Enterprise resource planning (ERP) is generally known as a type of company management application, typically a package of integrated software that a company may use to gather, store, handle, and interpret data from several small business tasks.
ERP provides an integrated and continuously updated view of core business procedures using shared databases maintained by a database management program.
ERP systems monitor company resources such as money, raw materials, manufacturing capacity, and also the standing of company responsibilities: orders, purchase orders, and payroll.
The software which forms the system share information across different sections (manufacturing, buying, accounting, sales, etc.) that offer the information.
Function of ERP Systems
Advantages ERP System
Sales forecasting, which allows inventory optimization.
Matching purchase orders (what was ordered), inventory receipts (what arrived), and costing (what the vendor invoiced).
Revenue tracking, from invoice through cash receipt.
Provides a comprehensive enterprise view, making real–time information available to management anywhere, anytime to make proper decisions.
Order tracking, from acceptance through fulfillment.
Chronological history of every transaction through relevant data compilation in every area of operation.
Facilitates standard product naming/coding.
Protects sensitive data by consolidating multiple security systems into a single structure & Brings legitimacy and transparency to each bit of statistical data.
Benefits of ERP System
ERP creates a more agile company that adapts better to change. It also makes a company more flexible and less rigidly structured so organization components operate more cohesively, enhancing the business—internally and externally.
ERP can improve data security in a closed environment. A common control system, such as the kind offered by ERP systems, allows organizations the ability to more easily ensure key company data is not compromised. This changes, however, with a more open environment, requiring further scrutiny of ERP security features and internal company policies regarding security.
ERP provides increased opportunities for collaboration. Data takes many forms in the modern enterprise, including documents, files, forms, audio and video, and emails. Often, each data medium has its own mechanism for allowing collaboration. ERP provides a collaborative platform that lets employees spend more time collaborating on content rather than mastering the learning curve of communicating in various formats across distributed systems.
ERP offers many benefits such as standardization of common processes, one integrated system, standardized reporting, improved key performance indicators (KPI), and access to common data. One of the key benefits of ERP; the concept of integrated system, is often misinterpreted by the business. ERP is a centralized system that provides tight integration with all major enterprise functions be it HR, planning, procurement, sales, customer relations, finance or analytics, as well to other connected application functions. In that sense ERP could be described as “Centralized Integrated Enterprise System (CIES)”