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Introduction to ERP

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  • Difficulty Level : Basic
  • Last Updated : 28 Aug, 2020
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ERP stands for Enterprise Resource Planning.

ERP systems are the kind of software tools which are used to manage the data of an enterprise. ERP system helps different organizations to deal with different departments of an enterprise. Different departments like receiving, inventory management, customer order management, production planning, shipping, accounting, human resource management, and other business functions.

Basically, it is the practice of consolidating an enterprise’s planning, its manufacturing, its sales and marketing efforts into one management system. It combines all databases across different departments into a single database which can be easily accessible to all employees of that enterprise. It helps in automation of the tasks involved in performing a business process.

  1. Before ERP :

    Figure – Before ERP

    Before an ERP system, there are different databases of different departments which they managed by their own. The employees of one department does not know about anything about other department.

  2. After ERP :

    Figure – After ERP

    After ERP system, databases of different departments are managed by one system called ERP system. It keep tracks of all the database within system. In this scenario, employee of one department have information regarding the other departments.

  3. Vendors of ERP :
    • Baan
    • JD Edwards
    • Oracle
    • PeopleSoft
    • SAP
  4. Benefits of ERP :
    • This system helps in improving integration.
    • It is the flexible system.
    • There are fewer errors in this system.
    • This system improved speed and efficiency.
    • There is a complete access to information.
    • Lower total costs in complete supply chain.
    • This system helps in Shortening the throughput times.
    • There is sustained involvement and commitment of the top management.
  5. Limitations of ERP :

    ERP system has 3 significant limitations :

    • Managers generate custom reports or queries only with the help from a programmer and this will create a problem that they did not receive information quickly, which is essential for making a competitive advantage.
    • There is no proper decision-making scenario i.e. this systems provide only the current status, such as open orders. Whenever there is need to look for past status to find trends and patterns it become difficult.that aid better decision-making.
    • No doubt that data is integrated within the system, but there is no integration of data with other enterprise or division systems and it does not include external intelligence.
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