Enterprise Resource Planning (ERP) is about bringing all the components of your business together to improve functionality and efficiency, all of which could have a positive impact on your bottom line.
Here is an overview of what ERP is all about together with a look at how it could improve your supply chain strategy and have a positive impact on other aspects of your business, helping you make more informed decisions and reduce wastage.
Understanding the process
Although ERP tends to benefit manufacturing businesses in particular, it is a process that offers a number of streamlining and integration advantages that could benefit many different types of companies if they adopt the principles of the system.
In basic terms, ERP is a description of the process which you use as a virtual nerve center of your business by bringing together all the various components of your operation such as purchasing, sales, inventory, sales and marketing, finance and HR, in a way that allows you to see the whole picture of your setup from one resource rather than individually by department.
The basis of your software system
A good way of looking at what ERP delivers is to see it as the hub that helps you to bring each department together into a centralized communication system.
A software system can be created around the basic principles of ERP and this will make it easier for each part of your business to share information and communicate more easily with each other.
Collating all the data from each department and putting it in one central place has obvious advantages in terms of efficiency and decision-making, as you can see how each decision or activity can impact other areas of the business and overall.
The usefulness of a software system that can update a purchase you make from an online store, for example, and then simultaneously update your inventory, finance records and purchase ledger, is easy to see when it is setup correctly for your business.
Applying the principles
The analogy about ERP representing the nerve center of your business is no coincidence, as the original system was developed to mimic the functions of the human central nervous system.
If you take that idea and run with it you should be able to create your own system that standardizes and automates certain processes so that you can get access to meaningful data and free up key people to focus on other aspects of the business.
What you get out of a system like ERP depends mainly on what information you put in and how you format that data, but done properly, it can provide some valuable insights into where savings could be made and which parts of the business are most profitable.
Having valuable sales and costings information at your fingertips could make a noticeable difference to how you drive your business forward and if ERP can help you do that, it is worth looking at.