ERP Systems or Enterprise Resources Planning are software’s that ties together and automates all enterprise business process. From orders and requisitions, monitoring inventory levels and managing financial aspects and human resources.

It also records every business transaction in a data format that can be accessed for the whole company, updating it into the system reflecting each transaction.

Basically, the core ERP components are customer management, product data, manufacturing, finance, procurement, asset management, logistics and human resources.

So, in this article we’ll discuss deeper how ERP is important for your operation and its main functions.

ERP Core Components

So, lets discuss each of the main functionalities of the ERP system so we’ll have a better understanding of how it operates and what it can do for your company.

Customer management:

That’s the face to the customer, what will deal directly with people reaching your company. It enables order entry, promising and opening of order status.

Also allows marketing to develop and set price schemes, make promotions, give discounts. So, it’s an important part of the pricing strategy and marketing campaign.

It provides a real-time profitability analysis, while making it easier to establish customer delivery schedules, returns, tax management and currency conversion.

Manufacturing:

In ERP, manufacturing is the face of the production and its most vital aspect. That’s the original role of most of ERP systems and includes MRP processing, manufacturing order release, WIP management, cost reporting, shop floor control.

One of the highlights of ERP in manufacturing is that it provides a real time link of demand to supply. Which leads to a real time Available-to-promise and Capable-to-Promise.

Procurement:

That item is the face to suppliers of the ERP system. It integrates procurement team with supplier management, facilitates purchase orders, delivery scheduling, opening order tracking, receiving, inspection, evaluating performance.

It automatically creates the requests for quotation (RFQ) and manages the negotiation and pricing capabilities of the operation. Reducing costs and finding adequate suppliers.

Logistics:

That’s the link between the internal and external supply chain. It runs the whole internal logistics of an enterprise and provide connectivity to remote trading partners.

It also handles distribution channel configuration, warehouse activity management, channel replenishment, planning, distribution order management and serves as a primary interface between warehouse and transportation.

Product Data:

Here the ERP provides an interface with the material. It describes the products the enterprise makes and distribute. Contains data about costs, sources, engineering details, dimensions, weight etc.

As the product pass through, a lot of stages, the ERP connects inventory with manufacturing, managing the product lifecycle.

Finance:

That functionality is most used by the CFO. That’s one of the most important aspects of the ERP, provides real-time reporting of all transactions resulting from inventory movement, all the accounts received, payable and taxes.

On the informative side, it gives details and reports about budget conditions and capacities and insights on lost reductions and managing a better financial aspect.

Asset Management:

Here the ERP controls key assets of the company, establishing and maintaining equipment profiles, diagnostics and preventive maintenance activities and depreciation tracks

ERP in Human Resources:

Firstly, the ERP contacts employees, managing all aspects of human capital within the company. It monitors performance of transaction activities to include time, payroll, compensation, expenses, recruitment.

Then, it supports information and data about employee profile, skill development, career planning, performance evaluations and retentions.

ERP in sum

As you can see, ERP basically manages the whole operation. So, adapting one to what you need and strategically installing a software on your supply chain will help you with all sides of the project.            

ERP can be the difference between a well-established operation and what is not working. But it also needs to be implemented right and be constantly evaluated and improved.

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