Enterprise Resource Planning
Enterprise resource planning
(ERP) refers
to a type of software that organizations use to manage day-to-day business activities
such as accounting, procurement, project
management, risk
management and compliance, and supply chain operations.
A complete ERP
suite also includes enterprise
performance management, software
that helps plan, budget, predict, and report on an organization’s financial
results.
ERP systems
tie together a multitude of business processes and enable the flow of data
between them. By collecting an organization’s shared transactional data from
multiple sources, ERP systems eliminate data duplication and provide data
integrity with a single source of truth.
Today, ERP
systems are critical for managing thousands of businesses of all sizes and in
all industries. To these companies, ERP is as indispensable as the electricity
that keeps the lights on.
ERP is an integrated, real-time,
cross-functional enterprise application, an enterprise-wide transaction
framework that supports all the internal business processes of a company.
It supports all core business processes
such as sales order processing, inventory management and control, production
and distribution planning, and finance.
There are
various ways in defining an Enterprise Resource Planning System. This is how it
has been defined by American Inventory and Production Control System (APICS)
dictionary:
“Enterprise
Resource Planning: An accounting-oriented information system for
identifying and planning the enterprise-wide resources to make, ship and
account for customer orders.”
Internet encyclopaedia,
it has defined as “An enterprise planning system is an integrated
computer-based application used to manage internal and external resources,
including tangible assets, financial resources, material and human resources”.
Basically, an
ERP combines several traditional management functions into a logically
integrated system and facilitate the flow of information across these
functions. It is designed to model and automate basic processes across the
organization over a centralized database and eliminates the need of disparate
systems maintained by various units of the organization.
Enterprise
resource planning (ERP) is defined as the ability to deliver an integrated
suite of business applications. ERP tools share a common process and data
model, covering broad and deep operational end-to-end processes, such as those
found in finance, HR, distribution, manufacturing, service and the supply
chain.
ERP
applications automate and support a range of administrative and operational
business processes across multiple industries, including line of business,
customer-facing, administrative and the asset management aspects of an
enterprise. ERP deployments are complex and expensive endeavours, and some
organizations struggle to define the business benefits.
Look for
business benefits in four areas: a catalyst for business innovation, a platform
for business process efficiency, a vehicle for process standardization, and IT
cost savings. Most enterprises focus on the last two areas, because they are
the easiest to quantify; however, the first two areas often have the most
significant impact on the enterprise.
Why of
ERP? Importance
ERP is very helpful in the following
areas −
1. Business integration and automated
data update
2. Linkage between all core business
processes and easy flow of integration
3. Flexibility in business operations.
4. Better analysis and planning
capabilities
5. Critical decision-making
6. Competitive advantage
7. Use of latest technologies
Features
of ERP
The following are the features of ERP −
1.
Accommodating variety
2.
Seamless integration
3.
Resource Management
4.
Integration Management Information
5.
Supply Chain Management
6.
Integration Data Model
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