Tutorials Supply Chain Supply Chain Management : Enterprise Resource Planning Enterprise Resource Planning Best PracticesThe goal of ERP (Enterprise Resource Planning) systems is the successful integration of a company’s data and processes in to a single unified system. Usually, several components of computer software and hardware are employed in order to realize this goal. A unified database must be employed in order to store data for the various modules of the system.
Originally, the term “enterprise resource planning” was employed to designated systems used by enterprise wide resources. It was originally used in the context of manufacturing, but in today’s world, enterprise resource planning is used in a variety of spectrums. It can be used to unite all basic functions of a company, no matter what kind of company it is. Indeed, enterprise resource planning is used by governments, non profits, and corporations alike.
In order to be considered a legitimate enterprise resource planning system, the software package has to provide functionality in a single package that would normally involve two or more systems. To give one example, a software program that provides payroll and accounting is a legitimate enterprise resource planning software package. But the term is usually used in relation to bigger, more broadly based software applications. Using an enterprise resource planning system can not only replace several functioning applications, it will also eliminate the need for external interfaces that systems might have required before, as well as supplying further benefits that might range from lower maintenance and standardization to more convenient reporting abilities.
Many companies that boast the necessary in house IT skills to integrate several software programs decide to implement just a few portions of an enterprise resource planning system. They will then develop an external interface to other similar systems being employed to take care of their other application needs. To use an example, in some instances the PeopleSoft HRMS system might be perceived to be better than SAP’s HRMS system, or vice versa. So a company might choose to buy an enterprise resource planning system, but desire the PeopleSoft HRMS and Financial modules, but then buy the remaining applications from the SAP company.
Even in the retail world, this is a very common practice. Even middle sized retailers often have discreet Point of Sale products and financial applications, which are then rounded out by an application series that will take care of such facets of the business as merchandising, logistics, warehouse management, and the rostering of staff.
In an ideal enterprise resource planning system, the database would take care of all data, including manufacturing, supply chain management, finances, projects, human resources, customer relations management, as well as data warehousing.
Originally, enterprise resource planning systems were rooted in material requirements planning. When the routings became part of a software architecture and the organization’s planning capacity became part of standard software activity, the enterprise resource planning system was born. Usually, an enterprise resource planning system will oversee the logistics, production, inventory, distribution, accounting, invoicing, and shipping facets of an organization. Enterprise resource planning system software helps numerous business activities; these might include sales, inventory management, human resource management, quality management, marketing, billing, delivery, and manufacturing.
Enterprise resource planning systems tend to be mislabeled “back office systems.” This infers that customers are not involved at all with the systems. “Front office systems,” such as customer relationship management, deal with customers directly, as to eBusiness systems like eCommerce, as well as supplier relationship management systems.
Cross functionality defines enterprise resource planning systems. All the departments involved in manufacturing or operations can be effectively integrated in to a single functioning system. This could include accounting departments, as well as marketing, strategic management, and human resources, in addition to warehousing, Information Technology, logistics, and production.
Before enterprise resource planning systems were developed, all the departments that comprised a company would have to rely on their own separate computer systems. The system belonging to the Human Resources department would usually contain employees’ personal data, as well as info on the department itself and the reporting structure. The PR department would take care of paycheck info. The Finances department would have a system that dealt exclusively with the company’s payment transactions. In order to communicate with one another, the various systems would require a certain amount of common data. For the Human Resources department to be able to send salary info to the PR department, for example, there would have to be a static employee number assigned so that the employee in question could be successfully identified by the two systems. Because of this confusing system, many complications would arise.
The development of enterprise resource planning systems led to the combination of data among applications that used to be strictly separate. Organizations thus no longer had to worry about keeping their data in synchronization across numerous different systems. Larger organizations no longer had to worry about the vast number of software specialties that were previously required to keep the business running.
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