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Enterprise Resource Planning ERP

Updated on May 19, 2013

ERP

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What is ERP?

ERP:

ERP stands for Enterprise Resource Planning..

ERP means the tools, techniques and concepts for the integrated management of businesses as a whole from the viewpoint of the effective and efficient use of management resources to improve the efficiency of enterprise management.

ERP packages are integrated (i.e they cover all the business functions ) software's combined together to help automate all the process in the organization.

Traditional System:

Traditionally, organizations were divided into different units based on the functions performed by them. For example the production department, finance department, distribution department, etc.

These departments had their own goals and objectives, which from their point of view were in line with the organizations goals...

Each department functioned in isolation from each other and had their own system of data collection and analysis (this is known as an information island) and hence no-one knew what the other was doing and this led to chaos in the organization,,,

Enterprise System:

An enterprise can be defined as a group of people who have a common goal and has certain resources available at it's disposal to achieve these goals.

Now, in the enterprise system, the entire organization is considered as a system and all the departments as it's sub-systems.

Information about all the aspects of the organization is stored centrally and is made available to all the departments...this transparency and access to information by every department ensures that the departments will not work in isolation from each other anymore and pursue their own independent goals...

They all know what the others are doing, why they are doing it and what needs to be done in order to achieve their common goal..


Integration And Information :

As everyone knows in today's competitive business environment , the resource to any organization is information...

In order to for the decision makers to make the right decisions, an effective and efficient mechanism (ERP) to get the right information at the right time needs to be implemented..

Information:

The three fundamental characteristics of information are accuracy, relevancy and timeliness..

Information needs to be accurate i.e correct, relevant i.e of use and up to date and available to the management whenever required...

With the help of ERP all the three characteristics can be fulfilled.

Integration:

As mentioned earlier since traditional systems work in isolation, getting information about some aspect that is dependent on more than one department is a difficult task.

Even if the information (say reports) are acquired, valuable time is lost that could've been spent in decision- making as passing on the information from one functional department to another has to be done manually..

This is where ERP comes to the rescue by automating and joining all the various functions together under one system of information collection and analysis.

ERP

An ERP (Enterprise Resource Planning) system helps make the task of information sharing easier by integrating the information systems, enabling smooth and seamless flow of information across all the departments, automating business processes and functions, thus helping the organization to work as a single entity.

ERP software is designed to model and help in the automation of most of the basic processes of the organization from finance to the shop floor with the goal of information integration across the organization getting rid of expensive links between computer systems that were never meant to talk to each other..

Data and information should flow seamlessly to all the departments in the company, automatically once a task is completed, no matter where they may be located globally..

ERP helps in prediction and balancing the demand and supply of an organization...

It's an enterprise wide set of forecasting, planning and scheduling tools, linking customers and suppliers into supply chain management, employs processes for decision making, coordinating sales, marketing, logistics, finance, purchasing and even human resource..

ERP is basically a package of softwares (ERP Packages) put together to help automate most of the processes in an organization like finance, accounting, inventory management, etc...

ERP Implementation

ERP implementation consists of a lot of people, each playing different roles..there are the company employes, the package vendors, the hardware vendors, communication experts, implementation consultants, management, decision makers etc etc...

A successful ERP implementation depends on dedication of the software vendors, the consultants, the dedication of the company's personnel and employees.


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    • paiva25 profile image
      Author

      Paiva 4 years ago from Goa, india

      Thanks Taleb,

      Yes the implementation can be quite challenging, though if done properly the rewards are tenth fold.

    • Taleb80 profile image

      Taleb AlDris 4 years ago

      I enjoyed reading your brief useful hub about ERP.

      My company implemented Oracle ERP. I was a key member in supporting & implementing AR module, although all the challenges we faced, this project was an achievement which has finished successfully.

      I voted Up & Useful.