ERP

Enterprise resource planning (ERP) is an information system designed to coordinate all the resources, information, and activities needed to complete business processes. This information system is meant to be used across the entire enterprise (as such it is named) including steps reaching from filling orders to billing for a finished product. The ERP information system supports a variety of functions in the business. These functions include manufacturing, supply chain management, financials, projects, human resources and customer relationship management from a shared data store.

An ERP system is based on what is called a common database and a modular software design. This design makes the ERP system useful to all departments of the business because each department is able to store and retrieve information in real-time. With ERP the information needed to effectively run the business is reliable, accessible, and easily shared. Modular software design refers to the ability that those benefiting from the design have to make various aspects of the system move around and adjust to fit their own specific needs. The business can select the modules they need and eliminate the modules that they do not need. The modules chosen within the system can be mixed and matched or added to new modules. The goal is to improve business performance so whatever design best facilitates that is the one that should ultimately be created.

The evolution to an ERP system has been a long time coming. Obviously the use of software and the custom creation of this software to be used to facilitate better operations is not something that was available to manufacturers 30 years ago. What was once the standard for the coordination of various efforts within the manufacturing plant was called MRP or Material Requirement Planning. MRP has evolved into many progressive systems over the years and is currently in the form of the ERP systems that are being used.

Interestingly enough, not just any system earns the right to be called an ERP system. To be considered an ERP system a software package must, "provide the function of at least two systems. For example, a software package that provides both payroll and accounting functions could technically be considered an ERP software package."

Although ERP systems are intended to be made to the specifications of the user, ERP systems are delivered in a form that contains a database with all of the necessary software modules included. This means that the following module components are included in the ERP system:

• Manufacturing - Engineering, bills of material, scheduling, capacity, workflow management, quality control, cost management, manufacturing process, manufacturing projects and manufacturing flow.
• Supply chain management - Order to cash, inventory, order entry, purchasing, product configurator, supply chain planning, supplier scheduling, inspection of goods, claim processing, and commission calculation.
• Financials - General ledger, cash management, accounts payable, accounts receivable and fixed assets.
• Projects - Costing, billing, time and expense, and activity management.
• Human resources - Human resources, payroll, training, time and attendance, rostering and benefits.
• Customer relationship management - Sales and marketing, commissions, service, and customer contact and call center support.

Implementation of an ERP system is generally complex simply because of the scope of the application and the complexity of the software. Data migration from one system to another is just one example of how tedious the switch to an ERP system can be. Additionally there are significant changes that take place when the ERP system is implemented, changes that can have a significant effect on workers and their day-to-day work practices. To implement ERP most effectively, you will likely need outside help from specialists or ERP consultants.

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