ERP – Basic Information, Uses and Advantages

ERP stands for Enterprise Resource Planning. It is the industry term used to describe a broad set of activities supported by multi-module application software that helps a manufacturer or other business manage the important parts of its business. These parts are product planning, parts planning, parts procurement and inventory management, interacting with suppliers, providing customer service, and tracking orders. It can also include applications to manage finance and human resources. florida refi

The ERP system can either be on a centralized server and connected to various centers through Local Area Network (LAN) or it could also be installed at individual centers. There are benefits and disadvantages to both. If the system is installed on a centralized server, all the centers that use the system will suffer if the system suffers from some sort of malfunction. On the other hand if the system is installed at each destination or center the cost of the implementing it goes up. The cost is mainly the equipment that is required. It is up to businesses to decide what how to implement ERP depending on their requirements.ERP software


The term was first employed by the research and analysis firm Garter Group in 1990. It was an extension of Material Requirement Planning, Computer Integrated Management and Manufacturing Resource Planning. The software evolved and all the components from the all above systems and integrated them into software package. However, this does not mean that ERP packages have typically been developed from a manufacturing core. Many of the major players started their development of an integrated package from other directions, such as accounting, maintenance and human resources management. ERP systems now attempt to cover all core functions of an enterprise, regardless of the organization’s business or charter. These systems can now be found in non-manufacturing businesses, non-profit organizations and governments.

Here are some of the commercial applications they can be applied to:


  • Manufacturing
  • Supply Chain Management
  • Financials
  • Project Management
  • Human Resources
  • Customer Relationship Management
  • Data Services
  • Access control

Businesses that are large have a problem implementing this system. The large scale makes it difficult for in house developers to implement it. The cheapest way to implement this system to hire a firm to do it. The process is three tiered – Consulting, Customization and Support. The project takes typically 14 months to implement and entails significant changes to staff and work.

ERP – Uses and Advantages

ERP or Enterprise Resource Planning system is an integrated computer based application that is used to manage internal and external resources like human resources, financial resources and materials. Its use is facilitating the flow of business functions inside the boundaries of the business itself and also to manage the connections to the external shareholders. It is built on a centralized database and it utilizes a common computing platform. The ERP system integrates all the organization’s operations into one uniform system environment.

The system can be placed on a centralized server or can be spread out over modular hardware and software units, each having their own set of services. These modules can communicate through a local network area. Distributing the system allows an organization to assemble modules from different vendors and suppliers. This in turn replaces the need for the placement of multiple copies of the entire system, which are expensive and very complex, in areas that would not be using it to the full capacity.

This system has a number of commercial applications like in Manufacturing, Management of the Supply Chain, Financing, Project Management, Human Resources, Customer Relations Management, Access Control and Data Services. In the manufacturing area the system can deal with engineering, bills of the material, scheduling, work flow management, etc. the inventory functions, order entry, commission calculations, supplier scheduling functions of the supply Chain can be handle by the ERP system. It is also useful in dealing with Data Services like self service interfaces for suppliers, employees and customers. Human resources, payrolls, training, attendance and rostering can also be monitored using this system.

This system has many advantages. It allows for accurate forecast to be done because it connects the required software. This helps to keep the inventory levels to be at the maximum efficiency. This leads to a more profitable business. Proper communication, efficiency and productivity are enhanced by the integration of different functioning areas. It allows for an adequate three way tracking system between the purchase orders, inventory receipts and costing. Since the system centralizes the data it is beneficial in eliminating the problems of keeping various changes in multiple functions in sync. It also reduces the risk of losing sensitive data considerably. It lessens the production lead time and delivery time. It also facilitates business learning and helps to build common visions. The system also has many security features to protect it against outsider and insider crimes.

Leave a Reply

Your email address will not be published.