One major factor that determines the success of an organization is the management. Basically, the planning of resources will determine how they would be utilized. There are many strategies used for the recourse planning in an organization and among them is the Enterprise Resource Planning. Here is a guide that will generally define ERP, and give you insights on what it is all about.
What Is Enterprise Resource Planning?
A number of websites have tried to define ERP, which has lead to a little bit of confusion to the people who need to know what ERP is. But all in all, they all point out how vital the ERP is to the success of a business. But what really is ERP and how beneficial is it?
In order to successfully understand the Enterprise Resource Planning, you will need to think about all the necessary aspects of a business success. Aspects like order and inventory management, human resources, accounting, or the Customer Relationship Management should come to mind. Basically, it is a software that integrates different functions into a single system, in order to rationalize the processes and information in the whole organization.
The ERP system features a shared database that backs different functions that are used by varied units in the business organization. That implies that different employees from different departments can depend on similar information for the sake of fulfilling their objectives. The ERP software delivers some level of integrated automation and reporting. Rather than agitating employees to sustain different spreadsheets and databases, the ERP systems let the staff members to acquire report from one system. This can be applied when the sales order is flowing automatically in the financial system, without having to re-key anything manually. For that, the department of order management is able to process the orders faster and precisely. Also, the financial department will make their reports faster.
An ERP system will also have a dashboard or portal that allows the employees to comprehend the performance of the business faster, based on the crucial metrics.
History of ERP
ERP was redefined in 1990 by Gartner, however, it was created in the 60s. Here, the main idea of ERP was to focus on the inventory management control, mostly in the manufacturing department. The software engineers came up with programs that monitored the inventory and reported on the status. The programs also was used to reconcile the balances. In the 1970s, the system was developed into a Material Requirements Planning system, MRP. The system was used to schedule the processes of production. In 1990, the systems had already enhanced passed the inventory control and operational stages. The system now focused on the back-office processes like human resource, accounting, which helped to introduce the ERP.
Currently, ERP has developed to include the business intelligence, as well as taking care of the front office roles like the Sales Force Automation, eCommerce and marketing automation. Though the E signifies Enterprise in ERP, even mid-size and bigger companies are relying on the system. ERP has also been factored by solutions like the cloud computing, or the Software as a Service, SaaS.
Processes Of ERP
ERP is a system that involves a number of stages in order to come up with a successful solution. Here are the vital stages of ERP that can help a business be successful;
1. Strategic Planning
This is like the most vital stage in any business planning scheme. Here, you will begin by assigning a project team, then examine the current process of the business along with the flow of the information. The objectives of the plan will also be set at this stage, then the official development of the project plan takes place.
2. Reviewing Of The Procedure
At this stage, you will need to review the capabilities of the software, then identify the possible manual processes. When that is confirmed, you will then develop the typical procedures of operation.
3. Data Collection And Cleanup
Here, you will be needed to convert the data, as well as collect new data. You will then review every data input that is available. The final step is to clean up the data.
4. Training And Testing
At this level, you will need to test in advance the database, then verify your testing. The trainer will need to be coached at this stage and the final testing will be performed.
5. Going Live And Evluating
You will then develop a final a concluding Go-Live checklist, which will prove that you are ready to launch the project. When you have confirmed the checklist, you will then evaluate the solution and if it is perfect, you will implement it.
The Importance of Enterprise Resource Planning
The ERP plays a huge role in helping the business to succeed in their functions, in relation to the resources. Some of the benefits of ERP to an organization include the following;
• Synchronization Of Business Processes
The ERP system will integrate all the processes in a business, making it easier to manage the departments and the resources. It helps in synchronizing the stages from the planning and scheduling, through the production and delivering stage.
• Enhances Productivity Through Automation
The ERP system will automate the factors of business processes, which makes them faster, more resourceful and less error-prone. The system will also reduce the ordinary tasks in the organization, like balancing the data.
• Enhances The Performance
The ERP systems also integrate the dissimilar business processes, which in turn helps to avoid duplication or cut off in the organization.
• Helps To Deliver Quality Report And Performance Appraisal
The analysis carried out by the ERP system will help to quality financial and boardroom reports. You will also be able to carry out an evaluation of the performance of the entire organization.
In a nutshell, the Enterpire Resource Planning helps majorly in ensuring the business organization functions in the right manner. It helps to limit the petty errors in data and other functions throughout the project. Through the integration of the departments and resources, the ERP will help to cut on the costs, and it will also save on time. It is generally a tool that is vital for a business success.