Why You Need an ERP for Your Business

Learn about ERP, how it works, and why it is essential for your business

ERP o planificación de recursos empresariales

What is Meant by ERP?

ERP stands for Enterprise Resource Planning, which is a process by which organizations can manage and integrate all of their essential business functions into a single software platform. These functions include finance, manufacturing, project management, human resources, and marketing.

Typically, ERP systems are deployed in order to consolidate previously disparate business or enterprise functions into a more cohesive and streamlined system. Doing so can provide numerous benefits for businesses of all sizes, including enhanced efficiency, streamlined workflows, improved decision-making, and increased competitiveness.

How Does It Work?

ERP works by integrating different aspects of a business such as accounting, manufacturing, and sales. It allows businesses to have a more complete view of their operations and increase visibility of the current business processes that they have, which makes it easier to track and manage important business data. ERP also helps businesses create and track invoices, purchase orders, and other important documents.

How Is It Used and Implemented in Companies?

ERP systems or ERP modules are typically implemented by businesses through the installation of software solutions onto company computers, and the implementation process can involve significant customization of the software to meet the specific needs of the business. Once implemented, ERP systems provide a real-time view of all business operations which can help companies make better decisions and improve efficiency.

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The Five Main Functions of ERP 

Below are the main functions of ERP:

#1 Inventory Management

The inventory management provided by the ERP software helps to keep track of the stock at all locations in the organization. It also provides information on when to reorder the stock and how much needs to be ordered.

#2 Financial Management

The financial management function of ERP software helps to manage the financial transactions of the organization in a centralized manner. This ensures a timely and accurate recording of financial data.

#3 Human Resources Management

The human resources management function of ERP software helps to manage the employee records of the organization. It also automates processes such as payroll, attendance tracking, and performance appraisals.

#4 Manufacturing Process and Logistics

The manufacturing process and logistics management in ERP software help optimize the resources used in production. This results in more efficient use of resources and reduced manufacturing costs.

#5 Customer Relationship Management (CRM)

A CRM module stores data that is related to customers and prospects, which gives employees insights to improve sales and marketing processes. It is also useful if you’re working for an e-commerce business, as it allows you to target prospects with ads that are meaningful to them; track when prospects have been contacted and what was discussed; and eliminate additional sales calls that may not be appropriate.

6 Key Phases of an ERP Implementation Plan 

For an ERP implementation plan to be efficient, it must go through six key phases:

  1. Discovery & Planning
  2. Design
  3. Development
  4. Testing
  5. Deployment
  6. Support and Updates

Why Is It Essential for Businesses?

Integrating ERP in your business is essential because it helps your company be more self-aware by linking statistics about its five functions: manufacturing, finance, inventory distribution, human resources, and customer relationship management. 

By integrating all of these together, ERP provides numerous benefits which include:

  • Greater customer service
  • Improved cooperation
  • A better view of your business process
  • Stronger security and regulatory compliance
  • Enhanced inventory control
SafetyCulture Content Team
Article by
SafetyCulture Content Team
SafetyCulture Content Team
The SafetyCulture content team is dedicated to providing high-quality, easy-to-understand information to help readers understand complex topics and improve workplace safety and quality. Our team of writers have extensive experience at producing articles for different fields such as safety, quality, health, and compliance.