6 Ways an ERP Can Help Your Business Drive Sustainability

Sustainability is becoming increasingly important to businesses across all industries because it can provide a competitive advantage in the long run and is a requirement for survival in the future.

As the world faces major disasters such as the COVID-19 pandemic, business executives have realized that it is their priority to reduce costs, increase efficiency, and optimize production in order to remain competitive in the market.

According to the Institute for Management Development (IMD), 62 percent of executives believe a sustainability strategy is required to compete today, and another 22 percent believe it will be in the future.

As sustainability is being incorporated into business strategies for long-term viability, one method of achieving sustainability goals is to implement an Enterprise Resource Planning (ERP) system, which is designed to increase production efficiency, reduce costs and waste, improve supply-demand planning, and drive greater organizational effectiveness. As part of a scheme to improve industry and enterprise performance, many governments, including Singapore, are providing funding and incentives for SMEs to adopt digitization and automation tools such as an ERP system.

Let's look at six specific areas where an ERP system can help your company reduce waste, cut costs, and achieve long-term sustainability goals.

An ERP system can assist you in determining the source of waste and optimizing resource consumption.

Business waste can take many different forms; not all waste is physical. In fact, resource optimization is a method of reducing energy and material waste, as well as labor costs. Whether it is general waste or manufacturing waste, resource management is a critical issue for businesses in a variety of industries, including manufacturers, supply chains, and food and beverage companies that handle chemicals and materials that can expire and/or be toxic to the environment.

Paper Consumption and Storage Space
When businesses implement an ERP system, one of the goals is to reduce the use of paper documents, which saves paper, reduces storage space, and contributes to environmental preservation. This is especially true for large corporations and large offices, where a significant amount of business document shredding is required to maintain confidentiality.

Using a document management system such as Odoo Documents, Dropbox, or One-drive is one direct way to go paperless while keeping your documents confidential in the workplace. For example, with Odoo Documents, you can store, share, and send previously scanned documents, as well as generate business documents such as vendor bills, invoices, and contracts that can be approved and signed electronically without the need to print any paper documents.

See this short video to learn how Odoo Documents can quickly transform and digitize your document processes using AI and OCR engines.

Inventory Control
Poor inventory planning and a lack of control over on-hand, overstock can also result in waste. A good ERP system, for example, can help you track the shelf life of your products and materials if you work in the food and beverage industry. Ideally, the inventory module in the ERP software should be able to tell you how much food or materials are wasted and pinpoint the source of the waste, whether it is due to improper storage, spoilage, leakage, or human error. It can also tell you how much material is not consumed or sold, allowing you to determine which products are driving the business and which products cost more than they make.

Using the right removal strategy, such as FIFO (First In, First Out), LIFO (Last In, First Out), or, in the case of the food and beverage industry, FEFO (First Expired, First Out), is critical to avoiding waste by providing visibility and control over perishable products. Inventory management tools with built-in stock removal strategy functionalities, such as Odoo Inventory, can help you track and monitor your product movements in real time.

On the Odoo Inventory interface, here's an example of how the FEFO strategy can be configured on specific products, prompting the system to pick inventory lots based on expiration dates, earliest to latest.

Overproduction
Overproduction, which can be caused by inaccurate planning and forecasting or a lack of reporting tools, is another type of waste.

ERP software can assist you in overcoming this by automating sales and inventory reports that show you which products are not being sold and which materials are not being used. Using past sales data and trends, you can make an informed decision about demand planning: which products need to be reduced because they are not selling well, and which products can have their capacity expanded.

Odoo developed a Replenish-to-Order functionality that allows businesses to purchase or manufacture inputs, particularly those with a short shelf life, only when there is a demand for them, in order to align demand with supply production and reduce unnecessary procurement.

Read more about Odoo's Make-to-Order feature and how it can help you improve the efficiency of your procurement process here.

Improve Coordination and Increase Visibility

Oversight of the entire operation
An ERP system can provide you with a clear picture of your company's overall performance, as displayed by dashboards in the interface, which display the metrics relevant to your company's operations. Each department can gain an overview of its activities while identifying cost-cutting opportunities, such as over-purchased materials or determining the most fuel-efficient delivery route. Each business function can get a quick overview of its activities by displaying the metrics that are most important to them.

