ERP 101: What is ERP and How Does it Work?

Does your business need Enterprise Resource Planning (ERP) software? Maybe you do. Maybe you don’t. To choose an ERP system or identify whether this system is required in your company, or what advantages it will offer, it is first essential to know what it is.

What is ERP?

ERP is software that helps you run your business. This can mean a lot of different things, but ERP is very flexible, so it can adapt to a huge variety of business use cases. Originally, ERP was for big industrial entities. It dealt with supply chains and operations and ran on mainframe computers. Today, ERP comprises a class of systems for managing human resources, finances production and assets. It can run on a wide range of platforms, including public cloud hosting services.

Companies of many different sizes can take advantage of ERP solutions to optimize corporate resources. ERP is meant to automate and speed up business processes. This can have the effect of reducing the human factor, which sometimes slows things down or adds to errors and confusion. Ideally, though, ERP liberates people from tedious work and lets them focus on tasks that require human minds.

An ERP solution typically makes it possible to combine all of your company’s procedures within one scheme. This drives efficiency and can (should) lead to prompt data reporting on operations to senior management. With ERP data, top management can knowledgably engage in long term strategic planning.

ERP for supply chain management

Supply chain management is a challenge, no matter how big you are. And, it’s getting more complex and intense with every passing year. Raw materials, parts, or just about any production input invariably come from separate companies. Keeping track of the ordering, payment and delivery for these inputs requires powerful software. It’s like an enormous cluster of gears that have to be seated entirely to work. This is a big part of the ERP solution’s function.

Supply chain optimization in ERP occurs when the system logs production data in order to control processes and correct faults. The result is predictability of demand and subsequent reduction of waste-leading to enhanced profitability. For example, with well-tuned supply chain management in ERP, you can implement “just in time” operations, where you keep cash outlays for production inputs, as well as inventories, to a bare minimum. Getting to this point involves having automated business processes and good data reporting in ERP.

ERP for operations management

Operations management is another area where ERP can make a big impact on the profitability of your business. A small business may not have any issues keeping on top of operations. As companies grow, however, their operations tend to get more dispersed and complex. ERP brings visibility and traceability to operations. It enables automated processes for inputting and tracking orders through completion. It can coordinate the operational activities of multiple departments involved in doing the work.

Operational management ERP functions work hand-in-glove with supply chain management aspects of the ERP solution as well as with other modules like finance, HR and customer relationship management (CRM). Throughout operational business processes, the ERP system gives you visibility and insight into what’s going on. You can use ERP-generated data to analyze the state of the operations and make adjustments accordingly. This can (and should) result in improved profitability through the reduction operating costs in cost and time savings.

Moving forward with ERP

Modern ERP solutions, like Acumatica Cloud ERP, pull together vital areas of business operations and finance to enable profitable business management. They generate useful data about the financial condition of a business as well, giving executives valuable tools to make decisions about operations and long-term strategy. ERP today is available in a range of scopes. There are solutions for relatively small companies as well as for mid-sized and large enterprises. Most solutions are modular in nature, with the ability to start with a simple implementation ad grow incrementally, adding functions as the need arises.

Cortekx can help you increase your bottom line with Acumatica Cloud ERP. Contact us today to learn more.

Originally published at https://www.cortekx.com on August 8, 2019.

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