ERP is: understanding, benefit, features, and importance for your business
Ever heard ERP term? If you are a business owner in a modern era like this, certainly no stranger to the term ERP. Formerly the ERP system is a system that is widely used by a large-scale business or company, but now along with the advancement of ERP technology itself has been widely used by businesses with small scale and MSMEs.
Want to know more about understanding, benefits, mandatory features and the importance of ERP on your business? Here is the description.
ERP is an acronym which stands for “Enterprise Resource Management”, the consolidation process of collecting and organizing business data through a set of integrated software. ERP software contains applications that automate business functions such as production, sales reports, accounting, and more.
In layman’s terms, ERP facilitates your company’s operations in each department. ERP solutions improve the way you handle business resources, whether it be raw materials for production or hours of staff for human resources.
There are many more definitions of the different ERP is aimed at developers, vendors, or media technology. Most agree ERP is intended to serve all departments of the company with a better business processes.
History of ERP’s practice
Companies always struggle to balance all their different practices by sacrificing resources elsewhere.
For a long time this means that the company must employ additional staff to manage each department.
ERP’s first trace was found in manufacturing, with the Economic Order Quantity (EOQ) model, a paper-based scheduling system. This was replaced by a material resource plan (MRP) developed in the late 1960s which eventually became a manufacturing resource planning tool (MRP II).
Modern ERP practices began in the 1990s due to the emergence of computer software that was integrated with everyday business operations. Created by Gartner Group, this term initially only focuses on new digital tools that enable producers to manage supply chain relations, control inventory, automate accounting, and more.
At present, ERP is found in various industries, not only manufacturing. And from the beginning, ERP software is now available from the platform hosted in the Cloud.
Benefits of using an ERP system
If you are considering implementing an ERP system, improving existing systems, or even if you are not sure whether you need this system, it’s a good idea to know and understand the benefits that can be given by the ERP system for your business.
Here are the benefits of an ERP system in your business optimization:
Make your business more agile
In a rapidly growing business climate, the ability to respond to changes is very important. The ERP system is both flexible, modular, and quite scalable to adapt to changing market dynamics and changing customer needs.
Initially you can implement specific applications that meet your current business needs and add an integrated application ISESIUI’s needs when your business develops later.
Improve efficiency and productivity drastically
Inefficient spreadsheets, manual workflows, and desktop-based software can inhibit your business growth. Cloud-based ERP systems, for example, can streamline all your organizations and place all your data in one place, enabling more accurate reporting and a more efficient work environment, collaboration-based, and data-based.
Save unnecessary costs
Running your business with an ERP system creates efficiency that makes your business slimmer with its growth. Many businesses report that they can develop without adding additional staff or IT costs. The cost of implementing ERP systems is easily defeated by ROI from a business environment that is more efficient and fully optimized.
Increase Security and Accessibility
Using an ERP system will also increase security and accessibility while reducing risk and costs. Moving your ERP application to Cloud allows you to scale, expand, and improve business quickly. It also increases further visibility and accessibility, utilizing the fully capability of the ERP system.
Grow your business
The ERP system can eliminate inefficiency, wasted time and wasted resources, empowering your business to develop and optimal.
If you are burdened by inability to meet demand because you are limited by conventional systems or stagnant ERP systems that are stagnant, improving to the modern ERP system will free your business to realize the actual growth potential.
Mandatory features in ERP
The following is a list of the most important ERP features that are most commonly found in the ERP software system:
ERP functionality is a major part that makes this solution different from other types of software. Although many features are fairly interesting, their ability to integrate with other systems, is the main thing and important than the application series made to work simultaneously.
Integration ensures the various capabilities offered by the ERP system works harmoniously.
ERP provides fully integrated and intuitive platforms where you can analyze, monitor, and do most of the tasks driven by data. Through a single database, ERP collects, stores, and analyzes data in all departments. This ensures smooth communication in your organization.
The company today no longer has to work separately, thanks to ERP. Working from one source of information reduces the difference between your team along with errors and related costs.
Integration also allows your business to work with many components at once. For example, with customer relations management (CRM) integrated, users can access order history and customer information in the same system.
