What Is ERP? A Simple Explanation...

 

What Is ERP - ERP Definition

 

What is ERP? It is an abbreviation for Enterprise Resource Planning and it is basically an ideology of managing the resources of an enterprise. This is not simply the name of a software application, although many people use the acronym this way. ERP software has the ideology implemented in it, and it functions accordingly. When buying such a system, a company not only purchases the software, but also some of the world’s best business practices incorporated into it. Business software and ERP software are not interchangeable terms. The first type could be simply a program, which helps with managing a certain part of the business, for example: warehouses, finances, procurement. It is used only for the purpose of managing one or several departments, such as production. This, in most cases, doesn’t include an option for managing your human resources at the same time. On the other hand, ERP software is an application which integrates all departments in an enterprise. Such a system could be used to collect, manage and analyze all the information in the company. The managers can always check what is happening in every single department with a few clicks. They can easily create reports for all the activities, and make the necessary corrections, in case they are going into a wrong direction.


This is why these applications are also called integrated systems. They provide a great advantage because in the real world, every business is a complete system, i.e. one cannot manage the production process without any reliable information about the sales. The sales cannot be properly managed without well-structured information about inventories, etc.


Using different types of software for every single process is inconvenient and in some cases impossible. The ERP system interconnects all the information, and even allows for the automation of some processes. For example, if the level of sales increases, the software can automatically take the appropriate steps and offer different solutions, such as: increasing the inventories, making new purchase orders according to lead time and current stock levels, production capacity reservation, introducing more working shifts, etc.


The Manager simply has to choose from the different options, and execute his choices with several clicks. This is a huge benefit, especially for an international company, because it can integrate all business departments around the world, and the CFO’s can easily navigate the activities of the international branches.


Recently, I came accross a site entirely dedicated to ERP solutions. It gives some very uesful information on this matter and can be found at: whatiserp.eu. If you need more article about business software, you can take a look at it...


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