What Is Enterprise Resource Planning?
Business leaders in every business sector, in companies of all sizes and types, and around the world have likely heard of or discussed the concept of enterprise resource planning (ERP). But, what exactly is enterprise resource planning? The idea of connecting business operations, resources and technology isn’t an entirely new strategy. ERP as a concept—and as a technology—has become a vital part of business management today, and for good reason. ERP can provide a competitive edge and here’s what you should know about it.
The Definition of “ERP”
Enterprise resource planning, or ERP, is the review and management of a business by the careful integration of core business processes. Connecting back-office processes provides a unique view of business operations that can’t often be found when managing these processes independently. Business leaders will integrate all facets of the organization including financial management, inventory and supply chain, manufacturing and distribution , human resources and payroll, and other important business operations.
Instead of viewing these core business processes in an individual light, business leaders view them as connected or integrated. By looking at a business in this way, leaders can identify how certain operations impact other areas. Connecting activities like product sales with inventory management and profitability will reveal interesting connections and trends. By understanding these trends, leaders will be able to uncover new ways to reduce waste and cut costs, as well as boost productivity and profitability.
ERP Systems Explained
In today’s marketplace, ERP most often refers to the technology business leaders use to manage operations. Modern ERP solutions are specifically designed to manage multiple business operations within a single, integrated solution and to centralize data within a single database. Data collected from across the enterprise is captured and stored with greater efficiency and within easy reach. Entered once, that data can be used for multiple means. For example, the information on a proposal or quote can be used to generate an invoice. Invoice data, such as the number and type of items sold, can be used to update inventory levels. By connecting and sharing data, users save time from re-keying data repeatedly, improving productivity and protecting data integrity.
ERP System Options
Modern ERP systems are typically designed to be an all-in- one management solution businesses use to manage multiple aspects of operations. An ERP system can and should replace disparate software systems with integrated applications and built-in features such as business intelligence, dashboards, reporting and advanced analytics.
While ERP systems are designed for integration, most will allow you to choose specialized options whether it be for specific business areas like accounting or purchasing, or extended functionality for roles or industries. It’s important to explore all of your options not just for the technology, but for the services your implementation partner can provide such as training, maintenance and ongoing support.
If you have questions on ERP, don’t hesitate to contact us.
By The Wolcott Group, providers of RealSTEEL, a ‘real world’ ERP solution for the steel and metals industry