What is an ERP System? Why is ERP Important for your Company?

Every industry now uses an ERP system to manage its business. So, what is an ERP system and why ERP is important for your company?

What is an ERP system?

ERP stands for Enterprise Resource Planning an industry-standard term. ERP, at its essence, is a tool for managing information.

Origin of ERP System

ERP software or enterprise resource planning software has been around for a long time it’s helped a lot of organizations improve and become more effective and efficient. 

ERP stands for enterprise resource planning. An ERP is an evolution from some older technology that was originated with a lot of manufacturing organizations, and that software was called MRP material resource planning.

So the origin of MRP came to be when a lot of larger manufacturing organizations were finding that they were struggling with managing their entire manufacturing operations. 

They had trouble tracking customer orders and tracking demand, tracking what kind of parts and supplies they would need to purchase to be able to meet in fulfill customer demand.

So MRP systems were a way to handle that it was a way to manage the tracking of what supplies and raw materials we might need to manufacture for our customers 

it was a way to work the manufacturing shop floor so that we could prioritize orders and make sure that we maximize throughput and it was a way to address the whole movement in the 90s toward lean manufacturing and trying to maximize manufacturing efficiency

In the US, a lot of US manufacturers were struggling with manufacturing efficiency and manufacturing quality, and there were being beaten by Japanese Manufacturing organizations at the time. 

So MRP systems were a way to help organizations of all origins and all nationalities to help them better become more efficient and more effective. Over time MRP evolved and morphed into something more than just a manufacturing solution, it started to focus on warehouse management, procurement, financials, and accounting even HCM or human capital management or customer relationship management.

On the sales side, it took the core of MRP. It started to expand in other parts of the enterprise to where organizations were moving towards single systems that could tie together the entire organization. Provide one unified data set to provide a common workflow across the organization and for lack of a better term provide one system that provided all the operations and data and transparency into what was happening enterprise-wide.

So that’s the whole evolution of how ERP came to be. it traces its origins back decades ago when enterprise technology was first emerging now there are a plethora of ERP software providers in the marketplace

How does information work in ERP?

Information management is the organized collection storage and use of information for the benefits of an enterprise. 

So how do you organize the information in your company? I bet you have a customer database or CRM and something managing your orders or warehouse. An accounting system and then you’re probably filling gaps in your information pipeline with spreadsheets and manual processes, but none of this is to talk to each other. They don’t share data; it’s what people call islands of information which impacts efficiency and let’s face it efficiency is connected to time and money. 

So here is where an ERP system helps you the ERP centralizes all the information in your organization, and by doing this, you can streamline the flow of information. All your business processes become connected end-to-end, and now other things become easier, so you can provide better service. 

Your team works more efficiently because they have the information they need when they need it. And when you want to analyze your data since it’s all in the same place you can report on it. 

Companies relied on it since the 90s to streamline processes and improve data visibility around finance project management and manufacturing. However, the cost of ownership began to climb significantly, and on-premise ERP couldn’t keep up with modern security demands or technology trends. So ERP evolved to embrace the internet with new features and functionality in ERP cloud. The cloud offers a more affordable alternative for ERP because it eliminates the need for software and hardware or additional IT staff. 

ERP enables the organization of all sizes and across all industries to make significant cost savings to improve business insight enhances collaboration and increase efficiency. 

Why is ERP important for your Company?

Every organization or company needs an ERP system to manage it’s business and workflow. An ERP system provides a convenient way to organize employee’s work progress. 

Here is a brief overview of why your company needs an ERP system?

1) Standardization of software

With the lack of management, various business processes within an organization utilize disparate applications to manage similar operations. This leads to chaos in data transfer, security threats, and time-consuming. 

A well develops ERP software binds together all the processes with a unique interface and makes it easy to access and organize data. 

2) Better accounting and financial reporting

Keeping track of financial data is a critical factor for any company. It scales company success; without this data, the company might experience a loss in finance. 

ERP software gives your freedom to maintain all your transaction in one place. 

3) Faster Response time

As you provide excellent service, your reputation increases. Your ability to respond to these demands as quickly as possible acts as a key differentiator from your competition. 

To provide better customer service for your customer, your sales team need maximum access to all the information across all departments. The system needs to be centralized in one unit. 

ERP software comes with the functionality of integrating different data across the department that eliminates the need to do duplicate work and manual data entry. 

Final Verdict

ERP software is a great way to manage your different company departments and helps you to enhance the productivity of your staff. 

If you want to build your ERP system with a custom solution and looking for a company to rely on, you can drop a line to our expert team. Our tech-savvy team will provide a solution with FREE project estimation.

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