An ERP (Enterprise Resource Planning) application is a software infrastructure that provides management support and coordination of different structures, processes and flows of the company to achieve business objectives.
What is an ERP system?
An ERP system is a combination of practice management, business information technology, business processes of a company which are integrated into the system in order to achieve specific business objectives.
In time, techniques and management practices have evolved into a set of generally accepted rules (best practices) of each specific business vertical. Although results come after a long process of sedimentation, these “best practices” are also subject to the continuous need for structural changes and re-synchronizing with the business environment. The role of ERP is to facilitate the incorporation and updating processes in the business of the company.
Information technology represents the hardware infrastructure, software, networking and communications necessary to implement an ERP system.
It is recommended to implement an ERP system on an optimal IT infrastructure so that business processes operate at an efficiency that allows the attainment of business defaults.
The advantages provided by an ERP system
Streamline business processes can come from a number of advantages resulting from the implementation of an ERP system, among which we mention:
Reduce operational costs
An ERP is composed of a series of modules that are intended for various departments such as manufacturing, financial accounting, purchasing, sales, etc. Although their nature is extremely varied, the information is operated only once and it is accessible to any mode necessary. This saves time, resources, it decreases the probability of committing errors of operation, it facilitates access to information, etc. One of the particularities of a common ERP is storing all information in a single database.
A client launches (through telephone fax / email) an order. This command is then operated by various departments (sales, warehouse, purchasing, billing, accounting) as various activities are provided to meet demand. Identification at some point of the command status is a process that involves contacting each department. Identifying the causes that generate loss in selling is also extremely difficult. By implementing an ERP, the process can be automated: from taking orders through a portal (Business to business or business to consumer) or through other channels, to delivery and billing information, at any time there is the possibility of checking the current status and identify any non-compliance with the original request.
Easier management of current operations
Daily decisions are taken based on the information currently available. Using the standard reports provided by the ERP implementation or pin type tools Business Intelligence (BI) complementary to the ERP system, information is current, and it has accuracy, consistency and intuitive presence. It thus creates the premises for taking decisions.
In many cases there were reported major reductions in the fixed stocks, in conditions of increased customer satisfaction. This is due to new management tools and operational decision-making processes that allow control of supply, delivery, picking, production, targeting, etc.. Also, we keep under control stocks that have short expiry periods, slow rotation, etc..
Increase the level of orders protection By automating the retrieval of chain order, acquisitions, inventory management, warehouse management, logistics, we eliminate the vast majority of potential failures that lead to keeping applications, or delivery of unsolicited goods.
Improving your cashflow by implementing a coherent and easy trade policy with which you can obtain specific indicators, the company controls more strictly monetary flows and periods of recovery of money, imposing a discipline on all financial factors involved.
Integration of financial information Being a single system, there is one vision of the results. You eliminate such problems as “multiple truths”, in which each department has its own set of results, analysis and conclusions are often contradictory.
The current ERP systems integrates all functions performed by the management of a company, starting from planning, to ensure the stock of raw materials and materials, defining technologies, coordination of production processes and, last but not least, to the management of financial accounting, human resources, stocks of finished products and ending with developing and maintaining relationships with customers and business partners. Such a system allows ERP users achieve comprehensive analysis of the realization of a business plan. By simulation activities and the flexible and dynamic applications you can have options such as planning ,forecasting and evaluation of trends evolution of the industry, qualitative analysis, integration with new technologies, e-business and online communication.
Why would you need an ERP solution?
In general, according to published studies, there are two types of motivations that lead to the implementation of an ERP:
- Replacement of an un-integrated informational system (more applications, outdated technology or not, that operate independently).
- Replacement of one or more outdated technology systems, integrated or not.
- Improving quality and accessibility of information
- Integration of business processes and systems that support them.
- Acquisition of a system able to support projected business increases.
- Simplifying integration of new business organizations (the acquisition of other companies) in the current technological infrastructure
- Optimizing business processes
- Structural cost reduction
- Improving response time to customer requests
- Simplify complex, but ineffective business processes
- Implementation of new business strategies
- Massive expansion of business
- Standardization of business processes