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What is an ERP System—An Introduction

 

Information is crucial in the day to day operations and long-term success of large corporations down to small businesses with barely a handful of employees. Effectively managing and accessing needed information in a timely manner is a key success factor in business. It is often recommended that businesses explore an enterprise resource planning (ERP) system. But what is an ERP system and can they really make a difference in accessing your businesses information in a quick and easy manner?

When a person asks ‘what is an ERP system’ a relatively simple answer can actually be given. An ERP system is a software program that pulls together a business’s information with the goal of facilitating the flow of this information easily. There are several different ERP software systems and a central database is often used for storing all of the data.

With a single, powerful software program, enterprise resource planning systems integrate all departments (HR, accounting, sales, manufacturing, etc.) and functions of an organization onto a single computer system. The software serves each department’s needs and provides a host of benefits to the company. From improving efficiency and reducing operational costs to allowing management to make smarter business decisions, an ERP system breaks down the barriers between departments for easy sharing and communication.

So is there a benefit for companies utilizing ERP systems? For most companies the answer is yes.

When an order comes in at a typical company, it sets off a series of processes throughout the different departments of the company. Often times each department has a different computer system optimized for that department. Often times these systems don’t or can’t communicate with each other. Therefore, the customer’s information is keyed in multiple times as it travels from department to department. These multiple entries increase the possibility for error and slow down order fulfillment and billing. If a customer calls wondering where their order is, there is usually no way for the service people to access the warehouse’s computer system. This means the customer is put on hold while someone calls the warehouse to check if the order has been shipped. As the customer waits, their satisfaction falls and your employees waste time better spent on tasks that can increase revenue and customer satisfaction.

Since we’ve already touched on ‘what is an ERP system’, we know that the typical order process mentioned above could be streamlined by choosing the right ERP system. ERP systems often reduce the amount of redundant, menial tasks to be performed. This saves time and cuts down the opportunity for errors. Information is also more easily accessible when needed adding to saved time and, oftentimes, increased customer satisfaction. An ERP system can also be a wealth of information for decision making. Data is more easily turned into organized information that management can analyze and base decisions on.

In summary, what is an ERP system? It’s a software system that facilitates the flow of your businesses information—it pulls all of your businesses information together making it quickly and easily accessible to those who need it. In the process, the system helps reduce costs through decreased errors and a decrease in redundant tasks. It also provides management with ways to track and analyze information across multiple departments for a new window into the company’s processes.

 

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