows information to be processed quickly and for a large data set which facilitates business review of low value material as well.
* Better Project Planning: In order to get ready to implement ERP, the organization will be forced to look at creating playbooks to mobilize projects. An integral part of this process is project planning. Traditional issues with project planning or lack thereof have been many but lack of recorded information around what constitutes “mobilization”, in my opinion, was primary. ERP allows the information to be collated and thus it can be translated into a repeatable business process based on some criteria.
* Reduced inventory levels: Better visibility into material lead time can reduce inventory levels for the organization. Better planning helps forecast material demand thus allowing business to purchase material close to consumption time. ERP allows implementation of minimum reorder level process that helps address issue of material scarcity which at times was used by organization to carry bloated inventories.
* Better equipment utilization: An integrated tool allows better utilization of construction equipment. It documents requests coming in from various sites and allows management to really get most out of the available equipment.
* Easier project monitoring: Documented project planning allows for easier project monitoring as well. One can easily monitor projects and identify key dependencies. Risk and issue management becomes lot simple due to increased visibility of information related to project.
* Scalability of operations: Due to “formalization” of processes, organizations can scale up easier. Higher % of cost can be turned into variable cost. In order to scale up, one just needs to ensure that the tool supported process is followed which reduces “onboarding” time for new resources. Processes can be evolved once they are followed on a regular basis and exceptions tend to limited.
* Improved quality of work: Traditionally in India, for construction houses, quality was not of much important. With the growth in industry and size of projects becoming increasing large, quality can not be compromised. Repeatable processes, recorded data, collated information allows organizations to measure key indicators to improve quality across the business.
Ajay Joshi – About the Author:
ERP Consultants India provides ERP selection, implementation and project management services. We help companies identify and quantify benefits that ensures focussed implementation. For any questions about this article, please write to info@erpconsultantsindia.com.
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