What is ERP?
Enterprise resource planning (ERP) is a system of integrated software applications that standardizes, streamlines, and integrates business processes across finance, human resources, procurement, distribution, and other departments.
Typically, ERP systems and needs are different depending on sectors such as manufacturing, retail, service industries, higher education, hospitality, health care, financial services, and government.
Benefits for an enterprise are:
- Enterprise-wide integration. Business processes are integrated end to end across departments and business units. For example, a new order automatically initiates a credit check, queries product availability, and updates the distribution schedule. Once the order is shipped, the invoice is sent.
- Real-time (or near real-time) operations. Since the processes in the example above occur within a few seconds of order receipt, problems are identified quickly, giving the seller more time to correct the situation.
- A common database. A common database enables data to be defined once for the enterprise with every department using the same definition.
- Consistent look and feel. A consistent user interface reduces training costs and appears more professional.
For this reason, every ERP implementation is unique to your specific business as every business has its own designed processes and workflows and accordingly different needs and implementation, even if using same software platform but it should get customized for your specific needs
Major components of a typical ERP system are:
- CRM: Customer Relationship Management where all potential customers and existing customers or even past customers’ data are stored along with all deals details, invoices, communications and documents.
- Financials: Where all financial data related to payments and cash flow and bank accounts, enabling management to have a single view of company’s financial position and manage it properly
- Inventory: For managing stock items and purchase orders along with stock reservations for pending sales orders. Accurate management of inventory is essential to properly serve your customer experience and manage your operations
- HR Management: Keep all your employees data and link it to their business transactions in a unified database simplifies managing your business and spot areas that need more improvement
- Supply Chain Management: Real-time data allows you to keep tabs on your supply chain, so you can find and fix issues as they happen, rather than waiting until you receive the data a day or more after the fact. It also makes predictive analytics possible. The SCM component, with the aid of real-time data, can help with demand planning, so you can create an up-to-the-minute accurate production plan that meets demand, but doesn’t exceed it.
- Business Intelligence and Analytics: Considering how many businesses are attempting to create data-driven decision-making processes, it’s quickly become one of the standard ERP components. The BI component of your ERP software collects and analyzes data, providing you with actionable insights related to your business processes.
More components could be added depending on the specific industries such as manufacturing and quality management or fleet management…etc