ENTERPRISE RESOURCE PLANNING: THE WINNING EDGE
ERP is an oft-heard abbreviation in corporate parlance. Most of the enterprises looking to climb up the ladder are fascinated yet frightened by this term. Some of the corporate leaders not fully familiar with ERP have jokingly termed it as Extremely Risky Proposition. While there are, no doubt, costs related to ERP, this article aims to explode the myths surrounding ERP by bringing out its benefits and also by suggesting an implementable ERP model.
ENTERPRISE RESOURCE PLANNING (ERP) is an enterprise-wide set of management tools that balances demand and supply, containing the ability to link customers and suppliers into a complete supply ...view middle of the document...
Further, ERP can provide the foundation upon which additional productivity and quality enhancements can be builtâ€”an environment where these other tools and techniques can reach their full potential.
Effective forecasting, planning and schedulingâ€”knowing routinely what is needed and when via the formal systemâ€”is fundamental to productivity. ERP is the vehicle for getting valid plans and schedules, but not just of materials and production. It also means valid schedules of shipments to customers, of personnel and equipment requirements, of required product development resources, and of cash flow and profit.
Enterprise Resource Planning has proven itself to be the bedrock for supply chain management. Itâ€™s the glue that helps bind the company together with its customers, distributors, and suppliersâ€”all on a coordinated, cooperative basis.
Diagrammatic view of ERP is given below.
Key Benefits of ERP
1. Integrates financial information: As the CEO tries to understand the companyâ€™s overall performance, he may find many different versions of the truth. Finance has its own set of revenue numbers, sales has another version, and the different business units may each have their own version of how much they contributed to revenue. ERP creates a single version of the truth that cannot be questioned because everyone is using the same system.
2. Integrates customer order information: ERP systems can become the place where the customer order lives from the time a customer service representative receives it until the loading dock ships the merchandise and finance sends an invoice. By having this information in one software system, rather than scattered among many different systems that canâ€™t communicate with one another, companies can keep track of orders more easily, and coordinate manufacturing, inventory and shipping among many different locations simultaneously.
3. Standardizes and speeds up manufacturing processes: Manufacturing companiesâ€”especially those with an appetite for mergers and acquisitionsâ€”often find that multiple business units across the company make the same widget using different methods and computer systems. ERP systems come with...