ERP Definition

What is the best ERP Definition? Everyone agrees that ERP stands for Enterprise Resource Planning, but the actual definition can vary greatly. An ERP system is an application that brings together information from all departments in an organization and often can even include customer/vendor data. Most ERP systems include; Supply Chain, Service, Customer Relationship Management, HR, Manufacturing and Finance. While the ERP definition can change between organizations, the goal is always to integrate all of the pieces of complex organizations.

Manufacturing

A typical ERP manufacturing system will integrate all aspects of the manufacturing process.  Modules may include – When to order raw materials, plant capacity, worker scheduling, work orders, quality control (QA), workflow and costing.

Finance

An ERP usually will include a Finance module that can often take the place of any legacy accounting system.  Modern ERP’s include all the functions you would expect from a full accounting package.  The Finance modules include:  General Ledger, AP, AR, Fixed Assets and budgeting.  Finance is one of the main ERP Benefits and will be included in any ERP definition.

Customer Relationship Management (CRM)

A CRM application basically stores and reports all interactions with a customer or potential customer.  These systems go far beyond a basic address book and include order information, sales history, customer contact history, complaints, business information and customer contacts.  Overtime, this data becomes invaluable to most business and allow you to service your customer with greater efficiency.

Supply Chain Management

The Supply Chain module will help you keep the appropriate amount of stock in the warehouse and manage your purchasing and inspection programs.  Using this module will allow you to keep a close eye on your purchasing habits to make sure the materials you need are always on-hand and materials that are not needed do not take up space in your facilities.  Having this module integrated with your manufacturing processes and Finance make it one of the most important functions of any ERP system.

Human Resources

Most systems come with an optional HR module that helps you track every aspect of your HR organization.  Typical modules include:  Payroll, Employee Benefits, Retirement Accounts, Hiring and even employee diversity.

As you can see the enterprise resource planning definition will change often as new modules are added to an organization.  However, the purpose is always to help manage multiple departments to ensure everyone in your business is working towards the same organizational goals.