Every cannabis business is conditioned for change because the industry continuously evolves, but continuous growth inevitably introduces complexities. That’s why cannabis companies need to look for solutions that present new and better capabilities around automation, visibility and of course, compliance.
These capabilities are where an ERP solution comes in. A cannabis ERP simplifies daily activities by centralizing business data in one location. As a result, the performance of the entire organization’s business processes is transparent, which, in turn, paves the way for the improvement of business efficiencies.
But an ERP solution is not a silver bullet for every cannabis business since it comes with its advantages and drawbacks.
Pros Of A Cannabis ERP Implementation
For business workflows to succeed, a cannabis business requires collaboration. But bringing together an organization of unique employees, different departments, and numerous operations is challenging. An ERP system, however, reduces the time and effort it takes to bring the entire organization together by centralizing data in one location, in turn improving collaboration. Collaboration then reduces manual operational costs and increases employee engagement and process efficiency.
Operations Become Transparent
The centralization of data in one location gives you access to all your cannabis business processes throughout the supply chain. For instance, any senior management can pull data from any department, or all of them, easily. Moreover, tracking cannabis products throughout the supply chain becomes a real-time event. Therefore, a cannabis ERP solution gives the cannabis business stakeholders total visibility into business operations.
Make Informed Business Decisions
Besides centralizing data, a cannabis ERP system is also excellent at making suitable analytics and reports for an organization. This, in turn, allows the decision-makers to make more informed business decisions using the insights derived from the ERP reports. Additionally, the ERP system provides this business intelligence reports fast and in real-time, thus, acting like a single source of truth for the cannabis business.
Cons Of Cannabis ERP Implementation
ERPs are Expensive
Implementing a cannabis ERP into your business usually means a subscription fee, license fee, and implementation support. The average cost of implementing an ERP system for one user in your organization is nearly $9,000. A mid-sized company, therefore, spends about $150,000 to $750,000 to implement an ERP system. Consider also that the ERP system is not a solution to purchase once. User licenses must be renewed monthly for a fee, and there is an additional customization fee.
Implementation Process Can Get Complex
The cannabis industry is unique primarily because of its compliance requirements with state and federal regulations. This forces many businesses to customize processes and make additional adjustments for solutions to meet business needs. A specialist is often needed to help with the installation, setup, and integration of the ERP system within the existing business operations. Additionally, employees take time to fully assimilate the new ERP protocols into the current tasks and processes.
Inflexibility Can Occur
Due to the complexities of ERP systems, custom configurations can be limited. Therefore, budgeting for these issues is tricky. For example, if an employee modifies the system interface, it can require 3rd party support to reconfigure, and reconfiguration generally adds to production costs. The challenge of implementing an ERP solution is that these issues occur unexpectedly, especially within the first year of adoption.
Implementation is Time Consuming
Be sure to take the time to look for the right ERP solution and vendor, time to implement and customize it, and then time to train and use the system. Bringing together a team of employees that aren’t onsite also increases the time it takes to implement a cannabis ERP system. Add to that the time you’ll take evaluating an ERP software for its compliance functionality. It can take anywhere from a couple to 18 months for a cannabis business to implement an ERP solution entirely into its operations.
Implementing a cannabis ERP system means choosing the right one from the start. Factors like the price, complexity and time-consuming nature of the cannabis ERP solution might deter you from implementation, but consider the benefits of having an ERP solution and whether the pros outweigh the cons. Cannabis companies considering an ERP solution should look at the integration capabilities, deployment options, the support offered by the vendor, and the overall ease of use of the software functionalities.
For more cannabis ERP information, including what questions to ask during your software evaluation and selection process or how to get started, we have cannabis business experts ready to help.
Is there a downside to implementing a cannabis ERP system?
Implementing cannabis ERP software can be expensive, complex, and time-consuming.
Does this mean I shouldn’t implement an ERP solution for my cannabis business?
To implement or not to implement cannabis ERP for your business entirely depends on your resources and business needs. As a rule of thumb, implementing an ERP solution is prudent if your business needs process and efficiency improvement, automation, and increased collaboration.
What are the benefits of implementing a cannabis ERP system?
An ERP solution automates your processes, gathers your entire organizational data, and centralizes it in one location. This increases business collaboration and visibility. It also enhances decision-making since it provides comprehensive and insightful analytic reports.