The systems ERP is one of the tools that companies use today to improve productivity.The original concept in English is known as ERP (enterprise resource planning). It is a computer program used to control various areas of a company.
Some of the things that an ERP manages are production, logistics, distribution, inventory or shipments. Also, this software can be used to control billing and accounting processes. The management of ERP software is the responsibility of the company’s employees. Clients do not have access to the program.
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The Implementation Of ERP Systems And Their Evolution
In the beginning, ERPs were called back office (the back room of the company, where what the public does not see is managed). A typical example of a back office is the control panel of online stores for SMEs such as PrestaShop, Shopify or WooCommerce. From there, you control things such as the customer list, the stock of products, the status of shipments, suppliers, etc.
As the ERP software evolved, it incorporated other functions such as the administration of the customer relationship (CRM). This would allow companies to use their customer databases for marketing actions, compiling predictive statistics or sales projections, among others. With the incorporation of this function, the ERP would also serve to manage the company’s interaction with customers, both current and potential.
The use of ERP programs would eventually expand over the years. More and more companies began to use these systems, which were improved with more modules. In this way, the most advanced ERPs allow managing processes such as manufacturing and production. Today, with the program, you can control the warehouse, logistics and technical information. Previously, it was necessary to have software for accounting and other software for human resource management. Later, the ERP would also go on to implement these functions. Other tools may include marketing and strategic direction.
The systems enterprise resource planning has enabled the centralization of all the company’s efforts under the same program. This facilitates the employees’ access, who will control any section without having to use different software. In recent times, many large companies buy ERP programmed to measure with the specific functions they require.
Benefits Of Enterprise Resource Planning Systems For Running A Business
The use of ERP systems has provided several benefits that affect the overall performance of the business. The reasons why ERP adds value to business management are detailed below.
The first notable aspect is the unification mentioned above of all areas of the company. All information on finance, human resources, sales, manufacturing, etc., will be found in the same program. Employees will only have to learn to run a program. The centralization of the areas streamlines decision-making within the company.
Process automation is another key point. A large amount of information related to the different areas is automatically integrated. The need for specialized software for each section is eliminated. In this way, the information links between the other sites are much simpler and more automatic.
Many of the business processes of the company are controlled with the same software. Some ERPs can be integrated with customers and suppliers. The ERP facilitates the automation of many functions with the vendor, such as upgrading the stock available. In addition, the program allows agile communication with the supplier, which can become a valuable partner for the sales strategy.
The ERP also enables communication and collaboration with customers. This exchange of information allows you to know your purchasing needs and then launch marketing campaigns.
ERP Simplifies All Company Processes
Thanks to ERP, all the company’s databases are integrated into a single program. The software makes it easy to locate any list, be it customers, suppliers, manufacturers or products, intuitively and saving time.
Another advantage is that all company information is stored on the same platform. Since the ERP system collects all the company’s data, it guarantees greater control over its value chain (manufacturing, warehouse, distribution, etc.).
Having all the information integrated and centralized in the program makes it easy for all department managers to have immediate access to the same data. In this way, duplicate registrations and operations are avoided. In addition, for many of the activities that employees had to do manually, such as generating an invoice or a delivery note, the program performs automatically. Thus, the possibility of making mistakes is also reduced.
ERPs Adapt To The Requirements Of Companies
Although there are generic ERP programs, the truth is that many companies choose software programmed according to their requirements. In these cases, the software providers design and configure it according to each client’s specific needs. This is also known as an open software infrastructure, which allows programmers to make changes if the company needs to change any function or application.
The company can decide which features interest it for its program to adjust the budget for the software. This way, you only pay for those functions that are useful to you.
Economic Benefits Of The ERP System
The implementation of an ERP system is an investment that in the long term returns to the company. This powerful software reduces human errors, eliminates duplication, and automates many processes. It is for these reasons that the company’s costs are reduced. According to a survey carried out in 2013 by Panorama Consulting, 40% of companies that acquire this type of system notice increased productivity.
The ERP not only allows saving personnel costs but also facilitates the work of the company’s staff. Since the software can complete countless tasks in less time, employees can spend more hours on other issues. When a company decides to purchase an enterprise resource planning system, it hopes to increase its profits.
ERP As A Security System
These systems are often designed to improve information security. To access different information of the company, a system can be established by levels of access or require a specific employee’s authorization. This makes it more difficult for company information to be stolen.
On the other hand, all the company information will be centralized, and the program will be able to generate automatic copies as a protection measure.
Other Interesting Advantages Of ERP Systems
- It allows directors to have access to real and homogeneous information on the financial status of the company. Each department usually has its accounts, but the ERP will collect a single version of all the company numbers.
- It allows centralizing all the monitoring of customer orders, from when the order is dispatched until the merchandise is received. If this process were divided between several systems, there would be communication problems between them. Something that does not happen with the ERP.
- For manufacturers, manufacturing processes will be more agile and standardized. By being all the management collected in a single computer system, time is saved, reduced costs and productivity improves.
- Inventory is simplified as the program provides better visibility into the product supply chain. ERP helps employees develop better delivery plans for customer orders.
- Help the Department of Human Resources (RR. HH.). The ERP keeps all the information related to human resources unified. It allows you to track employees’ time and communicate with them.
- The ERP facilitates and speeds up communication between company employees.
What Are The Drawbacks Of ERPs?
Some of its disadvantages are:
- The software is usually expensive, especially if it has been programmed on demand by the company. However, today there is more affordable generic software, and many SMEs are also integrating it.
- On many occasions, its integration requires making changes in the company’s processes. In addition, its installation is usually a difficult task.
- ERP is a very complex type of program. The company takes time to adapt to it and all its functions. Many companies find it difficult to adapt to the program.
- There are still few expert professionals in ERP software.
- Sometimes they involve hidden costs since you may have to pay to renew the license once you buy the software, etc.
- It can be difficult for employees to handle. They may take time to become familiar with the program.
Do the pros or cons outweigh when installing an ERP? The bottom line is that the statistics speak for themselves: almost half of the companies that use it see increased performance. More and more companies will make use of this software in the coming years. Therefore, although a priori may be not easy to handle, companies should give it a try.