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ERP Components

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  • Difficulty Level : Medium
  • Last Updated : 17 Mar, 2021

An Enterprise is a group of people which has certain resources as its control to achieve its goal. It acts as a single entity. This single entity is different from traditional approach. It is an integrated software that integrates many small modules to become a big organization.  These small modules are said to be the components of ERP. It has the ability to manage many fields like finances, manufacturing , customers, projects and many more. With ERP systems , we can adapt to changes leading to an improved and efficient working of organizations.

Five Main Components of the ERP system are as follows :

1. Finance :

It keeps a track on all your financial data including Accounts receivable, Accounts payable, General ledger, costs, budgets and forecasts. It helps to keep a record of cash flow, lower costs, increase profits and make sure that all the bills are paid on time. The growing complexity of the business makes important the need to have a single system to manage all of the financial transactions and accounting for multiple business units or product lines.


Finance Component

2. Human Resources (HR) :

It is a software handling all personal-related tasks for managers and employees. Employees play a very important role in any organization, without them business would not exist. This component is responsible for automated payments to employees, payment of taxes, generating performance reports, attendance tracking, promotions, deciding working hours and holiday hours of the staff.


Human Resources(HR)

3. Manufacturing and logistics :

It as a group of applicants for planning, production, taking orders and delivering the products to the customers. It provides you a view of the demanded and achieved levels which is very important to check whether you are achieving your targets or not. It provides all the stock summary and production plans beneficial for the business. It includes Production planning , order entry and processing also the warehouse management.


Manufacturing and logistics

4. Supply Chain Management (SCM) :

A supply chain management is a network of facilities that perform the procurement of the materials and transformation of these materials into intermediate and finalized products and distribution of these products to the customers. Planning, Manufacturing, Marketing, Distribution and the purchasing organizations through a supply chain operate independently. These organizations have their own goals and objectives.                                                     

Supply Chain Management(SCM)

5. Customer Relationship Management (CRM) :

This component interacts with the customers using data analysis to study large amount of information. They target the audience and observe what is beneficial for them. The component gathers customer data from multiple channels. Hence, CRM stores detailed information on overall purchase history, personal info, and even purchasing behavior patterns. The benefit it gains is by keeping a track on the customer’s buyer history and suggesting additional purchases.

Customer Relationship management(CRM)

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