What is an ERP system and how does it work?

ERP stands for “enterprise resource management” – a consolidated process of collecting and organizing business data using an integrated suite of software. ERP software contains applications that automate business functions such as production, sales quotation, accounting, and other activities.

Simply put, an ERP system can facilitate a company’s operations in all departments by improving data on different types of business resources, whether they are raw materials for production needs or staff hours for human resources.

These processes include and help ensure:

  • Sales;
  • Human resource management;
  • Warehouse and inventory management;
  • Customer relationship management (CRM);
  • Purchasing and financial management;
  • E-commerce, etc.

ERP history

Although the ERP system is a relatively new invention compared to other inventions, companies in their beginnings have always tried to use resource management, even if it did not have this name – “ERP” – trying to balance all their different practices with the use of resources. However, this required the recruitment of additional staff for the management of each department.

The first beginnings of the ERP system can be found in production using the economic order quantity (EOQ) model – a paper-based planning system. It was replaced by material resource planning (MRP) tools developed in the late 1960s, which eventually became production resource planning (MRP II) tools. Modern ERP practices began in the 1990s with the increasing integration of computer software into day-to-day business. Today, ERP is found in almost every industry, not just manufacturing, making it available on cloud-based platforms as well.

What does an ERP system do?

The goal of an ERP system is to improve efficiency (and therefore cost-effectiveness) by improving the use of the company’s resources, regardless of whether these resources are time, money, staff, or something else. quality and performance, it is possible to develop your business more efficiently and appropriately.

ERP software combines various reports, metrics, data, information, lists of company departments in one environment. It facilitates daily work by providing a complete picture of what is going on and how resources are being used. From a business perspective, an ERP system primarily provides insight into how processes can be improved or resource better used to create greater efficiency and business growth for the company as a whole.

Also, the ERP system also allows you to quickly find the information, or its summary, the report you need because everything is in one place. No more searching spreadsheets or different business applications to find the data core you need. It’s all available and available directly in the ERP system.

Therefore, we can conclude that the ERP system and its implementation is a necessary step in business development, which can significantly facilitate the company’s operations by providing information and data to make important data-based decisions for the company’s overall development.


Starlink Development

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