ERP or Enterprise Resource Planning system is basically a computer application that brings all the departments of an enterprise on a centralized communication system. In an organization different departments have to function together in order to meet the needs of the customers or consumers. Whatever the business is it is essential for all the departments to work together harmoniously. This can be done only when the needs of each department are met entirely and there is proper flow of information among the different departments of the enterprise. if the internal functioning of the organization is managed properly the relationship with the customers and stake holders also improves.
With the help of ERP all the needs of the different departments can be met through a centralized system. This increases the speed with which a business enterprise operates as there is a continuous flow of accurate information among all the departments. Speed is everything in an organization. The greater the speed the faster the needs of the people will be met. With the help of ERP all the internal and external resources can be manage effectively and efficiently. Centralization is when the entire working of the enterprise is in the hand of a centralized power. This is one aspect of ERP because the internal as well as external resources can be managed from a centralized computer system.
The main aim of an entrepreneur is to earn profits and increase the profitability as much as possible. This can be done with lesser efforts with the help of ERP. You can also implement ERP in E-commerce. Here the needs of the customers and the suppliers can be met separately and easily. So the buyer can place his order and the supplier can make sure that the order is met within the prescribed time span.
With ERP when a customer places an order the order gets forwarded to the first department of the enterprise so that it can get started immediately, once the work is done the information gets forwarded to the other departments through the centralized system so that they get an idea about where to start, this ways the information is transferred faster and accurately and all that the departmental heads have to do is refer to the system. This way the order can be met at a breakneck speed and this in turn improves the relationship between the supplier and the consumer.
As ERP is a computer application it is commonly known as back-office software.
The Uses of ERP
Enterprise resource planning or ERP is a process which integrates all the functions of its various departments into one computer based system. This system service each department’s needs and ensures that all the departments in a company function efficiently. Since each company has their own way of function and coordinating between departments, setting up the ERP system takes a lot of time and effort. This system manages the internal as well as external resources of a company such as assets, financial resources and raw materials. It facilitates the flow of data from one business function to another within the organization, and also manages the connections with outside shareholders.
The ERP system seems pretty easy to understand, put to set it up in the real world is quite a task as many companies have different systems and procedures designed especially for each department’s needs. What ERP does is integrates all these different functions and activities of a company into a single system which runs smoothly. It greatly helps a company to increase its efficiency as well as profit since it provides all the information needed for the decision making process in one place. With this each department has access to all the information required and hence no longer needs to wait for another department’s opinion since it’s already on the system.
A good example of ERP definition can be seen in customer ordering and delivery. This is where the ordering and delivery process is smoothly run to ensure the satisfaction of the customer. First, the order is placed, then the sales deal is done, after which the stock is checked in the warehouse, and finally the order is shipped and delivered to the customer’s doorstep. This is the basic process of the customer ordering and delivery. With the help of ERP, the information required to complete the process is readily available, thus making the process a lot faster.