Tư vấn - Giải pháp

ERP and its benefits

Enterprise Resource Planning (ERP) is a business management practice that uses information technology as a tool to integrate all core business processes. ERP enables an organization to achieve its business objectives. In ERP, there is only one database through which all the departments of an organization such as production, sales, finance, logistics, shipping, human resources (HR), and customer service – manage their business processes. 

ERP is one of the most successful business software solutions because of its salient features, which include

  1. Integrated business processes
  2. Centralized data storage
  3. Centralized management

ERP Solution Overview

1. The key feature of ERP is that it streamlines the collective business processes of an organization. ERP integrates different departments of an organization such as production, sales, inventory, shipping, accounts and HR into one information system.

The integration of business processes into one system provides many benefits to an organization. Some of the benefits are:

- Reduction in process turnaround time

ERP reduces the turnaround time of a process by streamlining information flow across different departments. In addition, ERP automate the complete process based on a defined workflow. This avoids any deviation from the standard process workflow and helps reduce the process turnaround time.

- Reduction in information loss due to human error

ERP reduces information loss due to human error. In a non-ERP system, the same data has to be entered multiple times in different information systems. For example, to create a purchase order, the same information is entered in the purchase department, and the finance department. A small human error in entering data in any of the departments can lead to the loss of important information.

- Availability of data

The automated environment of ERP ensures that current data is readily available to everyone in the organization.

2. In a non-ERP system, data is stored at several locations in the various functional areas of the organization. However, an ERP system stores data in a centralized location. It dissolves all the boundaries within an organization.

The benefits of centralized data storage are:

  • Efficient data management: storing data at a centralized location enables an organization to efficiently manage the data. In non-ERP systems, data is scattered across the organization and managing multiple data storage locations is more difficult than managing one data storage location
  • Increased data security: ERP increases data security. Because data is stored in one location, applying data security policies is easier. Furthermore, physically securing one data storage location is easier than physically securing multiple data storage locations
  • Faster access to information: ERP dissolves the boundaries between all the departments of an organization. All the departments access the same system. Each department can readily access the relevant information through the ERP system and doesn’t need to wait for information from another department.

3. An ERP system provides a company’s management with a centralized repository of information from which of manages all the operations of an organization. This increases managerial control over the entire business. Because everyone uses the same system, management has access to accurate financial and operational information. This helps management take faster and more accurate decisions. For example, to assess the performance of different departments, management needs only to generate a report using ERP. In non-ERP system, every department submits its own report. Management then has to make a consolidated report.

Although implementing an ERP system can be costly in terms of time and resources because of its complexity, the long-term payback should make it worthwhile.