Why Need Enterprise Resource Planning? » Branded Blogger

Every business whether big or small has at least 1 or more than one departments managing a different kind of work under them. 

Small businesses may not have any kind of problems to keep records and to supply reports to the different type of departments. But big businesses have problems to maintain and supply the same report to all the department at once. 

So they need a software that can help them keep records, supply records and can help in proper planning so ERP software helps them to do all those things alone, without using any other software. So the question arises What is ERP?

ERP - Enterprise Resource Planning

ERP stands for Enterprise Resource Planning. But the question is what is ERP not what ERP stands for. So today in this article we will discuss in detail about what ERP means, what are the types of ERP software and how it helps in the proper working of a business. 

ERP or Enterprise resource planning is a business process management software which allows any business organization to use a system of integrated applications to manage the business and also help in many back-office functions like technology, services, and human resources. 

ERP software considers all facets of operation which also liability product planning, development, manufacturing, sales, and marketing. All of these in a single database application and user interface. In short, it is a business management software used to integrate all the business activity in any organization

Various Type of ERP software:-

SAP R/3 and B1: SAP is one of the best-known suppliers of ERP software available in the market. SAP software offers two types of solutions. The first one is the R/3 suite and the second is B1 suite, sometimes it is called "business one.

" R/3 is the type of software system that can support from very small type of companies to very large type of corporations. R/3 is also customizable to meet specific business needs. R/3 can run on a variety of platforms, which includes UNIX, Windows Server, and many other OS. 

B1 target more at small and medium-sized businesses and also offers pre-built modules of finance, warehousing, customer relationship management (CRM), e-commerce, purchasing and reporting. LN/Baan: The Baan ERP software was first designed and created by The Baan Corporation which is in the Netherlands. It was later then purchased by the Infor Global Solutions in 2003. 

This ERP software is designed especially for the manufacturing industries who are working on complex products with complex supply chains that work on different methods. This is specially designed for large made-to-order and engineering-to-order companies. 

It is used by many big companies like The Boeing Company, Ferrari, Fiat, Evenflo, Navistar, and British Aerospace. Baan is highly customizable and supports flow chart based process and procedure documentation.

Microsoft Dynamics NAV 2009:

This company offers two types of ERP software packages. Microsoft NAV has primarily targeted to small and medium-sized businesses and also offers modules for analyzing e-commerce, CRM, supply chain management, manufacturing, and finance. 

Microsoft AX 2009is primarily designed for the medium and large type of organizations and has functions that are useful for companies which have a branch in multiple countries. It is focused on improving productivity and it is best suited for servicing organizations, manufacturing companies, wholesalers and retail-oriented companies. 

Though AX 2009 is more customizable than NAV. JD Edward's EnterpriseOne: JD Edward's EnterpriseOne is an Oracle-based ERP application software. EnterpriseOne is owned by the Oracle Corporation. It offers pre-designed modules that focus on standards-based processing and also understanding of different business processes and its requirements. 

The Available modules include among others are analytics, capital asset management, CRM, finance management, human capital management, manufacturing and ordering systems. An additional higher level of modules can also be added for specific industries like real estate, construction or food, and beverage production. Oracle Financials: 

Oracle financials also offers two types of ERP software. The first one is E-Business Suite Financials and The other one is PeopleSoft. E-Business Suite Financials is very easy to use and it is specially targeted at the financial services industry. 

It also supports distributed organizations and offers modules for financial information, dynamic planning, budget forecasting, and multidimensional profit analysis. PeopleSoft is a type of ERP software which is highly customizable, it can support complex business requirements. 

It also offers customizable modules for a wide type of business styles and runs smoothly on a wide range of database and hardware system.

Why do a company need ERP or Enterprise Resource Planning?

To understand why we need Enterprise Resource Planning to let's take a scenario where a customer approaches sales to buy a particular product, sales team approaches the inventory department to check the availability of the product in this scenario the product customer wants is out of stock. 

Sales team approaches the production planning department to manufacturers the product. Production planning team checks with the inventory department availability of raw material. 

If the raw material is not available in the inventory the production planning team buys the material from the vendor then production planning forwards the raw materials to the floor shop execution for actual production. 

