A single source of the truth is what cannabis companies need — and cannabis industry ERP delivers.
When I was just starting in the cannabis industry, I was tasked by ownership to ensure our systems and processes would support the extraordinary growth our company was experiencing. Often, with growing companies, systems are brought in as a specific problem arises, typically resulting in an assortment of separate, disconnected applications. Unfortunately, this practice promotes inefficient business processes and workflow that stifles, rather than supports, profitable growth driven by deep business insight.
What’s more, the cannabis industry is a highly-regulated environment, meaning that data integrity and control are critical — and very difficult to achieve with disparate systems. Working with a single source of company data allows cannabis companies to effectively facilitate business processes, maintain compliance, track resources, and provide meaningful management insight and timely reporting to stakeholders. That single source of control should be an Enterprise Resource Planning (ERP) for cannabis system.
Why not a seed-to-sale system, you ask? Aren’t they designed for the cannabis industry? We’re glad you asked.
Bolt On versus Built In
Just last year, we published a blog addressing the topic of seed-to-sale systems claiming to be ERP (spoiler alert — they are not). Seed-to-sale systems are really compliance systems, and while compliance in the cannabis industry is important, there’s much more required to run a successful and profitable operation. Forward-thinking cannabis manufacturers and distributors need the end-to-end integrated functionality (including compliance capabilities) that a robust cannabis industry ERP solution delivers.
ERP software is designed to automate and improve a company’s operations. It achieves this by connecting functional business areas through a centralized database — from account management, order entry, production, warehouse and inventory management, point-of-sale, to accounting and financial management.
Compliance in the cannabis industry is vital, but to achieve long-term success, a company needs visibility and deep insight into what’s happening across the organization. Specifically, it needs detailed costing information to assess profitability and make key business decisions. Seed-to-sale systems are designed to track the product movement only — not the actual costs associated with growing, moving, harvesting, packaging, and shipping, or the true profitability of the business’ revenue streams.
Some seed-to-sale software publishers have tried to augment their applications to add some of this functionality — bolting on back office accounting functionality for example — but most fall far short of the comprehensive, end-to-end functionality of a cannabis industry ERP system.
What are the advantages inherent in a cannabis industry ERP system over seed-to-sale? Here are three big ones:
- Boost productivity
The combination of a seed-to-sale software lumped with back office accounting features cannot deliver the level of functionality inherent with cannabis ERP. Fully integrated financial and operations management that allows real-time comparison and analysis adds up to improved productivity.
Using a seed-to-sale system along with 3rd party accounting or inventory management functionality results in duplicate data entry, imports, and exports, and endless spreadsheets just to get a working picture of a company’s operations. Cost tracking is vital for cannabis companies — and seed-to-sale systems are simply not designed to help companies track the costs incurred during the production cycle.
An ERP system integrates full functionality across different process areas, from procurement and supply chain management to production planning, inventory lot tracking, costing, procurement, order processing, payables, receivables, banking, and financial reporting. When employees have access to consistent reliable data with a few keystrokes, they are less likely to waste time creating and maintaining redundant information in spreadsheets. With all data in the same secure database, staff is always working with the most current information — a single version of the truth.
- Improve data management and control
In the highly regulated cannabis industry, successful companies must retain meticulous records. But good record keeping goes beyond compliance. Cannabis companies who seek financing or acquisition will benefit from a robust, auditable business management application. When data lives in multiple places, as with a seed-to-sale system, auditability is compromised. This can hurt in several ways, but it’s becoming mandatory during due diligence for capital raises and acquisitions.
- Increase overall profitability
ERP systems ultimately improve profitability in many ways, from reducing overall operating costs to promoting better asset management. ERP communicates information quickly and consistently to all areas of the business, ensuring your entire team is marching to the same beat. Production knows exactly what products and quantity to produce, because it came from material requirement planning (MRP) calculations based on actual orders and demand forecasts. By directing warehouse people to the proper locations in the stockroom, ERP helps prevent shipping the wrong items to customers. Accounts payable is less likely to pay suppliers for incorrect invoice quantities or damaged product because they have information they need readily available. These types of fact-based decisions about the health and direction of the company can be made using the available accurate, real-time data from an ERP.
One is More
Investment in a business application to help run your cannabis business is a critical decision. The application a cannabis company chooses should facilitate overall efficiency, boost productivity, and provide quick access to decision-making data. Remember that first and foremost, cannabis businesses are businesses — and ERP solutions are designed to run businesses. Seed-to-sale systems were designed for a single purpose — product tracking — something a cannabis industry ERP solution does beautifully alongside all its other tasks.
Learn more about cannabis industry ERP solutions here.
- Flexing Your Options: How to Choose the Best Cannabis ERP Solution
- Seed-to-Sale Software Systems are not ERP for Cannabis
- There’s green to be made in the green business: Cannabis software helps businesses turn sales into profits
- Negotiating the Highs and Lows of the Cannabis Business: How ERP can help you grow a successful cannabis business