Ever Been Intrigued by ‘ERP’?

It’s no wonder that every time you search for ‘ERP’ on the World Wide Web, you are overwhelmed by an incredibly large volume of data that opens up before your bewildering eyes. What is more, each and every website that the search engines so painstakingly provide on the SERPs has its own definition of ‘ERP’, while one’ ERP’ implementation typically varies with another. But despite all that perplexity and puzzlement lies the unerring fact that ‘ERP’, an acronym for ‘Enterprise Resource Planning’ is quite a powerful modern day business tool.

However, to get a clearer view of ‘ERP’ we need to consider all the processes that are critically linked with running a business. This obviously includes Order Management, Inventory Control, Accounting, Human Resources, CRM (customer relationship management and many more. At its most elementary level, ERP software assimilates all the above performances into a single entity that can streamline processes and data across the organization.

Nevertheless, the uniqueness of ERP systems lies in shared database which can support all the functions that are utilized by the sundry business units working under the same enterprise. In other words, it means that employees working in different divisions, such as Accounts and Sales will be able to rely on the same information to fulfill their specific tasks.

Most ERP software, incidentally, provide facilities for synchronized reporting and automation. Instead of being forced to maintain separate databases and spreadsheets that are required to be manually managed for generating reports by employees in any organization, these ERP software solutions help staff members to pull reports from a singular system.

For example, when sales orders automatically flow into the financial system sans any manual re-keying, the order management division can process the orders more smoothly and faultlessly and that too within a very short time, while the finance department can close their books quickly and effortlessly on any particular issue. These are some of the reasons that most businesses now consider the ERP system a critical organizational tool as it integrates a medley of organizational systems into a solo scheme that enables flawless production and trouble-free transactions.

Key Advantages of ERP System

ERP, as you must have observed by now is all about integrating and assimilating various business processes that results in saving time and money. Nevertheless, here are some of the key advantages that the system offers

  • Excellent Order Tracking, right from acceptance through fulfillment
  • Sales forecasting vis-à-vis inventory optimization
  • Chronological record of transactions through relevant data compilation in all areas of operation
  • Revenue tracking, from invoicing to issuing of cash receipt
  • Tracking Purchase Order (what was ordered) to Inventory Receipts (what has arrived) to Costing (vendor invoice amount)

Apparent Disadvantages

Despite so many plus points that go in favor of ERP, there are quite a few drawbacks that are often found associated with ERP software that are listed below

  • Customization problems
  • High cost, especially in customizing the software for individual party
  • Re-engineering business process to fit the ERP system often tells on the competitiveness of the company or the product
  • Mass scale integration of sensitive information among departments often leads to loss of privacy
  • On account of ERP’s basic architecture (OLTP = On-line Transaction Processing) ERP systems are not quite suited for production planning and Supply Chain Management (SCM)
  • Harmonization of ERP system in big multi-national companies proves fairly expensive on one hand while loss of company privacy creates problems ion the other.

Conclusion: Even though it may not be so effective for big companies or corporations, ERP certainly proves helpful for most small and medium sized businesses where automatic flow of data from one department to another makes all the difference. In cases of one-man show (one-woman show) business houses, it proves ideal.