What is ERP?
An Enterprise Resource Planning (ERP) is a series of integrated software applications that facilitate the planning, organizing and controlling of enterprise resources. The framework uses data from financial systems, manufacturing systems, human resource management and customer relationship management to produce financial reports that can plan a company's operations.
ERP software facilitates efficient bookkeeping by managing business-related information in an accessible format that can be shared with all departments within the organization. A complete ERP package will provide companies with the ability to manage their different lines of production, including planning, scheduling and costing as well as inventory control and accounting (Tognazzi 2009).
Each company has its own unique ERP and organizations must assess where ERP planning fits in the companies goals for the future. For example, many organizations use an ERP system to organize production information. The ERP system allows production managers to plan orders and produce accordingly as well as manage inventories (Johnson 2010).
ERP systems have various levels, from simple to complex. The most basic level of an ERP system is what is commonly referred to as a semantic web (Burdisso 2008). This is the ability to create links between data from different sets of systems and databases, allowing companies to store data consistently.
The ERP system can be seen as a process that gives input to the business' goals, while also making a decision on what is needed. The various ERP systems will provide different levels of reports in order to achieve this goal.
ERP systems are often used by small businesses and even mid-sized businesses. However, they are also useful for larger organizations with more complex processes (Burdisso 2008).
ERP systems are used by companies in a variety of industries. They are popular in manufacturing, transportation, energy and utilities (Biotech 2004).
ERP systems can save companies money and can help the company increase efficiency. They can also provide more accurate information which is important for companies that sell products to distributors and customers (Tognazzi 2009).
Organizations typically choose an ERP system based on the industry they are in and their size. However, each organization must evaluate its setups needs within the context of the processes it performs. For example, many smaller companies do not have a need for large levels of complicated accounting functions; however, these same companies may want to track billing information or maintain stock records (Biotech 2004).
There are three components to an ERP system:
The function of the data component is crucial, as it allows companies to store a variety of information in a standard format. This component is often used to centralize information from different systems within the organization (Tognazzi 2009).
It is important for an ERP system to come with a good set of reports, which will allow users to see the information they need when they need it. This ensures that each level in the organization has access to the data they require and that company's operators and managers can use the reports generated by operational systems to make informed decisions (Johnson 2010).
The interface may vary depending on what software package is being used. However, essentially the interface is used to allow people to control the system. The interface must be easy to use and must have a simple layout in order for different users of the system to be able to get information easily (Tognazzi 2009).
There are three main categories of ERP systems:
Enterprise resource planning systems may cover all essential business functions or may just cover certain aspects of the business. For example, they might not deal with supply chain management at all or they might only deal with finance (Biotech 2004).
All of these categories will generate their own reports and there will be many types of reports within each category.
Reports will contain different data that will allow the users to create analysis plans on how the organization deals with each aspect of the business. For example, ERP systems will typically contain recurring financial reports that allow companies to see their income and expenses each month.
A popular category of ERP system is supply chain management software, which helps companies manage the flow of goods from suppliers to customers, and vice versa. These systems allow companies to forecast what they need in terms of materials, labor and other resources over a period of time (Biotech 2004).
As mentioned above, the ERP framework is a collection of integrated software applications. It allows the users to use one software package to work on different parts of an organization's processes. For example, ERP systems may be used for supply chain management as well as manufacturing information (Tognazzi 2009). This can be an effective way for businesses to manage their resources as well as their costs.
The ERP framework also allows organizations to view their business in a multi-dimensional manner making it easier for managers to see patterns or changes in production or profit margins (Johnson 2010).
Businesses often integrate ERP systems with other software packages in order to be able to track their resources more easily. For example, one company may have an order-processing and invoice-generating software package from a different organization that they integrate into their ERP framework (Tognazzi 2009).
Once an organization has implemented an ERP system, it is important that the same information is input into the system by both the sales and production departments. This will allow the sales managers to track how much each customer orders as well as how much each customer owes after receiving products (Johnson 2010).
The process of integrating information from different sources is often called "data integration".
Surely, the ERP framework has many advantages. Managers who have implemented ERP can make use of its reports and the reports generated by other systems. These managers will know that the data which they are inputting is accurate and that it is in a format that will allow them to make informed decisions about their business (Tognazzi 2009).
ERP includes data from different systems within the company which allows companies to be able to track their resources more easily.
ERP systems are used by different organizations in order to manage their resources. These systems are used in all different areas of the company, allowing managers to get a bigger picture of the different parts of their business.
There are advantages and disadvantages to implementing an ERP system within an organization. Some advantages include:
Some drawbacks to implementing an ERP system include:
Implementing ERP systems is a significant project. To get the most benefit from them, organizations must train staff on how to use the new software as well as train them on how best to use it in order to track resources and generate reports (Johnson 2010).
ERP systems can be expensive, which makes it hard for many small companies or organizations in developing countries to implement them (Biotech 2004).
Conclusion
ERP is a simple and efficient software system that helps companies to manage resources and improve their performance. ERP systems have been used by companies in many different business sectors and they are now starting to be implemented in developing countries. ERP systems can be very useful for organizations that want to manage their resources more effectively.
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What is ERP?