Data analysis provides insight into business trends and can offer predictions based on past practices. This increases efficiency on the scale of the organization, ensuring the smooth operation and increasing productivity.
When someone asks, “What did ERP do?” The answer will most likely always include automation. The ability of this ERP automates boring general tasks including ordinary, payroll, accounting, invoice making, reporting, and other entries.
Automation Reduces the time that your staff usually spends for this process, allows them to focus on more important tasks. Optimizing your employee time ensures more effective working days.
Automating your process can also reduce human error. When your employees spend most of their time repeating the same task repeatedly, they will definitely make one or two mistakes.
Automation allows data sent from one part of the system to another, without possible errors. Even small mistakes can harm your business, so why not eliminate it if possible?
3. Data analysis
Because ERP has collected and processed data from all your business functions, does not make sense to use the information through analysis?
Simply put, this ERP function finds trends and patterns in your process. This allows users to reflect on the effectiveness of certain tasks, in addition to providing estimates for future business decisions.
ERP analyzes data related to all business operations, including client data, production statistics, sales data, and more.
For example, ERP can help you predict demand, make a budget, and analyze your HR function. Data analysis offers easy access to important business data and gives you the tools you need to track organizational productivity and efficiency.
Many people use the term “reporting” and “analysis” synonymous when talking about ERP. Although this is usually not a problem, it is still important to distinguish the two.
You can consider ERP reporting capabilities as a tool needed to submit analysis to end users. These tools often include adjustable dashes, gantt charts, pie charts, bar graphics, and other visual representations.
Many systems also allow users to limit access to reports, protect valuable company information.
ERP provides intuitive detailed reports, can be followed up, and relevant. In addition, it allows complete search, ensuring every mistake, inconsistencies, and questionable processes can be tracked, repaired, and prevented.
Thus, ERP reporting capabilities help you target the weaknesses of your business, ensuring stronger performance over time.
5. Customer relationship management
Customer relationship management software (CRM) is useful for several reasons. First, CRM is a good choice for companies whose customer base becomes too large for spreadsheets.
The spreadsheet works well until you spend more time updating it than actually use it to find information.
Second, CRM in ERP concentrates customer information, allows quick access when working with other parts of the system. For example, integrated CRM allows users to access billing information and customer addresses when processing shipping.
In addition to contact management, CRM tools also handle marketing automation, sales path activities, and prospect management. With ERP, you can design and implement a comprehensive customer service solution.
You can easily create campaigns, track customers along the sales cycle of sales, and measure customer satisfaction. ERP customer service management capabilities make it easy to increase long-term customer retention.
Financial management is one of the most important functions in any business. Thus, good ERP is that has a strong accounting tool.
The ERP system helps manage processes such as debt, receivables, fixed asset management, risk management and tax management. There are many systems available that can also manage various currencies and tax regulations if you regularly do business outside your country.
A good ERP system also allows you to automate many accounting functions including payment processing, sales analysis, cost management, and others. It increases the accuracy and processing time, reduces the burden on your staff and their working hours.
7. Tracking and visibility
One of the biggest aspects of the ERP solution is its ability to provide comprehensive visibility. The most obvious example of this is supply chain visibility. Many ERP systems currently have technology to track finished products and raw materials from making up shipping.
Most of this is made possible by the high-level ERP integration system provided. Because all applications you can send and receive information, tracking material is a simple process. This level of visibility allows users to understand and estimate problems such as postponement and output stock.
In addition to tracking the tangible object, ERP allows users to track information. These include sales, production statistics, staffivity staff, and others.
The ERP system provides many tools for tracking different collection of information. Sales are often tracked in CRM tools, staff productivity can be tracked in HR modules and production statistics can be found in manufacturing analysis tools.
The ERP system also allows users to set warnings for certain events, keep it up to the most important activity.
The importance of using an ERP system for your business
ERP is a strong data management solution. This streamlines business operations by automating most data-based processes, conducting extensive data analysis and providing accurate data management, all within an intuitive and integrated framework.
Using ERP does not be said to be cheap, but if your business requires a comprehensive solution for business operations, using ERP is the best solution to optimize existing processes.
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