ERP (Enterprise Resource Planning) Defined – What is ERP?
en·ter·prise [en-ter-prahyz] – re·source [ree-sawrs] – plan·ning [plan-ing]
Enterprise resource planning (ERP) is business management software that allows an organization to use a system of integrated applications to manage the business. ERP software integrates all facets of an operation, including product planning, development, manufacturing processes, financials, sales and marketing.
ERP is a cross-functional enterprise system driven by an integrated suite of software modules that supports the basic internal business processes of a company. ERP gives a company an integrated real-time view of its core business processes such as production, order processing, and inventory management, tied together by ERP applications software and a common database maintained by a database management system. ERP systems track business resources (such as cash, raw materials, and production capacity) and the status of commitments made by the business (such as customer orders, purchase orders, and employee payroll), no matter which department (manufacturing, purchasing, sales, accounting, and so on) has entered the data into the system. ERP facilitates information flow between all business functions inside the organization, and manages connections to outside stakeholders.
In simple terms it connects interested parties to relevant information, and creates new information by logically combining data to create new resources. Studies have shown that organizations in the growth stage of their lifecycle typically need to formalize their information technology systems. ERP gives a company an integrated real-time view of its core business processes such as production, order processing, and inventory management, tied together by ERP applications software and a common database maintained by a database management system.
Supply and Demand
Supply and demand can both be facilitated with ERP. So in the same way that sales will be improved by an ERP system, so can EDI (electronic data interchange) facilitate purchase orders and other wholesale transactions. An ERP workflow system will create the authority for approving or declining purchases on direct purchase requisitions therefore removing the need for intervention.
ERP Evaluation Criteria
The evaluation criteria for an ideal ERP system are
- Functional fit
Leading organizations perceive ERP as a vital tool for competing, as it integrates dispersed organizational systems and enables flawless transactions and production.
ERP packages are tailored for organizations based on number of employees or users, as well as industry. Midmarket solutions tend to have more sophisticated capabilities than small-business packages, and enterprise-grade packages are the most complex. It’s important to choose a solution that will support the various functions of your organization, such as accounting, inventory management and product configuration. Some packages are tightly focused on types of manufacturers, for instance, and will offer modules to support functions you don’t need if you don’t have a factory to manage.
ERP is generally available as an On-Premise installation or in SaaS (cloud) model. Infor offers On-Premise, SaaS (cloud) or a combination of both to suite any organization’s needs.
Origin of “ERP”
In 1990 Gartner Group first employed the acronym ERP as an extension of material requirements planning (MRP), later manufacturing resource planning and computer-integrated manufacturing. Without supplanting these terms, ERP came to represent a larger whole, reflecting the evolution of application integration beyond manufacturing. Not all ERP packages were developed from a manufacturing core. Vendors variously began with accounting, maintenance, and human resources. By the mid–1990s ERP systems addressed all core functions of an enterprise. Beyond corporations, governments and non–profit organizations also began to use ERP systems.
Potential ERP Software Benefits
From repetitive to engineer-to-order, Manufacturing ERP Systems can enable you to accelerate production and meet customer demand more quickly.