Large ERP vendors are competing with their smaller counterparts by either buying them out or forming strategic alliances with them. A number of consultants within large firms are specializing in various areas. They will analyze the process that needs to be reengineered, and once this is done, they will decide how the ERP software must be used.
It is important to realize that there is no such thing as a "perfect ERP tool" for any organization. Each company will have a different need, and the decision will be dependent on the higher level managers, especially those who are working in the IT department. These are the people who will be responsible for making sure the software is maintained.
To understand Enterprise Resource Planning, it is first important to understand the applications that are associated with it. Much of the software that is used with ERP is multi-module. This means that it will assist companies in properly integrating their various processes. The most important areas for ERP applications is finance, human resources, and manufacturing. When a vendor sells a ERP module to a company that is related to finance, it will be capable of combining a number of different tasks. For example, some modules may deal with charts related to accounts and balances, while it may also be used to maintain expenses that are connected to the organization.
These expenses could be overhead, orders, or product costs. Perhaps one of the most impressive things about ERP tools is that they can be used to monitor the depreciation and appreciation of company assets. An example of assets that can be monitored are stocks, equipment, and cash holdings. Another thing that this tool can be useful for is the maintenance of receivables and payables. If a company needs information about the accounts of their customers, ERP finance software can be used for this purpose as well. One area where this type of software is crucially important is ABC or activities based costing. Activities based costing is responsible for finding the true costs involved with a specific business strategy, plan, or operation.
As you can see, ABC could allow a company to become more productive and give it the ability to make more strategic decisions. In addition to finance, ERP software is crucially important for the human resources department. Before the introduction of ERP, maintaining the human resources element of a company could be challenging. In most cases, a company would be required to deal with extensive amounts of paper. When a new person was hired to the company, a number of forms had to be filled out. Some of these forms were applications, drug test information, and tax forms. As you can imagine, this paper work would grow as the company hired more employees.
As the amount of paper increased, managing it properly became more and more difficult. The process of human resources was first developed in the late 1970s. The few applications that existed were created to run on a single mainframe, and it was often built within the company. Human resources is a very important part of corporations, and a number of companies are using HR tools that are 20 years old. By the 1990s, a number of companies were looking for new ways to maintain their HR information. Some companies used various software tools, and problems arose when these tools were unable to effectively communicate with each other.
The introduction of ERP solved these problems, because it allowed HR tools and process to be integrated into one cohesive unit. It allowed HR departments to work seamlessly, and the large piles of paper that had been present for so long were finally a thing of the past.
The third most important area of ERP is logistics. Enterprise Resource Planning can greatly improve the logistics of a company by making production planning more efficient, as well as controling the costs involved with materials and inventory. This technology is also useful when it comes to processing orders, because the process become automated, and the status of order is tracked and analyzed. Another important aspect of Enterprise Resource Planning is the maintenance of warehouses. The records of goods moved into warehouses will be recorded, and it will also help in moving products through the warehouse.