What is ERP?

What is Enterprise Resource Planning (ERP)?

ERP stands for “Enterprise Resource Planning” and refers to a type of software or system used by a business to plan and manage daily activities such as supply chain, manufacturing, services, financials, and other processes. ERP systems are critical for managing thousands of businesses of all sizes and in all industries.

History of ERP

The history of ERP goes back more than 100 years. In 1913, engineer Ford Whitman Harris developed what became known as the economic order quantity (EOQ) model, a paper-based manufacturing system for production scheduling.

MRP remained the manufacturing standard until manufacturing resource planning (called MRP II) was developed in 1983. As computer technology evolved through the 1970s and 1980s, concepts similar to MRP II were developed to handle business activities beyond manufacturing, incorporating finance, customer relationship management, and human resources data.

Benefits of ERP within your business

• Focused IT Costs – Instead of spending resources on multiple systems you can focus all the costs in to one ERP system.
• Total Visibility – You can monitor every important process in your business by taking data from each department.
• Improved Efficiency – ERP can reduce the time and effort required by team members to carry out their daily activities. 
• Customer Service – Sales team members will be able to focus on maintaining client relationships instead of maintaining spreadsheets.
• Data Security – The database system the ERP software runs off also enables centralised backups of your critical and sensitive data. Cloud-based ERP systems, despite what many people think, can offer an extra layer of security. 
• Improved Workflows – An ERP platform streamlines the process of collaborating with others by providing employees with access to the data they need when they need it. They do this by providing an interdepartmental database, where information from each department is funnelled into one central location.
• Improved Supply Chain Management – Through a well-designed ERP platform, your supply chain can become better and more responsive via improved demand forecasting, inventory management, procurement and more.
• Improved Reporting and Planning – Financial reports such as income and cash flow statements generally are built-in, and custom reports can be quickly generated without IT intervention

Essentials of ERP

ERP systems are designed around a single, defined data structure that typically has a database. This helps ensures that the information used across the enterprise is standardised and based on common definitions and user experiences. These are then connected with the different departments who use them from finance to operations and sales to customer service. ERP is the vehicle for integrating people, processes, and technologies across a modern database.

Overview

With access to ERP, companies can quickly improve their business best practices as the ERP software evolves. They can automate methods that used to lots of processes, such as reconciling financial accounts and creating orders and invoices.

For most the advantages of ERP systems often outweigh the disadvantages. The potential for totally streamlined business functions and boosts in productivity over the long-term makes the benefits of implementing ERP systems a worthwhile investment of time and resources.