Departmental Coordination has been improved.
When the workflows of business departments are not coordinated, time and resources can be wasted. Unsynchronized workflows occur when one department is unable to make decisions due to miscommunication, misinformation, or a bottleneck in another department. People in these situations must wait for information, sign-off, approvals, and work to be completed in other departments.

An integrated ERP provides interconnections and automation of the flow of information across departments, allowing for smoother, faster, and more transparent coordination with streamlined decisions.

In the ERP system Odoo, for example, Odoo Purchase is linked to Odoo Accounting, among other fully integrated modules in the system, which prompts the generation of a drought journal entry when a new Purchase Order is confirmed.

Product Lifecycle Management and Quality Control

Defective products that do not meet quality standards waste materials and cause production delays. ERP modules designed for production and manufacturing, such as Quality and Product Life cycle Management PLM, assist manufacturers in detecting, monitoring, and tracking all production data.

In the Odoo Quality module, you can configure your quality control plans and schedule quality inspections for specific steps in inventory procedures or manufacturing operations.

If you own a manufacturing company, you should be able to manage your production lines, identify the equipment and plant that is in place, and control its schedules. You can reduce the production of defective products and provide timely attention and action to any errors if a piece of equipment fails or a product fails quality checks with the help of quality management tools and features such as automated quality alerts.

While defects and errors can never be completely eliminated, quality management tools in a fully integrated ERP like Odoo can help minimize damage and waste caused by malfunctions quickly, saving your manufacturing company a lot of money and time.
Cloud Hosting Adoption

Choosing to host your ERP in the cloud can provide additional benefits not only to your company but also to the environment.
How an ERP can help your company's sustainability

IT system migrations to the cloud are estimated to save up to 30-40% of total software ownership costs. When you move your company's ERP system to the cloud, you eliminate the need for on-premise hardware as well as the human, physical, and financial resources required to maintain it. Your company can gain flexibility and scalability in storage capabilities and unused capacity by utilizing the cloud.

The cloud can also help the environment by lowering the carbon footprint of your company's data center. Cloud providers such as Google Cloud Platform (GCP) and Amazon Web Services (AWS) have pledged to make their data centers carbon neutral and twice as energy efficient as traditional data centers.

More information on how public clouds, such as Google Cloud Platform, can provide a safer, more secure, and agile server hosting solution can be found here.

Data in real time equals agility and better decision making.

One of the primary goals of an ERP system is to collect, gather, and store data and information about the entire company's activity in real time. The ability of the ERP system to provide immediate business data enables business managers to access this data and assess the effectiveness of their business strategy in real-time. As a result, they make continuous adjustments in areas that need to be aligned or resources that need to be better allocated and utilized

ERP software users can specify which measurement parameters should be displayed for each project. Whether for Accounting, Sales, or Inventory management, real-time data can help identify which areas bring the most value or the least profit, presenting more opportunities to drive more effective tactics and reduce excessive production or overstocking of inputs.

Let's take a look at the Analytical Accounting feature in Odoo Accounting to see how real-time data can help you make better decisions.

This feature can be used to provide a clear profitability overview of various departments or specific projects and promotion periods across all Odoo modules such as Sales, Purchase, Production, and Invoice by distinguishing costs that arise over time or identifying areas that bring revenue increases. By categorizing your general accounts (analytical accounts) by department, project, product group, and more, it provides a more dynamic view of your typical loss/profit balance than your general ledger.

How Odoo can help Port Cities make your business operations more environmentally friendly.

Best-in-class ERP technology combined with the right industry expertise in ERP implementation can provide you with a robust and interconnected system that delivers an unprecedented level of efficiency and synchronization in production, reporting, and demand planning.

All of the areas mentioned above can assist you in adhering to your company's sustainability strategy and are linked by a well-rounded and flexible ERP software like Odoo.

GeminateCS takes pride in having a diverse on-hands expertise from serving clients from industries such as Manufacturing, Supply Chain, and Retail all over the world. Contact GeminateCS consultants today to learn more about how you can make your business more environmentally friendly.

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