Enterprise resource planning (ERP) applications are broad-reaching technology systems that encompass virtually every task and procedure across a company’s entire back office. ERP systems combine software and hardware with proven methodologies and best practices to boost productivity and reduce costs. With ERP in place, businesses can seamlessly link processes across finance, production, human resources, distribution, and other core departments, dramatically enhancing the planning, execution, management, and control of all their most mission-critical operations.
An ERP package can streamline and automate an unlimited number of important functions such as accounts payable, accounts receivable, activity management, benefits administration, and billing, invoicing and cost tracking (for project-based businesses). With ERP, companies can also improve cash management, while manufacturing firms can practice more effective capacity planning and cost containment.
Additionally, many ERP packages on the market today provide robust and comprehensive business intelligence and decision support capabilities, leveraging a data warehouse or operational data store to make centralized, timely business information readily available to all those who need it.
There are variety of ERP modules for businesses to choose from, including engineering, finance (which includes powerful forecasting and general ledger functionality), and human resources/human capital management. Each of these ERP components is designed to improve the way these vital back office departments operate, collaborate, and share information.
Manufacturing was the very first industry to benefit from the use of ERP applications, implementing the world’s first ERP systems more than forty years ago. For the past few decades, these companies have been utilizing ERP to improve production processes and reduce related costs with enhanced inventory management, intellectual property tracking, and input/output control, which enables more effective implementation of popular and proven best practices such as just-in-time manufacturing models and kaizen techniques, which are the Japanese processes of continuous improvement using problem-solving and analysis. Companies can also optimize labor utilization, eliminate lag times in production schedules, and improve the effectiveness of materials management through the use of ERP manufacturing applications.
At the core of many of today’s most popular ERP applications lies powerful and complete financial management, which allows accounting staff members to more effectively track net cash flow, accelerate and manage order to cash cycles, and better negotiate and execute purchasing agreements. An ERP system can also deliver significant improvements in other areas, enhancing many non-financial processes such as payroll, quality control, resource allocation and scheduling for project management teams, supplier relationship management for purchasing and procurement departments, and training and time and attendance tracking for human resources groups.
An ERP system also enables companies to maximize the utilization of both human and financial resources, better track vendor managed inventory and other off-site or remote stock, and significantly improve workflow management by better planning, mapping, and executing key processes across the business.
With ERP, companies can achieve and maintain a solid competitive edge, reaching the zenith of productivity and cost-efficiency.