The aim of an ERP system is to provide an integrated solution to all business areas of a particular enterprise. Ideally, you have one software system that the entire company can access and work with. So, for example, all the data for finance, sales, accounting, human resources and inventory is managed in one central repository and each business group within the organization accesses only the subset of data that they need.
Workflow as a concept is nothing new. Even before the era of computers, there have always been established procedures for handling operations within a corporate structure. Take a purchase order, for example: an employee notifies their manager that they require a particular item; the manager then puts in a requisition, which, depending on his level of authority, may need to be bumped further up the management chain until it is authorized; it is then handed over to the purchasing coordinator and finally purchased. The workflow can be relatively straightforward or very complex, but it is basically a business process that consists of a number of sequential tasks performed in a particular order or following a set of rules that is designed to facilitate a particular objective. Examples of processes for which workflows are commonly in place include order processing and fulfillment, sales cycle and campaign management, performance reviews, medical/insurance claims processing, expense reporting, warranty management, invoice processing and more.
The ERP workflow can be part of the larger concept of Business Process Management (BPM), which is a more holistic approach to business processes. Companies that employ BPM aim to optimize their business processes while striving to be more efficient, more effective, and improve the level of tracking and control built into their processes as a whole.
BPM and workflow implementation force companies to sit down and evaluate their processes and the rationale behind them: what is the flow of a particular task (e.g. draft -> ready -> financial approval -> final authorization -> sent to vendor), what possible scenarios exist, what rules need to be applied at each stage of the process (e.g., a purchase order cannot be moved from a status of “cancelled” to “sent to vendor” or any order over $10,000 needs another level of authorization), who is involved at each stage and what level of authority should they be granted. Creating a detailed blueprint of business processes, streamlining and regulating the workflow facilitates a greater degree of control; enhanced ability to respond to any potential issues; and increased efficiency, accountability and transparency for continued auditing and analysis of the process.
In many of the available solutions, in addition to automating the routing of documents and tasks from one person to another, email or SMS notification is employed to inform the next person in the chain of events that a document or process requires their attention. Rules can often be set so that another person in the chain is notified if a document remains at a particular status for too long (e.g. if the tracking document for an item in a repair shop remains by a certain technician at the status “in process” for more than two days, both the technician and his or her supervisor will receive automatic notification so that they can investigate the delay).
BPM and workflow functionality are increasingly a part of many ERP solutions, and it makes sense to implement such process maps and controls early in the game in order to maximize the benefits of the ERP system. Some ERP vendors offer built-in workflow functionalities, while others offer possibilities for third-party integration. If third-party solutions are employed, it’s very important that the ERP and BPM/Workflow groups understand and communicate about the technology and processes that are being implemented.
Remember: workflows involve humans, and the people involved at all levels of the process should also be involved in the initial mapping out of the processes before they are implemented. While mapping out the process, you may discover new and better ways to perform tasks or provide better oversight. The defining and modeling phase is often a learning process for both employees and managers. Collaboration during the definition process can produce enhanced processes, improve performance of both the system as a whole and of individual employees, and ultimately foster a sense of “ownership” in each individual regarding his or her part in the process itself.
In conclusion and to recap, workflow and BPM systems control the flow of information between individuals or departments, and direct it to the next appropriate processing stage according to an established workflow map. A good system should enable managers to monitor the progress of a particular process within the workflow, handle exceptions, escalate individual exceptions and generate reports that can be used to improve performance. It is therefore advisable that you make BPM and workflow one of your priorities when selecting or implementing an ERP software solution.