By Ben Weiner, COO for Conjungo, The Technology Information Resource and Supplier search engine
ERP stands for Enterprise Resource Planning.
Enterprise Resource Planning systems collect data and financial information from various areas within an organisation, then stores that data centrally on a computer. ERP systems are typically made up of different modules depending on the type of organisation and its’ requirements. For example, a firm of lawyers don’t need a stock control system as naturally they don’t carry any stock but will need to know how much time is being spent on every case that they are dealing with.
ERP systems can integrate the processes between a sales department, accounting department, manufacturing, logistics and stock. As a result, sales management will know what has been sold, know that an invoice can be generated for each sale and the items sold can be checked to see whether it is in stock. This therefore unifies the organisation by enabling various departments to see what is critical to their department but not necessarily within their control.
What is the future of ERP?
Most large enterprise companies have an ERP system in place to enable them to monitor and gather vital information on a global basis, such as the volume of sales and invoices generated.
This is a trend that is set to continue but it is gradually filtering down into smaller companies as it allows the same elements and generation of information to allow a company to function more efficiently.
With an ERP system in place, people in different departments can view the same information about customers, making sure that every single interaction with customers is based on accurate information. It also means that manual processes can be automated to free up people’s time and make internal processes more efficient.
For example, if a particular stock item is sold, the stock level is automatically corrected and another item is ordered to ensure that the company never runs out of important stock. It will, for example, save the salesperson having to ask the logistics department if a certain item is in stock when talking to a customer. This can be replicated across all functions within a company so when an order is received, the process is automatically sent across the various departments and eventually the ordered item is dispatched, delivered and invoiced with no human interaction.
Benefits of using an ERP system
The following outlines some reasons why organisations implement an ERP system.
ERP allows management to gain a clear and accurate understanding of the organisation’s financial position and performance at any time. It can reveal a full profit and loss position, how each business unit is performing in terms of how many sales they have made and what are the best and worst selling items. Management reports can be generated quickly and easily. Many directors’ of companies want to know the current financial position and how well the company is doing on a daily basis.
ERP enables people to find important financial information in one place rather than having to speak with a number of different departments who are running their own software packages that may be difficult to integrate.
Reduce stock levels. ERP allows companies to fully understand how many items that are in stock, which ones are the best selling items and what is not selling. As a result, an organisation will not keep too much stock of a product that is not selling. This helps reduce the value of stock it is keeping and prevents perhaps many thousands of pounds worth of stock just sitting on the warehouse shelves!
Personnel and human resources. Processes such as payroll and working out tax and national insurance can be automated.
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