What is ERP and why is it needed?
Every business, even the smallest one, consists of three main processes: supply, production and distribution. And these processes include several more components. In large enterprises, a separate department is responsible for each of them, communicating with each other using reports, requests and orders. In small organizations, the functions of managing individual procedures can be concentrated in the hands of one responsible employee.
In both cases, there is a high risk of violations, errors and delays affecting the final result. Information distortion, data loss, or functional manager overload will invariably lead to disruption, missed deadlines, and reduced profits. An effective business information management mechanism is needed. The introduction of ERP systems is a high-tech solution for the complex organization of management information in real time.
What is an ERP system?
Enterprise Resource Planning (ERP) is an automated enterprise resource planning system. This is a comprehensive software that reflects all the activities of the enterprise in the digital space. ERP systems combine separate business processes, such as supply, production, storage and distribution, into a single mechanism. This optimization simplifies management and control, allowing management to focus on growing and improving business profitability.
ERP (Enterprise Resource Planning) is a complex software that is designed to manage business processes and enterprise resources. The ERP system combines all functional areas of the business (finance, inventory management, production, sales, etc.) into a single system with a single database.
How ERP works
The ERP system includes several modules, each of which is responsible for a specific functional area. Each module contains a set of tools and functions that allow you to manage business processes in this area.
The workflow of an ERP system is as follows:
- Planning: An ERP system allows a company to plan business processes such as production, sales, purchasing, etc. based on data from previous periods.
- Management: An ERP system provides tools for managing business processes such as managing inventory, production, finance, sales, etc.
- Automation: An ERP system automates routine tasks such as reporting, order processing, inventory management, etc.
- Analysis: The ERP system provides data to analyze business processes and make informed decisions based on this data.
- Reporting: The ERP system provides reporting on the activities of the company, which can be used to monitor and improve business processes.
An ERP system allows companies to manage their resources more efficiently, automate business processes, get more accurate information about their activities and increase productivity.
A bit of history
The ERP system is a logical development of business optimization processes started over 100 years ago. The foundation for modern software was the EOQ optimal size ordering model, developed in 1913. The production schedules drawn up on its basis ensured uninterrupted production on time without overflowing warehouses with stocks and materials.
In 1964, the EOQ model was given new life in the form of partially computerized material requirements planning (MRP I and II) systems. They included modules for managing purchases, material consumption, and production schedules.
In the 90s, CRM sales management models were added to the list of business software products. The differences between CRM and ERP are in information coverage. CRM concentrates on trade in the form of fixing orders, sales volumes, costs and sales revenues. ERP has become the quintessence of previous models, including the principles of MRP and CRM as functional modules
Functions of ERP systems
Online planning systems differ from advanced features and a systematic approach. Instead of disparate programs focused on one direction, the user has an integrated platform that links all components together. Software from the B-Fin online service provides access to the main areas of activity:
Management of mutual settlements with counterparties, internal and external financial transactions:
- interaction with banks;
- cash flow accounting.
Management of key logistics processes to ensure continuous production, including:
- inventory control;
- accounting for goods and work in progress;
- control of the movement of goods and materials between warehouses;
- Production Management.
Accounting for sales activities
Managing the sale of products (services) in the operational and strategic perspective:
- sales planning;
- control of retail and wholesale trade;
- cash flow management.
Why do businesses need ERP systems integration?
The integration of ERP systems has several business benefits:
- Improved Efficiency and Productivity: ERP system integration allows you to automate business processes and improve your company's efficiency and productivity. All data related to business processes is available in a single database, which reduces the time for information processing and improves the quality of decisions.
- Better resource management: ERP system integration allows you to manage all company resources, including finance, personnel, production facilities, warehouses, purchasing, etc. This allows the company to control costs and optimize the use of resources.
- Increased transparency and accuracy: Integration of ERP systems allows the company to access accurate and up-to-date data about its activities. This improves the transparency of business processes and allows for better planning and forecasting.
- Reduce errors and risks: Integration of ERP systems allows you to automate routine tasks and reduce the possibility of errors associated with manual data entry. It also helps reduce the risks associated with mismanaged resources or manufacturing processes.
- Improve Communication: Integration of ERP systems improves communication between different functional areas of the company and reduces the possibility of information conflicts. This allows for better communication between different departments and increased collaboration within the company.
The integration of ERP systems can help companies improve the efficiency, manageability, accuracy and reliability of their operations, which are key success factors in today's business.
ERP: why does business need it
Small companies are under the same financial, accounting and tax pressures as large ones. But they have many times fewer resources to fulfill the same list of obligations. The ERP system replaces the accountant, marketer, warehouse manager and administrator at the same time. With its help, the operations manager will be able to organize the work independently without outsourcing. This will allow you to keep a limited budget without losing the quality of work. The B-Fin service offers to test the capabilities of an ERP system using an available demo version.