Definition of Enterprise Resource Planning (ERP)

An ERP (Enterprise Resource Planning) system is a type of software that companies use to manage their daily activities such as accounting, purchasing, project management, risk management and compliance, as well as supply chain operations. A complete ERP suite also includes enterprise performance management (EPM) software that helps plan, budget, forecast and report on a company’s financial results. ERP systems connect a multitude of business processes and enable the flow of data between them. By collecting shared transactional data from a company from multiple sources, ERP systems make data duplication unnecessary and ensure data integrity with a “single source of reliable information.” Today, ERP systems are essential for managing thousands of businesses of all sizes and in all industries. For these companies, ERP is as indispensable as electricity.

What is an ERP system?

How can these solutions manage the daily activities of organizations, such as accounting, finance, purchasing, project management, supply chain and production? Enterprise resource planning systems are comprehensive and integrated platforms, whether on-site or in the cloud, that manage all aspects of a production or distribution business. In addition, ERP systems support all aspects of financial management, human resources, supply chain management and manufacturing within your core accounting function. ERP systems also ensure transparency of your complete business process by tracking all aspects of production, logistics and finance. These integrated systems act as the nerve center of your business for complete workflows and data, with different access for each department. ERP systems and software support multiple functions within businesses and SMEs, including customizations based on your industry.

ERP Fundamentals

ERP systems are designed around a single and defined data structure (schema) that typically has a common database. This ensures that the information used across the enterprise is standardized and based on common definitions and user experiences. These fundamental concepts are then interconnected with business processes driven by workflows across departments (for example, financial services, human resources, engineering, marketing and operations), connecting systems and users. Simply put, ERP is the means of integrating people, processes and technologies in an innovative company. Take the example of an automobile manufacturer that purchases its parts and components from multiple suppliers. It could use an ERP system to track the demand and purchasing of these parts and ensure that every component of the entire purchasing-to-payment process uses uniform and clean data linked to the company’s workflows, operational processes, reporting and analytics. When ERP is properly deployed at this automobile manufacturer, a component, for example “front brake pads,” is identified everywhere by its part name, size, material, source, batch number, supplier part number, serial number, cost and specifications, as well as a host of other descriptive and data-driven elements. Since data is the lifeblood of any innovative company, ERP systems facilitate the collection, organization, analysis and distribution of information to anyone or any system that needs it to best accomplish their work and responsibilities. Do you want to purchase an ERP? Visit www.gestiumerp.com