ERPs (Enterprise Resource Planning) are systems that allow companies’ resources to be planned. They first appeared in the 1950s and made it possible to plan manufacturing resources. Previously they were called MRP (Material Requirements Planning). Then they evolved into materials or accounting planning.
Nowadays, they are used to plan production, logistics, distribution, storage, shipments, billing, accounting, sales, payments and even human resources. They allow the company to manage operational and production processes.
They are also information management systems and are normally organized into integrated modules, so that the company can optimize its processes and, therefore, make better use of its resources. That way, the people responsible for taking decisions can access the information in a quick and reliable way and the company can achieve its objectives.
ERPs are also important for the company’s legality, since it allows it to comply with obligations such as tax payments, wages and social benefits payment, among others.
It is very common for them to be organized by modules. The sales module, the accounting module, the inventory module, the human resources module, etc. This allows companies to use it according to their needs.
Another feature of ERPs is that they must be configurable. That is, it must be adaptable to specific needs. This is important because no company is the same as another.
With an ERP, a company could process a customer’s order. Beginning with the order’s placement until the product is delivered, including all intermediate processes.
How does this process work?
The seller registers the new order in the system, the production manager plans the use of the machines, for which he registers the raw material needed and the use of labor force. While the production department works on the order, the accountant records the accounting movements and the financial director completes the information to pay the suppliers. The human resources manager prepares the payroll roles for the personnel. All this while the general manager monitors the progress of the business and makes the best decisions before problems appear. Once the order is ready, the system can generate a product delivery order, a sales invoice and a collection order that will expire once the customer makes the payment.
Sometimes, ERP solutions are complex to implement and can take a long time until all processes are configured in the application and the system stabilizes. But the advantages of implementing it are far superior. First, the business will operate in an orderly and efficient way. When a problem arises, it will be possible to identify the causes and at all times it will be possible to evaluate the progress of the business and make significant improvements.
ERP implementation can be very expensive, depending on the size and complexity of the company. However, in recent years, accessible solutions have appeared online.
To know if a system is an ERP, it must fulfill at least two functions. First, the modules’ database must be unique and centralized. Second, is that it must allow the interaction between the system’s different modules.
There may be companies that do not require one of these systems. It is best to seek professional advice before starting to use one. Remember, the key to a good ERP is the integration of information and the interaction between the modules.