The World Bank’s 2020 Doing Business report points out that growing a business and doing business in Africa has many challenges. There has however been a continuous improvement across the Sub-Saharan region and Rwanda and Mauritius stood out among the top 20 countries globally in terms of the ease of starting and maintaining a business.

“Technology will continue playing a key role in enabling SMEs to comply with regulations and manage their operations”, says Ben Bottelberge of Seidor, a leading supplier of integrated business management solutions.  “Basic accounting systems are usually in place in small to medium-sized businesses but as these businesses grow, they start requiring more to run their entire operation effectively. An ERP system can add real value.”  Bottelberge points out however that businesses should be clear about the value motivating the change before they start looking for the right system to invest in.

“Businesses must know what challenges they have to overcome, what strategy they need to support and/or what their legal, safety, tax or other compliance requirements are to find the right solution to serve their business needs now and in the future.” is Bottelberge’s advice.    

Some challenges different types of SMEs can overcome by using an ERP system:

• Procurement

When a business makes ad hoc purchases, they don’t get the cost benefit of scale. An ERP system will improve coordination between departments to improve business performance. For example, the stock manager and procurement manager gain access to trend analysis built from previous purchases as well as real-time information on the company’s requirements so they can confidently make bulk buying decisions.

• Transport and logistics

Transport companies need to monitor and manage their profitability on each route and vehicle, which includes expenses such as fuel, food for drivers, the maintenance of vehicles as well as driver performance.

Bottelberge refers to a transport and logistics company that was facing the challenge of poor driver performance as an example of how using SAP Business One helped to improve a business.  “The drivers were paid a base salary only and were taking longer than necessary to complete trips as they had no incentive to save time. The solution was to create an incentive based on the number of trips completed which resulted in the drivers working smarter (while still adhering to strict safety regulations related to speed and sleep). This improved customer service and the bottom line.” 

• Distribution:

“A warehouse that isn’t run well will not be able to service multiple suppliers if they arrive at the same time to collect goods”, Bottelberge explains. He uses pharmaceutical distribution companies as an example. “These companies manage sensitive goods of a high value. Managing stock is crucial as it directly impacts the business. Expired stock is wasted revenue and being out of stock can lead to lost revenue and in some cases the permanent loss of certain customers.”

Another example is a company which both manufactured and distributed goods used in the building industry. “This company kept high stock levels because they wanted to ensure that they would always be able to fulfil customer orders. After a few months of using SAP Business One to track and manage all their production, order, sales and financial data, they managed to reduce their stock holding and improve their cashflow. They could harness the power of technology to maintain stock levels based on sales forecasts with a slight buffer to allow for ad hoc customer orders.” 

• Special pricing

Suppliers have to be adaptable in terms of pricing to stay competitive in an ever-changing market and customer environment. Different customers often have different pricing structures and these all have to be managed accurately and effectively. A supplier needs to know when to offer discounts on certain products or to specific customers and how to maintain a profit at the same time. Access to reliable data from a single integrated system will be invaluable to meet this requirement.

How an ERP can support business strategy

An ERP system gives decision makers access to data which will help them to make informed decisions around company growth. “Think of a warehouse which is doing well and where the owners decide that they would like to move into more areas. They would want to ensure that they are capable of keeping up the management of their current location and have the systems in place to run the additional branches properly.” Bottelberge explains. “With a user-friendly single integrated system, such as SAP Business One, business owners and managers can easily identify business trends and where their top clients are to plan locations for expansion. They will also have greater oversight of the performance of the business at different locations and be able to exercise better control, by for example setting thresholds to prompt for the approval of a senior manager.”

Four aspects to consider when comparing ERP systems to meet your requirements

Bottelberge lists the following aspects for SMEs to consider once they have listed their requirements and are comparing ERP systems and service providers:  

1) The size of your operation

A small-scale operator may not need a business management system with a host of functionalities, such as biometric scanning, aimed at more complex businesses. His advice is to focus on what will have the greatest impact on your business.

2) Your business and your customers’ needs

“There are many solutions available, so make sure you get one that suits your business by addressing all of your needs and your customers’ needs.”

3) The experience of the ERP team

“Find a supplier that not only knows the software they sell but also has the experience to understand the type of business you are running to really help you implement a winning solution.”

4) The support team

Bottelberge explains that there can be a considerable difference between the kind of support a small-scale operator would require compared to the support needed by a complex manufacturing company. “At Seidor, we have both a proactive and reactive support approach that includes proactive account management and customer calls.” 

Visit www.seidorafrica.com to find out more about moving from accounting to an ERP system.