What are ERP Systems?
The modern world is changing rapidly and the tools which worked earlier may not be sufficient at the present time. It is a very important question especially for companies that want to be a step forward the competitor. If you are looking for ways to improve the operating of own business and increase its income, then learn what are ERP systems. Implementation of an ERP system is a prerequisite for the life and development of any business. But in order to choose the right system and understand what benefits your company will provide, you need to understand how do ERP systems work and what are the main features of Enterprise Resource Planning Development.
What are ERP Systems?
With the structuring of industrial companies, modern automated management support systems, ERP systems are becoming more and more popular. What does ERP systems mean? ERP-systems - a set of integrated applications that comprehensively, in a single information space support all the main aspects of enterprise management - resource planning (financial, human, material) for the production of goods (services), operational management of the implementation of plans (including supply, marketing, maintenance agreements), all types of accounting, analysis of business results.
What is the primary goal of an ERP system?
Now you know ERP systems definition. Let’s find out what is the main goal of ERP systems. They are based on the principle of creating a single data warehouse containing all corporate business information and providing simultaneous access to it of any necessary number of enterprise employees with the appropriate authority. Data is changed through the functions of the system. The main functions of any type of ERP system:
- Maintaining design and technical specifications that determine the composition of manufactured products, as well as material resources and operations necessary for their manufacture;
- Formation of sales and production plans;
- Planning requirements for materials and components, timing and volumes of supplies to fulfill the production plan;
- Inventory and procurement management: contract management, centralized procurement, accounting and optimization of warehouse and workshop stocks;
- Capacity planning from integrated planning to the use of individual machines and equipment;
- Day-to-day financial management, including the preparation of a financial plan and the monitoring of its implementation, financial and managerial accounting;
- Project management, including planning stages and resources.
Benefits Of An ERP System
The benefits of ERP are amazing. Look at them if you still aren’t sure your business requires ERP implementations:
- Integration of all aspects of the enterprise’s activities. Disparate applications that previously provided data storage for various areas of the company’s activities are combined in one holistic system that integrates all business processes and allows you to go beyond the traditional functional and local framework in the resource planning process.
- The attraction of the best methodologies. ERP implementation makes it possible to put at the service of the enterprise more than a thousand of the most modern methods of organizing business processes, which allows the most optimal way to manage the activities of the company.
- Elimination of information imbalance. A single database of ERP solutions, covering the entire flow of information from various structures of the organization, eliminates the possibility of information inconsistencies within the system, which significantly improves the quality of information and provides additional benefits in decision-making. These advantages include the simplification of the procedure for controlling information and its openness to employees who need it in the process.
- Access to the database in real-time. Whereas traditional systems use a multi-stage data processing scheme, in which the recording of information on paper is followed by the transfer of paper media to a specific structural unit, where the data is redesigned or entered into a computer, in the best ERP systems, placing information in the database is produced directly from the source, bypassing the intermediate stages, after which the data becomes available to all interested parties.
- The possibility of simultaneous access to solve planning and control problems. Due to the simultaneous entry of data into the general database of the enterprise system, information can be used simultaneously by any number of users of the system, which increases the efficiency of both planning and control, as well as ensures the coherence of actions of all parts of the enterprise and management efficiency generally.
- Formation of the organizational integrity of the enterprise. Enterprise resource planning ERP makes it possible to combine geographically remote branches and divisions of the company and involve them in a single information space, which allows for the exchange of organizational developments between structural divisions with non-standard and highly efficient processes, as well as contributes to the formation of a single corporate image and improve the image of the company in the global market.
- Improving the efficiency of interaction and cooperation between departments of the organization. Creating a streamlined procedure for interaction and cooperation between departments of the same organization, including geographically remote ones, leads to the fact that each unit receives all the necessary data in a timely manner and in full. The common processes invariably arising as a result of this interaction can be standardized using an ERP system to minimize the risk of inconsistencies and disagreements.
- The possibility of interaction and cooperation between various organizations. Modern ERP systems allow you to create a kind of information channels that can connect the company with partner companies to provide them access to the enterprise database and exchange the necessary information. As a result of such cooperation, a single information archive is formed, which allows optimizing the supply processes, deliveries and other types of joint activities, as well as bringing the whole process of interaction to a whole new level.
- The ability to attract additional investment. Implementation of the best ERP systems makes the company's business processes more transparent, increasing its attractiveness to investors, and therefore, allows attracting additional investment for the further development of production.
- Product Cost Management. The methods and means of controlling the cost of production provided by the ERP applications are powerful weapons in the competition, as the probability of high profits increases, and at the same time, it becomes possible to vary market prices as a result of reducing the cost of production.
What Does An ERP Do?
What do ERP systems do? The main purpose of the ERP-system is to ensure the growth of competitiveness of the enterprise by increasing the efficiency of business processes and reducing costs. It is about the optimization of all areas of the enterprise to develop the most effective means of managing production costs and gaining advantages over competitors. To achieve this, special methods of planning and management are implemented in systems of the ERP class, thanks to which it becomes possible to improve the production process in the following areas:
- Production of products in the shortest possible time and with the minimum amount of costs by optimizing business processes;
- Increased control over supply and demand by reducing the production cycle;
- Assessment of the capacity of the enterprise available at the time of receipt of the order, to establish the possibility of its implementation;
- Identification and comparison of real and specified performance specifications of existing units of equipment, followed by adjustments to the production process;
- Timely termination of work in progress in the absence of demand for the final product, and consequently, the timing of the execution of the order;
- Exercising control over the number of stocks in order to eliminate the shortage and stocking up of stocks, as well as to prevent the growth of warehouse costs;
- Improving the quality of service by channeling enterprise resources to timely delivery.
What Does ERP Stand For?
There are various interpretations of ERP technology. First of all, ERP is an information system that allows you to store and process most of the data critical for the work of the company. Its main advantage is the functionality that allows you to synchronize data and combine several business processes and tasks.
The heads of many companies, as their business grows, come to understand that they need a system to automate their business. If small businesses still manage to do without this tool, then medium-sized businesses can hardly exist and develop without ERP enterprise resource planning. Look at the ERP system example. Within the framework of one system, you can simultaneously take into account and plan cash, as well as track their movement, form costs and evaluate labor productivity in the enterprise. All processes become transparent thanks to ERP system.
Different Features of ERP Software
All types of ERP systems, regardless of the features of their development, share a common architecture. It consists of the following blocks:
- Platform. Basic features of ERP and environment for the operation of modules and components. Changes to the platform code can only be made by the developer. Users and implementation specialists do not have access to this program code.
- Data management. Database, including storage and processing (interpretation) of data. This category includes data storage on the server, software for working with databases (SQL or any alternative), tools for interpreting and processing data and sending them to program modules.
- Modules Components that connect to the platform as needed. All of them work with a single database and use the basic functionality (as needed). The rest of the modules work independently of each other, can be “seamlessly” connected and disconnected without problems if they are not necessary anymore.
- Internal use modules: warehouse management, production modules, accounting, CRM and other modules that are used by company employees within the organization.
- Modules for working with external users. This layer contains the modules necessary for interaction with external users, potential customers and current customers of the company, partners, product users, suppliers and buyers.
- Connectors - turnkey solutions for communicating with third-party applications. Most often they use APIs from the platform core. Allow you to integrate telephony, configure data exchange with the site or any software products and systems.
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