Author: Dr Ma Yue, CEO, DigiwinSoft Malaysia
Business isn’t easy. We’re living in times where timely, reliable data reporting means the difference between success and failure. You have a computer. What else do you need? Every department in your business has a computer. However, each department speaks its own language. How would this affect your business?
Data Reporting & Your Business
Your business is an engine, feeding on fuel of resources to churn out profit. In the same way, all processes in your business (e.g., marketing, sales, accounting, finance, and factory operations) feed on data that they collect in order to produce information (reporting) that helps you make great decisions.
Sales and marketing provide information on your customers. Accounting provides financial reporting, and also management reports on budgets and costs. Your production floor store details on machines, raw materials inventory, production schedule, and production progress.
What is the issue then? Let’s take two examples. First, imagine you’re trying to decide whether to raise or lower your prices. You want to maintain your markup. Thus, it’s important to you whether your cost has risen or lowered.
The second example is you trying to figure out how to make sure that your machines don’t get overworked, meaning getting timely maintenance before any breakdown, in a cost-effective way.
Example 1: Costing
We’ve mentioned that accounting and operations speak different languages. Even if each has automated collecting data using a computer, bridging the data so that a useful report can be produced to tell you what you want to know isn’t a given.
Therefore, even with data available, you can’t make heads or tails out of them. Hence, you’d be missing a key detail for your pricing strategy, which is cost. As a result, you would either overprice your product and risk losing customers, or underprice them and risk making losses.
What is the solution? Try ERP (Enterprise Resource Planning). An ERP solution is a software that connects the data flow between your processes. Therefore, in this example, the ERP solution links your accounting and factory data flow in order to produce an integrated report, making it easier to produce the costing report that you need.
Without the benefit of an ERP solution, your accounting and factory personnel would have to find time to sit together, go through those data, and maybe produce the details that you need. More manpower diverted from their key responsibilities means higher costs, but perhaps no result in the end.
Example 2: Machine Status
Imagine that you’re running a manual or semi-automated factory. You have competent personnel to man the machines. However, while they’re busy producing output and inspecting machines, they can’t actually see, in real-time, what is happening to the machines.
The key principle of maintaining your machine is to perform preventive maintenance when needed. Waiting for the machines to break down before you act is costly. Not only you’ll have to foot the bill in repairing and perhaps even replacing the machine completely, but also the downtime that your factory will suffer.
This will affect your production status and punctuality in delivery, costing not only the machines but also business opportunities as angry customers decide to take their business elsewhere. What can you do about it?
There is MES, Manufacturing Execution System. It’s a specialised software that links data from every asset (machines, raw materials, and output inventory), and reports their status in real-time on a dashboard.
Now, you may tell when a machine needs some maintenance, whether you’ve enough stock of raw materials, or how many and where you’re producing defective outputs. Your gains include real-time, effective floor management, quick response to inventory shortages, and economical spending on machine maintenance.
Is it worth it when compared with the cost?
Your business won’t be the first to digitalise successfully. We, DigiwinSoft Malaysia, a solution vendor in Malaysia and a partner of Cheng & Co Group, cite Wegmans Furniture Industries Sdn Bhd as a prime example of how digitalising a business is most beneficial to the business.
The comparison of before and after ERP system implementation in Wegmans Furniture.
Prior to adopting our ERP solution, Wegmans faced the following issues in their business processes:
The ERP solution that Wegmans adopted connected data and data processes of various departments, enabling better management reporting and smoother communication between departments. As a result, Wegmans’ various departments also enjoyed improvements, such as the following:
We’ve talked about improvements. Now let’s delve a little bit into the cost. We won’t delude you. You’ll need to spend. However, the best news for you is that tax grants are available for qualified companies to apply for, and, if approved, they could offset some, if not all, of your spending on the solution.
Digitalising your business is a choice, but an important one that could yield great results for your company. The benefits outweigh the costs that you incur if the right solutions are installed, and that they are fully utilised. For more information on your digitalisation journey, the following is a chart outlining the stages that you’d go through if you decide to digitalise your business:
Getting Started with Digitalising Your Business: Some Hints
Every vendor has its own procedures. However, the process can be described in the following steps:
This blog post is an excerpt from The Connection E-Magazine: SMEs Sustainability in Malaysia 2023.