Mastering ERP Workflows: Definition, Benefits & How to Build Efficient Processes

Efficient business operations rely on streamlined processes, and that's where ERP workflows come in. These automated sequences transform complex, manual tasks into smooth, integrated workflows, enabling employees to be more productive and efficient.

This blog post explores what ERP workflows are, highlights their benefits, and provides real-life examples to illustrate their impact on efficiency and accuracy. Additionally, you'll learn five steps to develop and manage your own ERP workflow, ensuring your organisation remains agile and competitive.

What is an ERP Workflow?

An ERP workflow refers to a set of automated steps within an ERP system that simplifies and manages core business processes. ERP workflows ensure that tasks like order management, inventory tracking, and financial approvals are seamlessly integrated and executed efficiently, eliminating manual errors and delays.

Effective ERP workflows bring a lot of advantages:

• Better collaboration: Cross-departmental workflows improve communication and coordination, enabling better decision-making.
• Improved accuracy: Real-time data updates ensure precise tracking, from inventory levels to financial reporting.
• Cost savings: Automation minimises operational costs by reducing redundant processes and manual labour.
• Scalability: As your business grows, workflows can adapt to handle higher volumes of transactions.

Real-life Examples of ERP Workflows

How do ERP workflows operate in real-world scenarios? Understanding this can significantly illuminate their impact on business efficiency and productivity. Here are four detailed examples of ERP workflows for your reference.

Note: Each business is unique, and ERP workflows can be customised to fit your company's needs. Below are some foundational examples that illustrate typical processes, but these may require adjustments based on your industry or operational scale.

Sales order processing workflow

This workflow streamlines the entire sales order process, ensuring that customer orders are handled efficiently from receipt to fulfilment. 

1. Order receipt: The sales team receives an order via phone, email, or online platforms.
2. Order entry: The order is entered into the ERP system, triggering an automated check for product availability.
3. In stock?: If yes, the inventory is updated. If no, a work order is created for production or restocking from suppliers/vendors.
4. Invoice generation: The finance module generates an invoice and sends it to the customer.
5. Fulfilment notification: The shipping department is notified to prepare the order for dispatch.

Purchase order approval workflow

Streamlining purchase orders helps avoid bottlenecks and ensures timely procurement of goods. This workflow automates the purchase order approval process, minimising delays and enhancing accountability.

• Purchase request submission: The procurement team submits a purchase request through the ERP system.
• Approval routing: The system automatically routes the request to the designated manager for approval.
• Order generation: Once approved, a purchase order is generated and sent through email or an integrated system to the vendors.
• Order tracking: The ERP system tracks the order status until the goods are received and the invoice is matched.

Inventory management workflow

Are you struggling to maintain optimal inventory levels while minimising excess stock? This inventory management workflow automates processes to ensure that stock levels are just right, balancing supply and demand effectively.

1. Real-time monitoring: The ERP system continuously monitors stock levels across all locations.
2. Replenishment trigger: When inventory falls below a predefined threshold, the system triggers a replenishment order.
3. Supplier verification: The system checks supplier availability and generates a purchase order.
4. Goods receipt: Upon arrival, the goods are scanned and inventory levels are automatically updated.

Customer Relationship Management (CRM) workflow

If you want to improve your customer relationship management, consider implementing this workflow. With automation, you can ensure timely responses and maintain a consistent communication channel, ultimately fostering stronger relationships with your clients.

1. Customer inquiry logging: Incoming customer inquiries are logged into the CRM module of the ERP system.
2. Task assignment: The system automatically assigns inquiries to the appropriate sales team member based on their expertise.
3. Follow-up scheduling: Follow-up activities are scheduled and reminders are sent to the assigned team member.
4. Performance reporting: The ERP system generates performance reports on customer interactions and follow-ups.

ERP Workflow Process: 5 Steps to Develop & Manage It Effectively

According to McKinsey research, 50% of all work can be automated, highlighting the importance of leveraging ERP workflows to enhance efficiency and reduce manual tasks. Following these five steps, businesses can effectively develop and manage workflows that optimise operations and drive success.

Step 1: Define what you want from the workflow

It involves clearly outlining your goals and understanding the specific tasks you want to automate. By identifying the desired outcomes, you can design a workflow that meets your business needs.

