ERP must be foreign to readers who are just venturing into a business, but those working in the industry for a long time know what this is. ERP is a short term for Enterprise Resource Planning, which is a system that allows the organization to utilize a system of applications that manage the key elements of the business.
The true definition of ERP
When you look at a definition of ERP, you will only get confused as each website has their meaning of it. But all it takes to understand the basics of ERP is to step back and think about every function that makes a business run. These functions are usually called “departments” like the human resources, accounting, order management, inventory, customer relationship management and much more. But taking this at the very basic level, the ERP system connects all these functions into one absolute system to streamline the information and processes throughout the whole organization.
The main feature of all the ERP systems is the shared database wherein it supports a lot of functions utilized by various business units. When it comes to putting it into practice, this means that the employees coming from different divisions, such as sales and account, can count on the same information for whatever needs they have for it.
The ERP software also provides some level of synchronized automation and reporting. Rather than forcing the employees to maintain spreadsheets and databases separately, not to mention they had to be done manually and merged into a single report, there are solutions in the ERP systems that allow the staff to take out reports just from a single source. For example, the sales orders are flowing automatically into the financial system, and this is done without manual inputting, the Department of order management can process these orders more accurately and quickly. If it was the case with the finance department, they can close the books faster. Other common features of the ERP include the dashboard or portal to let employees understand the performance of the business quickly.
Should your business implement ERP?
As a business grows, it will find itself running different systems in every department it has. These systems could have been absorbed, inherited or pieced together for the purpose of working with vendors and partners. But with the lack of conformity, it can deal a huge blow to the processes involved in the business. Problems are expected to arise when the systems used are incompatible, outdated, maintenance is too expensive, or unable to be upgraded or serviced. When it is already evident that the systems are in need of improvements, this is when the current structure of the business should undergo an overhaul. This is also the time wherein ERP systems implemented into the business will make sense, too.
As it has the common platform in place, you will see internal costs drastically go down as it aids in automating the processes, re-purpose or reduce headcount and increase productivity.