What is ERP? What Are Its Features and Benefits?
What is ERP?
Enterprise Resource Planning or ERP is a software system that standardizes different processes of the enterprise and integrates finance, supply chain, human resources, sales and marketing, inventory system, distribution, etc. Usually, an ERP system operates on an integrated software platform using different common data that are adopted on a single database.
A normal business enterprise has many departments and business units at multiple and global locations. These departments communicate with each other and exchange data. The success of an enterprise depends on effective and timely communication and exchange of data internally among the departments and business units and externally with the customer, vendors, and other stakeholders. This system is known as a decentralized system and exists in an enterprise that does not have ERP. Such a system leads to data duplication, delay or wrong communication, and loss of business to the enterprise.
In an ERP system, the data is maintained at a centralized location and can be accessed by all the concerned departments. Each department has access to the data of other departments and business units. The ERP empowers the managers with information to make timely decisions and get more business to the enterprise.
The major reason for adopting an ERP system is to integrate financial information, customer order information, standardize and speed up operations processes, standardization of human resources, and inventory reduction.
Features of ERP
ERP is a system for managing all the resources of the enterprise spread globally and their use in the entire enterprise in a well-coordinated manner. ERP integrates the functions of planning, financing, supply chain, manufacturing, sales, and marketing of an enterprise into one management system.
ERP unites all the databases across the departments of the enterprise and integrates them into a single database, and this data is accessible to all the enterprise employees. ERP converts the centralized data into reports and visions that can be used by the enterprise to reallocate its resources and to make good use of new market opportunities.
The ERP system automates order processing, invoicing, HR systems, payroll, inventory management, etc., and helps track materials from vendors.
Benefits of ERP
The benefits of an ERP system include but not limited to:
- Eliminates duplication and redundancy of data.
- Provides timely data across all departments and business units.
- Empowers management with control over business processes.
- Better productivity, better inventory control, better quality, reduced material cost, and increase in profits.
- Better interaction with customers and vendors, improved customer satisfaction, and performance improvement.