A purchasing manager at a textile firm in Bursa put it plainly last month: ‘We survived the crisis, but two of our competitors shut down. Now we’re trying to reach their customers — yet we still track who wants what, where each order stands, and which client received which offer across separate files.’ This is the reality many mid-sized Turkish manufacturers are living right now. The worst of the global downturn appears to be passing, but the recovery period is shaping up to be more competitive, not less. In this environment, a single software module or a single process improvement is no longer enough to make a difference.
The new dimension of competition requires three management axes to function simultaneously: data management, business process control, and customer dialogue. When these three axes are handled independently, each generates its own value. But when they work together, the picture changes entirely. Being able to see a product in stock alongside the customer demand for it, the process of converting that demand into a sales offer, and the invoicing steps that follow — all at the same time — directly affects how quickly a manager can make decisions. ERP systems form the backbone of this integration, but a standalone ERP implementation typically leaves the customer-facing side of the business outside its scope.
This is where customer relationship management — CRM — enters the picture. The majority of Turkish SMEs still regard CRM as a luxury investment, or leave that function to whatever spreadsheets the sales team keeps on their own. But a distributor’s inability to systematically track which customer was contacted when, which offer was accepted, and which complaint was left unresolved becomes a serious disadvantage during a recovery period. When competitors close and market space opens up, the ability to move quickly depends on having current and prospective customer information readily available. Running CRM and ERP on a shared database — or at minimum keeping them synchronized through regular data transfers — is what provides that speed.
On the process side, the crisis has left a clear lesson: firms that don’t know which process costs how much tend to look in the wrong direction when cutting costs. Coordination gaps between production planning and procurement show up as excess inventory or delayed deliveries. Running ERP’s production, purchasing, and accounting modules in an integrated way reduces these gaps — but having the modules installed is not sufficient on its own. Who enters the data, when they enter it, and which report is used by whom — when these questions go unanswered, the system exists on paper but delivers little in practice. Process ownership is an organizational matter that precedes any technology investment.
Data management is the foundation beneath both of these axes. Many Turkish SMEs keep their accounting software and operational tracking systems separate, which means different records for the same customer live in different programs. Assembling a month-end report by pulling data from multiple sources wastes time and introduces error. Reports generated from a single data source eliminate the need for managers to manually consolidate outputs from different departments. Without this infrastructure in place, neither CRM nor ERP can operate at full capacity. Data quality and data discipline are decisions that come before software selection.
The practical difficulty of all this should not be underestimated. Integrating CRM and ERP goes well beyond connecting two software packages at a technical level. Creating the motivation for the sales team to enter data consistently, building the process discipline for the accounting department to keep ERP records close to real time, and designing reports in a way that management will actually use — these are all people and organizational challenges. Technology is the enabler in this process, but without management commitment no software can accomplish this on its own. Furthermore, the implementation costs and consulting requirements of this kind of integration can place a significant burden on smaller firms.
As 2010 approaches, managers have a concrete agenda in front of them: start by mapping the current flow of data — where is each piece of information produced, where does it go, and who uses it. Then identify the most critical bridge between CRM and ERP: the steps from a customer order entering the system through to invoicing are typically where the most coordination failures occur. Building that bridge delivers results far faster than rebuilding the entire system from scratch. Competitive advantage does not come from owning the largest software package — it comes from connecting the tools already at hand into a manageable, coherent whole.
This article was originally written in Turkish by Gökhan MERCANOĞLU on July 27, 2009 and has been automatically translated into English and other languages using machine translation.