One of the greatest advantages of a sophisticated distribution ERP system is that it allows companies to easily integrate with other software or websites. This includes integrating with a CRM system, a payroll add-on, or eCommerce websites. Even though all these systems talk to one another, it does not necessarily mean that your company’s processes are automated. It is true that in order for there to be automation where multiple systems are in play, some form of integration is necessary. However, automation goes one step further and does not require any human interaction. Here is a simple comparison between integration and automation, looking at someone buying products online:
An interested buyer wants to buy t-shirts, so she submits her order to an online shopping site, say Amazon. She will specify exactly what she would like to purchase along with her credit card information. Her credit card is pre-authorized by Amazon’s software, and the order is received by the company that actually distributes the t-shirts. At this point, the t-shirt vendor’s internal distribution ERP system will need to be updated to account for this purchase. Through integration, the vendor’s software will be able to pull information from Amazon into their ERP system. The connection between these 2 systems implies that they are integrated. The next step is where the difference between integration and automation comes into play. There are two basic approaches for Amazon and the internal ERP system to exchange data:
- Someone from the t-shirt company will have to click a button to update the data in their ERP system to recognize the new sale. This is often done at the end of the day, and all the sales from that day are batched. This is integration.
- Every few minutes, the two systems will communicate with each other without human intervention, to consistently refresh and update information. Without any buttons needing to be pressed, the t-shirt company’s distribution ERP system will recognize the new sale and pull the necessary information down from the site. This is automation.
Once the new sale is recognized, the t-shirt vendor’s system will check that certain criteria are met (inventory availability, credit card has been preauthorized, etc.), and if everything is in order, a picking slip will need to be printed to the warehouse, outlining what has to be picked & packed for the order in question. This printing step can also either require someone to physically hit the “Print” button, or it can be done automatically if all the necessary criteria is met.
As you can see from the above example, automating processes means that there is no human intervention. Some benefits of automation, generally and specific to the example above, include:
- Labour costs are reduced
- The risk of human error is eliminated
- The process of updating inventory is sped up. Looking at the example above, constant communication with Amazon means that inventory will be updated within minutes of the order being placed, as opposed to having to wait until the set time the assigned employee at the company manually refreshes it.
- Certainty that inventory will be updated: There is the chance that the person responsible for refreshing inventory won’t do it at the right time. They could be on vacation, or even stuck in traffic.
Ultimately, in this type of example, automation ensures that your inventory will be up-to-date no matter what, and that the order flow process is streamlined. This avoids the possibility of your company promising a customer product that you do not actually have available. For example, if someone places an order online at 9 am and the information is not updated until 12 pm, another order could be placed over the phone between those three hours that relies on the same inventory. The bottom line is that always having up-to-date inventory is very important, and automating certain processes can help with this.
When evaluating your company’s current processes, take into consideration how integration can help, and how taking that extra step to automation can be even more beneficial at times. Remember that just because your data is all in electronic form, it does not mean that your processes are automated. Eliminating that extra human intervention is what defines automation.