Enterprise Resource Planning (ERP) is the system that handles the internal processes of your business – the resources planning, management control and operational control. It came after manufacturing resource planning (MRP II), a method for the effective planning of all resources of a manufacturing company, which then originated from material requirements planning (MRP), the system used to manage the manufacturing processes.
ERP deals with the manufacturing, logistics, inventory, invoicing and accounting for your company. It is a back office system wherein your customers, suppliers and the general public are not directly involved. ERPs are cross-functional and enterprise-wide, and all your departments are integrated in one system.
ERP makes use of software to facilitate business activities. Using cost-effective reusable software common to a wide range of industries is more efficient than using expensive custom ERP software. New ERP software can be catered to the needs of hospitals, manufacturing industries, government departments and other business sectors.
ERP software is the heart of an ERP system. It contains different modules, and each has its own function in the business process. ERP modules are: production planning -the utilization of manufacturing capacity, components and resources; purchasing – acquisition of raw materials and potential supplier and price negotiation; inventory control -maintenance of average stocking level of warehouse; sales – implementation of booking order, shipping and invoicing; marketing – direct campaigns and support; financial – gathering of data and generating of financial reports and human resources – maintenance of complete employee archive.
ERP software is useful because it enables you to manage all the operations of your departments from production to distribution and accounting in one integrated system. It helps reduce operating costs, facilitate day-to-day management and support strategic planning. Skill, experience and adequate education of employees on how to make use of the ERP software correctly will make way to the success of the system. This, in turn, will promote proper operation of your business processes and increase your profitability.
