What is ERP?
ERP stands for Enterprise Resource Planning. ERP is actually a process or approach which attempts to consolidate all of a company's departments and functions into a single computer system that services each department's specific needs. It is, in a sense,a convergence of people,hardware and software into an efficient production, service and delivery system that creates profit for the company. Usually ERP systems will have many components including hardware and software, in order to achieve integration, most ERP systems use a unified database to store data for various functions found throughout the organization.
What are the components of ERP system ?
Ideally, ERP delivers a single database that contains all data for the software modules, which would include:
Manufacturing
Engineering, Bills of Material, Scheduling, Capacity, Workflow Management,Quality Control, Cost Management, Manufacturing Process,Manufacturing Projects,Manufacturing Flow.
Supply chain management
Order to cash, Inventory, Order Entry, Purchasing, Product Configurator, Supply Chain Planning, Supplier Scheduling, Inspection of goods, Claim Processing, Commission Calculation.
Financials
General Ledger, Cash Management, Accounts Payable, Accounts Receivable, Fixed Assets.
Projects
Costing, Billing, Time and Expense, Activity Management
Human resources
Human Resources, Payroll, Training, Time & Attendance, Rostering, Benefits.
Customer Relationship Management
Sales and Marketing, Commissions, Service, Customer Contact and Center support.
Data Warehouse
And various Self-Service interfaces for Customers, Suppliers, and Employees.
Access control: user privilege as per authority levels for process execution.
Customization: to meet the extension, addition, change in process flow.
Advantages
In the absence of an ERP system, a large manufacturer may find itself with many software applications that do not talk to each other and do not effectively interface. Tasks that need to interface with one another may involve:
- Integration among different functional areas ensures proper Communication, Productivity, 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 Bill of materials
- Tracking the 3-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 on a granular level.
- Some security features are included within an ERP system to protect against both outsider crime, such as industrial espionage, and insider crime, such as embezzlement
