ERP

ERP or Enterprise Resource Planning system , as the name suggests is a software package designed and developed to plan all the resources of an enterprise effectively. Now what is a resource ? Everything available to a organization's disposal organization in order to function effectively can be termed as "Resource" . These resources can be Financial Resources, Human Resources, material resources and others. A ERP package addresses the enterprise needs of an organization by integrating various functions of an organization using a process view of the organization. The activities supported by ERP systems include all core functions of an enterprise, including financial management, human resources management, and operations. Some of the reasons why organization goes for / advantages of an ERP are –

- Integration of interrelated information.
- Integration of end to end business processes.
- Standardize and speed up organizational processes.
- Reducing complexity.
- Centralized information source
- Security

Interestingly, many times because of all above individual organization departments are reluctant in installing the ERP system in there facilities. Implementing ERP also results in decrease of departmental myopia (A department completely overlook/ignores other department's work/process) and also the habit of putting work on others shoulders.

Lets try to understand above points by an example. Visualize an industry process of manufacturing, storing (Inventory) and selling of an item. Various processes involved are procurement of raw material, production planning, selling , accounting and others.  Now we start from back, a sales person enters a sales order in the system for item X with quantity Q then the inventory in charge should come to know that quantity Q is committed/required to/for sales of item X. Now considering that organization maintains a minimum stock for item X, if processing of this sales order decreases the inventory below the minimum stock then the production in charge should be intimated to start production of item X. This in turn should trigger purchase department for procurement of the required raw material.

Picture below indicates a brief flow of scenario discussed above

Coming back, ERP system in place automates & integrates this inter departmental information flow and the business process as well. It also standardizes and reduces the process complexity. Above all, all this information is stored at centralized place and is secured by user privileges so as to avoid unauthorized access.