• Set clear objectives: Determine what you want to achieve, such as faster order processing or better inventory management.
• Identify key processes: List the business processes that need automation, like sales orders, purchase approvals, or customer support.
• Involve stakeholders: Gather input from team members across departments to understand their needs and pain points.
• Create a workflow map: Visualise the steps involved to understand how tasks will flow from one team to another.

Step 2. Select the right ERP software

The right ERP system not only streamlines operations but also enhances productivity and supports scalability as your business grows. When selecting an ERP software, you should pay attention to these factors.

• Determine necessary functionalities like inventory management, financial reporting, and CRM capabilities.
• Ensure the ERP tool integrates easily with existing systems to facilitate smooth data flow.
• Look for platforms that allow for easy customisation to fit your unique workflows.
• A user-friendly interface will enhance adoption and reduce training time.
• Investigate the vendor’s reputation and customer reviews.
• Assess the availability of training resources and customer support.
• Engage in hands-on demonstrations to assess functionality.
• Conduct a pilot test to evaluate performance before full implementation.

Here are some popular ERP platforms that businesses often consider:

• Odoo: An open-source ERP solution that is highly customisable and offers a variety of modules, making it suitable for small to medium-sized enterprises.
• Microsoft Dynamics 365: An AI-powered ERP & CRM system that integrates seamlessly with other Microsoft products, providing a familiar environment for users.
• SAP ERP: A robust, comprehensive solution known for its functionalities in production and financial management, with extensive functionalities across various industries.
• Oracle NetSuite: A cloud-based ERP solution that offers a wide range of features, ideal for growing businesses looking for scalability and flexibility.
• Infor CloudSuite: Known for its industry-specific solutions, Infor offers advanced analytics and cloud capabilities to enhance operational efficiency.

Step 3. Configure the ERP system to support the new workflow design

Start by setting up and configuring the out-of-the-box features of your ERP system. When any gaps are spotted, allow your ERP system to go beyond its off-the-shelf software capabilities by customising features to align with your specific workflows. However, keep in mind that ERP systems can be complex, and involving experts may be required for customisation, as it can be challenging to do it on your own.

Besides, to maintain security and efficiency within your ERP workflows, it’s essential to set up role-based access controls (RBAC). Identify the different roles within your organisation (e.g., sales representative, inventory manager, finance officer) and assign permissions based on these roles. This ensures that users can only access the information and functionalities relevant to their job responsibilities.

Read more: How to Simplify Odoo User Access Rights Management

Step 4. Conduct rigorous testing and validation

In this step, you'll identify any potential issues, glitches, or bottlenecks. Remember to test every component of the workflow - from data entry to automated notifications - to minimise the risk of errors and disruptions during real operations.

In addition to technical testing, gathering feedback from end-users is crucial for refining the workflow. Engaging those who will interact with the system provides valuable insights into user experience and practicality. Their input can help identify interface challenges or workflow inefficiencies that may not be evident during initial testing. 

Step 5. Monitor workflow performance & drive continuous improvement

By tracking key performance indicators (KPIs), businesses can gauge how well workflows are functioning and identify areas that need improvement. Regular analysis of these metrics reveals inefficiencies and helps you adapt workflows to meet evolving business demands.

To drive continuous improvement, consider implementing the following practices:

• Establish clear KPIs: Define relevant KPIs that align with business objectives, such as order fulfillment times, error rates, and customer satisfaction scores.
• Conduct regular reviews: Schedule periodic assessments of workflow performance to ensure they remain efficient and aligned with organisational goals.
• Implement agile practices: Foster a culture of adaptability by encouraging teams to test new approaches and iterate on workflows based on real-time data.
• Provide training and support: Ensure that employees are well-trained in the ERP system and the value of optimised workflows.

Next Step: Build Your Own ERP Workflow with Experts’ Help

Building an effective ERP workflow requires a strong grasp of your business processes and the technical capabilities of your ERP system. Partnering with ERP experts gives you the insights to map, analyse, and improve workflows, designing solutions tailored to your unique needs. With expert guidance, you’ll navigate implementation smoothly, avoiding common pitfalls and maximising the gains from automation. 

Reference: 

• McKinsey (2017). A Future That Works: Automation, Employment, and Productivity.