Enterprise Resource Planning transversely consolidates entire organization's interior and exterior management information, enveloping finance/accounting, manufacturing, Customer Relationship Management, sales and services, Supply Chain Management, Human Resource Management, etc. With the objective to simplify the flow of information between the functions of inner and outer boundaries of the organization and manage the outer stakeholder's connections, ERP systems automate this activity with a consolidated software application.
ERP systems with the ability to run variety of hardware and network configurations bestow a database as a repository for information.
ERP includes following characteristics:
- An integrated information system.
- Consistent design engineering for each module
- Order tracking
- Embezzlement and industrial espionage protection
- Common database supporting merging all applications
Following are ERP modules:
The Financial and Control module manages all the financial information of an organization. Its basic features are General Ledger (GL), Accounts Receivable (AR), Accounts Payable (AP), Asset Management/Accounting (AM/AA), and also all financial reports.
The Human Resources module helps the HR professionals in the organization to manage the complete information and processes of the employees with high efficiency and low cost. Their major tasks include Organizational Management, Personnel Administration, Time Personnel and Payroll management, Budget management, Training and Event management, etc.
The Manufacturing module manages all manufacturing processes. Its tasks include engineering, Bill of Materials, work orders, scheduling, activity based costing, workflow management, cost management, product life cycle management, manufacturing projects, manufacturing flow, quality control, capacity, manufacturing process, etc.
Supply chain management
Supply Chain Management comprises all storage and movement of raw materials, finished goods, and work in progress inventory from the point of origin to the point of consumption. Supply chain management manages the following tasks like order to cash, inventory, order entry, purchasing, product configuration, supply chain planning, supplier scheduling, inspection of goods, claim processing, and commissions processing.
Project Management is the series of steps of planning, organizing, securing and managing resources in order to achieve pre-defined goals. A project which is temporarily endeavored with a defined beginning and end (usually time-constrained and often funding or deliverables constrained) is undertaken to achieve predefined unique goals and objectives, in order to get beneficial change and added value. Project management aligns costing, billing, time and expense management, performance units and activity management.
Customer relationship management
Customer Relationship management comprehensively executed strategy for managing a company's interactions with sales prospects, customers and clients. With technology it organizes, automates and synchronizes business processes with a core principle of sales activities, but also those for marketing, customer service and technical support. With specific objectives to find, attract and win new clients, nurture and retain those the organization already has, it entices former clients back into the fold, and reduces the costs of marketing and client service. Customer relationship management has the following advantages: Quality and efficiency decrease in overall costs, decision support, enterprise agility and also customer attention.
Enterprise resource planning comprises an important feature of access control. All data in the ERP are in one single database. Access to the data has to be secured not only at the application level, but also at the operating system, network and database levels through specific controls. Access control evaluation in an ERP is a tough exercise and requires good skills with the particular ERP. Many ERP's use the concept of roles, assigning standard authorization to the roles and attaching the roles to the users as per the job descriptions and duties required to be performed. Access control enables protection of data, manipulation and hacking of data.
The fundamental advantage of ERP is that integrating the myriad processes by which businesses operate saves time and expense. Decisions can be made more quickly and with fewer errors. Data becomes visible across the organization. Tasks that benefit from this integration include
- Sales forecasting, which allows inventory optimization
- Order tracking, from acceptance through fulfillment
- Revenue tracking, from invoice through cash receipt
- Matching purchase orders (what was ordered), inventory receipts (what arrived), and costing (what the vendor invoiced)
ERP systems centralize business data, bringing the following benefits:
- They eliminate the need to synchronize changes between multiple systems - consolidation of finance, marketing and sales, human resource, and manufacturing applications
- They enable standard product naming/coding.
- They provide a comprehensive enterprise view (no "islands of information"). They make real - time information available to management anywhere, anytime to make proper decisions.
- They protect sensitive data by consolidating multiple security systems into a single structure
- Customization is problematic.
- Re - engineering business processes to fit the ERP system may damage competitiveness and/or divert focus from other critical activities
- ERP can cost more than less integrated and/or less comprehensive solutions.
- High switching costs increase vendor negotiating power vis a vis support, maintenance and upgrade expenses.
- Overcoming resistance to sharing sensitive information between departments can divert management attention.
- Integration of truly independent businesses can create unnecessary dependencies.
- Extensive training requirements take resources from daily operations