ERP Systems

Concepts in Enterprise Resource Planning Systems

An Enterprise resource planning (ERP) system is an information system that coordinates all departments of a company.  These departments may include manufacturing, human resources, customer relations, sales, marketing, inventory, and so on.  Essentially the concept of an ERP solution is to coordinate all departmental activities and processes to create a completely streamlined enterprise.  All of this is achieved through the use of one single centralized database that contains up to the minute real-time data. 

The concept of an ERP database is to be at the center of all the modules or functional groupings of software.  Some typical ERP modules include; Financials, HCM (Human Capital Management), Purchasing or Procurement, SCM (Supply Chain Management), MRP (Materials Requirements Planning), and Sales and Marketing.  All of the data from these modules feed into and out of the centralized database making information more reliable, easier to share, and more accessible across the enterprise.

The concept of an ERP system was taken from the MRP systems of the 1970s and 1980s.  However, the ERP system has evolved much past the original MRP systems.  Today, Enterprise Resource Planning systems are completely integrated and MRP functionality is only one piece of an entire Enterprise Resource Planning system.  Imagine if you will that you have entire pizza pie.  The MRP system is one piece of that pie.  The other pieces are modules such as Financials, HCM, SCM, etc.  The entire pizza represents the Enterprise Resource Planning system.

The concept of an ERP system originally made sense for large industrial companies.  However, today ERP systems are now designed for even the smallest of companies.  And, industrial companies aren’t the only types of organizations that can prosper with an ERP system.  Enterprise Resource Planning systems are made for the food industry, retail industry, franchise industry, medical industry and just about any other industry you can think of.

There are some rules that one must play by in order to be considered an Enterprise Resource Planning solution.  To be considered an ERP solution, ERP providers must supply functionality for at least two systems or more.  For example, two systems might include Financials and HCM or SCM and MRP.  It doesn’t matter what the two systems are but they must be integrated and share a database.  Stand alone software solutions are solutions of the past.  As the information age continues to evolve, we will probably experience an even larger growth in the ERP realm.

Written by :

kristine H