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Why You Need an ERP - Scenario 2

In our first scenario we discussed the difference between solving an issue with a customer's product order using 2 methods.  1) no ERP in place, and 2) using an ERP.  Though there are some dramatics in that article, you can see the difference of using an ERP vs not in that situation.  So, let's move on to another scenario that using an ERP offers benefits.

Selling a Service

Most ERP systems are designed to handle Items and Materials, after all they were originated to assist the manufacturing realm with managing materials and production quotas.  Because of this many of the current ERP systems don't really address the selling of Services.  But it is possible to sell and manage services using an ERP system.  As an example we will pretend that you are registered for an account here at JBitPro.com, and you are selling services.

Though selling services differs in many ways from selling a tangible item, they all boil down to the same basic principle:  X costs Y, and the units are Z, where X is the product or service being sold and Y is the price.  And Z represents how you will be selling it.  For a Service this will most likely be time based, Weeks, Days, Hours, Minutes, Seconds, you get the point here.  With that in mind you can add your services to the system by adding a new "Item" and naming it after your "Service".

The Carwash

What happens if you have a Mix, and most businesses do?  Here is where our scenario begins, lets look at how a Carwash would use an ERP system to manage it's inventory and services.

For this example your the owner of a fabulous new carwash, "VehicaWash".  To set the scene lets get an idea for what you will need to manage to keep your doors open and continue offering car cleanliness to all the folk who want a shiny fresh car.  As a carwash you will be dealing with (forgive me if my list isn't complete, or includes something ludicrous, since I personally don't own a carwash):
  • Physical Inventory
    • Soaps for car baths
    • Chemicals for cleaning the carwash equipment
    • Rags and scrub brushes for attendants
    • Buckets for those times when elbow grease is needed
  • Services Inventory
    • Vacuum Service
    • Hand Wash Service
    • Towel Dry
Now for a real world scenario.  You are dealing with an especially busy day at your carwash.  Cars are lined up to the street and all of the vacuum bays are full with happy customers.  Your making money hand over fist, or at least that’s what it feels like on this busy day.  With each car through the wash your soap and carwash inventory is depleated a little more each time.  Your ERP system is accounting for this with each sale, and you get an alert at around lunchtime showing that it is time to reorder the liquid detergent for washing the cars.  The PO is ready, you just need to send it to the vendor and get the refill.  Not much thought is needed by you, only action to make sure the order is placed.

Let’s now consider this same busy day without the ERP system.  You are very busy dealing with the customers, and providing the services they expect at your carwash.  Your taking orders and in between you are checking the detergent levels in the carwash repeatedly, taking your attention away from the important task of helping your customers.  Your also doing a lot of paperwork to handle the sales.  You can see that the detergent is getting low in the carwash, and so you stop to place the order, unsure if you will run out before it comes in.  While placing the order you have a moment to watch your customers and employees busily moving around the carwash, and realize things could be running smoother if you could put more focus into Marketing and building customer relationships.  And less concern and worry about running out of important supplies.

Conclusion

Using an ERP is not the end all be all for running your business, but it definitely helps a lot.  Allowing you to handle things important to growing your business and keeping the shelves stocked.  It also helps keep track of your expenses and can help you identify problems with cash flow so you can get out ahead of them and correct them before they claim your business.  If you are looking for those benefits, register for your JBitPro account now for a chance to use an ERP for free for up to 10 years!

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