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Benefits of ERP System

Last Updated : 21 Jan, 2022
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ERP stands for Enterprise Resource Planning.

ERP systems integrate all business management functions including planning, inventory/materials management, engineering, order processing, manufacturing, accounting and finance, human resources etc. The biggest advantage of an ERP system based on its real-time capabilities and the ability to see what is going on with the organization as it happens.

Installation of an ERP system has many advantages. The advantages may be both direct and indirect. The direct advantages include efficiency improvement, integration of information, faster response time to customer queries, etc. Example of indirect benefits include better corporate image, improved customer goodwill, customer satisfaction and so on. Some of the benefits are as follows :

  • Integrating and sharing of information across different departments.
  • Reducing redundant data entry and processes.
  • Guarantee for the security of organization data.
  • Better communication across various departments.
  • Improving workflow and security.

There are also some benefits which are both tangible and intangible which are as follows :

  1. Information Integration :
    The most important benefit is promotion of integration. It is because it has the ability to update data between related business functions and components. Also the people involved in a project are interlinked to each other, thus it help in improvement of productivity.

  2. Reduction of Lead-Time :
    Lead-Time is the elapsed time between placing an order and receiving it. By reducing Lead-Time organization should have an efficient inventory management system, which is integrated with the purchasing, production planning and production departments.

  3. On Time Shipment :
    ERP system are designed to help your company to reduce data transfer time, reduce errors and increase design productivity. By using steps of ECO i.e. Engineering Change Order, ERP system automatically implements change in production database. Thus by using these, an ERP system ensures on time delivery of goods to customers.

  4. Reduction in Cycle Time :
    It is time between the placement of order and delivery of product. There are two types of situations; one is make-to-order and second one is make-to-stock. In both cases cycle time can be reduced but more time is saved in make-to-order case because in this ERP system save time by integrating with CAD/CAM systems.

  5. Better Customer Satisfaction :
    ERP system is capable of producing goods in a flexible way with consideration of time and cost management. It means will get individual attention and get services without spending more money or waiting for long period.

  6. Increased Flexibility :
    Product flexibility is type of ability of the operation to efficiently produce highly customized and unique products. ERP system not only improve flexibility of manufacturing operations, but is also improve flexibility of organization.

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