The ABCs of an ERP System

ERP (Enterprise Resource Planning) refers to software applications that integrate core business functions like finance, human resources, asset management, and logistics into one. The integrated software program runs on a single database that allows different segments of a business to interact and communicate, boosting the overall efficiency of a business. In certain cases, the ERP systems also include functionality to support contract sales, change order management, shop orders, billing, delivery scheduling, and service.

A basic ERP software replaces manual systems and processes in a company with automated options that boost productivity. Since a variety of ERP solutions are on offer, an organisation needs to choose one that can meet the challenges that are unique to their business requirements.

What are the Components of an ERP System?

The components of an ERP system will depend on an individual organisation’s needs and requirements. While this software was originally designed for helping manufacturing companies, its application has expanded to service industries, healthcare, financial services, and many other fields. And since each industry or organisation has its unique features, the ERP systems for them are designed accordingly.

Open-source ERP systems are designed for use by small organisations and offer little functionality beyond finance. The most popular option these days is the cloud-based ERP system that integrates almost all the important functions of an organisation. These systems can be on-premises, cloud-based, or managed, depending on the requirements of the company seeking them.

The following functions of a business can be integrated under ERP software:

  • Manufacturing Resource Planning
  • Customer Relationship Management
  • Finance Resource Management
  • Supply Chain Management
  • Human Resource Management, and many more

The ERP software replaces the traditional systems in a company where functions like finance, HR, manufacturing, and warehousing were handled separately, with a single unified software program. All these departments now share a common database that facilitates instant communication and better coordination between them.

Some ERPs also include customer relationship management tools to track all customer interactions. This provides an organisation with crucial information about orders, deliveries, returns, and service requests. The inclusion of analytic tools in the ERP system allows an organisation to study customer behaviour needs and plan for the future. 

What is an ERP System Used for?

Depending on the type of ERP system chosen by an organisation the scale, scope and functionality of the software may vary.

The ERP systems improve enterprise efficiency and effectiveness by:

  • Integrating the financial information of different departments and offices spread across the globe.
  • Coordinating data between manufacturing, inventory, accounting, distribution and dispatch, reducing chances of errors.
  • Including customer relationship tools in the system to track all customer interactions which are then analysed to understand customer behaviour and preferences.
  • IHelping to standardise and automate manufacturing and support processes across different locations, saving time and boosting productivity.
  • An ERP system with a chatbot and a self-service portal allows employees to maintain their personal information besides facilitating time reporting, expense tracking, leave requests, and scheduling training sessions. Integration of information about employees allows a business to match individuals with specific capabilities for newer assignments.
  • Enhancing an organisation’s ability to meet the applicable government regulations across different departments including finance, payroll, production, supply chain, and human resources.

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