5 Tips for Implementing ERP in Logistics Companies

The benefits of implementing an ERP system in a logistics company are significant. This system is proven to reduce 60-80% of human resource costs. ERP is also reported to be very helpful for logistics companies’ business processes in the transport, counting, sorting, and distribution sectors.

Tips for Implementing an ERP System in a Logistics Company

A logistics company is a company that specialises in transport services. Depending on their scale and type, logistics companies can offer services ranging from simple transport, customs clearance, storage, packaging, stock management, customer service, to other specialised services.

What is ERP in Logistics?

Enterprise Resource Planning or ERP is a system that can be implemented to streamline business processes within a company.

Integration and automation between the flow of goods and financial aspects is one example of the application of ERP applications in logistics companies.

With ERP, resources, assets, and business processes are integrated in one data set that can be accessed from various levels and divisions.

Why do logistics companies need a software-based system?

ERP systems can prevent data duplication and ensure real-time information so that decisions can be made quickly based on the right data.

In short, ERP systems can help companies plan, execute, and control logistics resources and processes effectively and efficiently.

The expected outcomes of this effectiveness are reduced costs, maximum asset utilisation, and opportunities to increase profits.

ERP systems can help companies plan, execute, and control logistics resources and processes effectively and efficiently.

Tips for Implementing an ERP System in a Logistics Company

Before deciding to implement ERP, you may have various questions regarding the implementation process.

What are the things to consider before implementing ERP in the company? How to ensure the implementation process runs smoothly? How long does the implementation process take from start to finish?

The answers to these questions vary depending on the characteristics of each company. However, there are tips that can be used as general guidelines in the ERP system implementation process.

Tip #1 Form a Dedicated Team

Transitioning from using the old system to the new system is not easy.

Companies must conduct research on the impact of this transition on daily activities, predict various risks, prepare strategies to overcome these risks, and monitor and evaluate the transition process continuously until the system is running well.

These responsibilities cannot be left to just one department or division.

It is necessary to formally establish a team so that the company and management provide a clear structure and support for the implementation process.

Tasks and roles of the ERP Implementation Team

The specialised team should have members spread vertically and horizontally.

That is, there are representatives of each division, and there are mid-level managers as well as employees who understand the technicalities of daily work. Broadly speaking, the team that is formed has the following tasks and roles:

  • Conduct initial research on ERP and existing vendors
  • Bridging communication within the company, both vertically (top management to technical implementers) and horizontally (between sections or divisions)
  • Bridging communication between the company and the vendor (IT company)
  • Facilitate the remapping of existing business processes
  • Evaluate the implementation results in accordance with the initial objectives

Tip #2 Prepare All Elements of the Company to Accept Change

One of the mistakes that can occur in ERP implementation is to completely transfer business processes that are carried out manually or on the old system to the new device.

The company may be too comfortable with the existing business processes to maintain them. As a result, the implemented ERP does not provide the maximum benefits as promised.

Provide Top-down Understanding

When deciding to use an ERP system, all elements in the company must be given an understanding that there will be changes in the company.

This must be conveyed from top to bottom. The willingness of the managerial level to change will greatly affect the confidence of the lower levels in their ability to keep up with the changes.

Remapping

If implemented correctly, an ERP system implementation can help cut unnecessary steps in a company’s workflow.

With the various automation it brings, ERP system demands restructuring of business processes by cutting ineffective work chains, removing non-critical stages, and increasing work effectiveness.

Therefore, before involving technology, companies must first understand the existing business processes. This can be done by remapping the roles of each division, section, or function.

Question the purpose of each process or stage, then eliminate those that do not contribute to the company’s productivity.

Tip #3 Invest Time to Choose the Right Vendor

There is no benchmark regarding the best ERP system for the logistics industry. The choice of product or ERP system is largely determined by each company’s business processes.

Moreover, various IT companies today have the technical ability to adjust the features to the needs of your business process.

However, finding the right vendor is crucial in implementing an ERP system.

The right vendor will not only offer products that are suitable for your company, but also ease the transition and implementation process.

Get to know your options

Since vendor selection is so important, invest sufficient time to do some simple research on available vendors.

Open communication with various IT companies. Ask questions about the packages or products they offer. Don’t hesitate to ask for explanations if there are things you don’t understand.

Considerations in Choosing a Vendor

Regarding vendor selection, some things that can be considered and used as guidelines include:

Vendor age

While company age is not an absolute guarantee of quality, the fact that an IT company can last for a long time cannot be underestimated.

The advantage of choosing a mature company is that they are experienced in dealing with various problems and are familiar with the intricacies of the problems that will arise in implementing ERP.

Profile of clients who use the vendor’s services

Take a peek at the clients who use the services of the vendor you are exploring. If these clients have a good and satisfying work reputation, you can be sure that the ERP system they use has contributed to this success.

Infrastructure capabilities

If your company wants to use a cloud ERP system instead of on-premise, the infrastructure that the vendor has is a very important consideration.

Communication fluency

Look at how responsive the IT company you are exploring is during the information gathering process.

  • Are they quick to respond to questions?
  • Do they allocate time to ensure you are satisfied with their answers and explanations?
  • Are they open with the advantages and disadvantages of the various packages they offer?
  • Smooth communication in the beginning can be a positive indication for future communication.

Tip #4 Prepare Your Data

The implementation process can take longer than it should if the company is not able to prepare the initial data before migrating to the ERP system.

Sometimes companies don’t realise there is certain data they should have as part of the new business process.

Or certain divisions may have data that has been collected but does not contribute or serve a specific purpose.

During the implementation process, the team from the vendor will help and guide you and your company to be able to sort and collect existing data. However, data preparation can be done early.

If it is realised that there is incomplete data, the time taken to complete the data will not interfere with the implementation schedule.

Tip #5 Mitigate Multiple Risks

Regardless of the preparations that have been made and the processes that have been carried out, the risk of problems arising will always exist. When a company is prepared for the possibility of problems arising, it will not panic when the problem occurs.

Some Problems That May Occur

Some risks can be predicted in advance so that solutions can be thought of in advance. These risks include cost overruns, schedule delays, unstable systems, staff adaptation difficulties, and data issues.

Work with Vendors

Good communication with vendors will determine the smoothness of the implementation process and troubleshooting.

Concerns about risks can also be discussed in advance and ask the vendor for advice to prevent these problems at the beginning of the project.

Experienced vendors will provide realistic input or options, according to the needs and conditions of the company.

Related Article: Custom ERP, Commercial, or Hybrid: Which One Does Your Business Need?

Keys to Successful ERP Implementation in Logistics Companies

ERP in Logistics

Research shows that ERP systems can improve the efficiency and effectiveness of business processes in logistics companies.

To ensure the implementation process goes well, companies can prepare themselves by forming an ERP implementation team, socialising changes to each element of the company, choosing vendors more carefully, preparing data early on, and mitigating various problems that might occur.

To ensure the implementation process goes well, companies can prepare themselves by forming an ERP implementation team, socialising changes to each element of the company, choosing vendors more carefully, preparing data early on, and mitigating various problems that might occur.

In addition, good co-operation between the company and the vendor will determine the smoothness of this implementation process.

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