Once ready, the shop floor team forwards the goods to the sales team who in turn delivers the goods to the client the sales team update the finance department with revenue generated by the sale of product the production planning team updates the finance department of payment to be made to deferent vendors for raw material all department approach HR for any human resources related issue. This is a typical business process of any manufacturing company.

A Key Observation Of The Scenario Is

  • A typical enterprise has many departments or unit.
  • These departments always communicate with each other and exchange the data.
  • The success of any organization lies in effective communication and data exchange within the department as well as associated third party such as vendor outsourcers and customers.

Enterprise Resource Planning software can be classified into two major types:-

  1. Decentralized system and
  2. Centralized system also called ERP

In a company with a decentralized system of the management system:-

  • Data is maintained locally at the individual department.
  • Department does not have access to data of other departments.

enterprise resource planning
[Decentralized ERP Systems]

To identify the problem arising from decentralizing enterprise system let's look at the same business process again. what is ERP enterprise resource planning? 

The customer approaches the sales team for the product but this time he needs the product on an urgent basis the sales team do not have real-time information access to the product inventory. 

So they approach the inventory department to check the availability of the product this process takes time and the customer selects another vendor which leads to loss of revenue and customer dissatisfaction. 

Now  suppose the product is out of stock and the sales team approaches the production planning team to manufactures the product for the future use, the production planning team check the availability of the raw material required, raw material information is separately stored by the production planning as well as the inventory department thus data maintenance cost goes up. 

A particular type of raw material which is required to manufacture the product is available in the inventory but according to the database of the production planning team, the raw material is out of stock so they go ahead and by the raw material thus material as well as the inventory cost goes up.

Once the raw material is available the shop floor department suddenly realizes that they are short of workers the approaches the HR who in turn hire temporary employees at higher than the market rate.

Thus labour cost increases, the production planning department fails to update the finance department on the material they purchase the finance department defaults the payment deadline said by the vendor causing the company loss of businesses reputation and may also lead to getting into any possible legal action.

Problem with a Decentralized System.

These are just a few of the many problems with the decentralized systems some major problems with the decentralized system are:-

  • Numerous disparate information system develops individually over time.
  • Integration the data becomes time and money consuming
  • Inconsistency and application of data
  • Due to the lack of timely information customer gets dissatisfied, leads to loss of revenue, reputation, high inventory material, and human resource costs.
  • These are some of the major drawbacks for which we need a solution well the solution lies in a centralized system that is the ERP or Enterprise Resource Planning

In a company with a centralized system of Data Management 

  • Data is maintained at Central location and is shared with various department
  • Department has access to information or data of other departments.
enterprise resource planning
[Centralized ERP Systems]

Let's look at the same business process again to understand how a centralized enterprise system helps to overcome the problem posed by a decentralized enterprise system. 

In this case all department update a central information system, when a customer approaches the sales team to buy a product on an urgent basis the sales team has real-time information access to the product and inventory which is updated by the inventory department in the centralized system, the sales team respond on time leading to increased revenue and customer delight. 

In case manufacturing is required the sales team update the centralized database production planning department is auto updated by the centralized database for requirement, the production planning team check the availability of raw material required via Central database. 

Which is updated by the inventory department thus data replication is avoided and accurate data is made available to the shop floor team who updates their manpower status on a regular basis. 

In the central database which can also be accessed by the HR department, in case there is a shortage of workforce then the HR team starts recruitment process with considerable lead time to hire a suitable candidate at the market price thus labour cause goes down. 

The vendor can directly submit their invoice to the centralized enterprise system which can be accessed by the finance department thus payments are made on the time and possible legal action are avoided.

The Key Benefit of Centralized Systems are

  1. Eliminate the duplication discontinuity and deducting in data.
  2. Provide information across departments in real time.
  3. Provide control over various business processes.
  4. Increasing productivity, better inventory management, promotes quality, reduce material cost, affecting human resources management, reduce overheads while boosting profit.
  5. Better consumer interaction increased throughput and improved customer service

Hence a centralized enterprise management system is required.

This Post is a Guest Submission by Joydeep Mandal, Who is an awesome Content Writer and writes about Gaming Niche. You Can check more of his Awesome work Here.
Why Need Enterprise Resource Planning? » Branded Blogger Why Need Enterprise Resource Planning? » Branded Blogger Reviewed by Branded Blogger on January 22, 2019 Rating: 5

No comments:

Adsense 728x90

Powered by Blogger.