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Benefits Of ERP System In An Organization
Enterprise Resource Planning:
Enterprise resource planning (ERP) is business management software—usually a suite of integrated applications—that a company can use to collect, store, manage and interpret data from many business activities, including:
Product planning, cost Manufacturing or service delivery Marketing and sales Inventory management Shipping and payment.
ERP provides an integrated view of core business processes, often in real-time, using common databases maintained by a database management system. ERP systems track business resources— cash, raw materials, production capacity—and the status of business commitments: orders, purchase orders, and payroll. The applications that make up the system share data across the various departments that provide the data. ERP facilitates information flow between all business functions, and manages connections to outside stakeholders.
Enterprise system software is a multi-billion dollar industry that produces components that support a variety of business functions. IT investments have become the largest category of capital expenditure in United States-based businesses over the past decade. Though early ERP systems focused on large enterprises, smaller enterprises increasingly use ERP systems.
The ERP system is considered a vital organizational tool because it integrates varied organizational systems and facilitates error-free transactions and production. However, ERP system development is different from traditional systems development.
ERP systems run on a variety of computer hardware and network configurations, typically using a database as an information repository.
Functional areas of ERP:
An ERP system covers the following common functional areas. In many ERP systems these are called and grouped together as ERP modules:
Financial accounting: General ledger, fixed asset, payables including vouchering, matching and payment, receivables cash application and collections, cash management, financial consolidation.
Management accounting: Budgeting, costing, cost management, activity based costing
Human resources: Recruiting, training, rostering, payroll, benefits, 401K, diversity management, retirement, separation
Manufacturing: Engineering, bill of materials, work orders, scheduling, capacity, workflow management, quality control, manufacturing process, manufacturing projects, manufacturing flow, product life cycle management
Order Processing: Order to cash, order entry, credit checking, pricing, available to promise, inventory, shipping, sales analysis and reporting, sales commissioning.
Supply chain management: Supply chain planning, supplier scheduling, product configuration, order to cash, purchasing, inventory, claim processing, warehousing (receiving, putaway, picking and packing).
Project management: Project planning, resource planning, project costing, work breakdown structure, billing, time and expense, performance units, activity management
Customer relationship management: Sales and marketing, commissions, service, customer contact, call center support - CRM systems are not always considered part of ERP systems but rather Business Support systems (BSS).
Data services: Various "self–service" interfaces for customers, suppliers and/or employees.
Benefits of ERP:
ERP can improve quality and efficiency of the business. By keeping a company's internal business processes running smoothly, ERP can lead to better outputs that may benefit the company, such as in customer service and manufacturing.
ERP supports upper level management by providing information for decision making.
ERP creates a more agile company that adapts better to change. ERP makes a company more flexible and less rigidly structured so organization components operate more cohesively, enhancing the business— internally and externally.
ERP can improve data security. A common control system, such as the kind offered by ERP systems, allows organizations the ability to more easily ensure key company data is not compromised.
ERP provides increased opportunities for collaboration. Data takes many forms in the modern enterprise. Documents, files, forms, audio and video, emails. Often, each data medium has its own mechanism for allowing collaboration.
ERP provides a collaborative platform that lets employees spend more time collaborating on content rather than mastering the learning curve of communicating in various formats across distributed systems.
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Most ERP software are equipped to ease regulatory compliance when it comes to a variety of business processes, such as financial accounting, data security and product traceability. ERP solution can streamline and automate daily processes, giving your employees more time to do things that actually generate revenue.