An ERP system typically has modular hardware and software units and "services" that communicate on a local area network. The modular design allows a business to add or reconfigure modules (perhaps from different vendors) while preserving data integrity in one shared database that may be centralized or distributed Enterprise Resource Planning (ERP) solutions provide a single centralized framework to integrate and automate all business processes of an organization with the aim of increasing operational efficiency and improving the accessibility and flow of information across all departments. Availability of timely information combined with a flexible framework enable organizations to respond and adapt quickly to the changing marketplace and business environment in a more efficient manner.
An ERP software solution comprises of several modules and components each pertaining to the requirements of specific functional departments or business process such as manufacturing, inventory management, accounting, distribution, finance, customer support etc.
ADVANTAGES
In the absence of an ERP system, a large manufacturer may find itself with many software applications that cannot communicate or interface effectively with one another.
Tasks that need to interface with one another may involve:
- ERP systems connect the necessary software in order for accurate forecasting to be done. This allows inventory levels to be kept at maximum efficiency and the company to be more profitable.
- Integration among different functional areas to ensure proper communication, productivity and efficiency.
- Design engineering (how to best make the product).
- Order tracking, from acceptance through fulfillment.
- The revenue cycle, from invoice through cash receipt.
- Managing inter-dependencies of complex processes bill of materials.
- Tracking the three-way match between purchase orders (what was ordered), inventory receipts (what arrived), and costing (what the vendor invoiced).
- The accounting for all of these tasks: tracking the revenue, cost and profit at a granular level.
Eliminates the problem of synchronizing changes between multiple systems
- Permits control of business processes that cross functional boundaries
- Provides top-down view of the enterprise (no "islands of information")
- Reduces the risk of loss of sensitive data by consolidating multiple permissions and security models into a single structure
The implementation of an ERP software solution automates all business and functional processes thereby increasing overall operational efficiency.
ERP solutions help in improving internal business processes and enables organizations to improve customer satisfaction.
Easy accessibility and availability of timely information results in better decision making and forecasting.
ERP packages have a flexible and scalable structure thereby enabling organizations to adapt and cater to future business expansions and requirements.
Helps in better utilization of resources thereby resulting in improved productivity.