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Importance of an ERP System

By July 16, 2012 No Comments

The Enterprise Resource Planning (ERP) system is an enterprise information system designed to integrate and optimise the business processes and transactions in a corporation.

Technology plays a key role in today’s business environment. Many companies greatly rely on computers and software to provide accurate information to effectively manage their business. It is becoming increasingly necessary for all businesses to incorporate information technology solutions to operate successfully. One way that many corporations have adopted information technology on a large scale is by installing enterprise resource planning (ERP) systems to accomplish their business transaction and data processing needs. The excellent ability of ERP systems to simplify business transaction processing, eliminate work that adds little or no value and simultaneously improve customer service are the main reasons for the outstanding success and popularity of these systems

An ERP package–depending on the out-of-box features–can support an ambitious range of financial management tasks. Companies often select an ERP solution to plan product rollouts, record interactions with customers and suppliers, track inventories, and keep financial records.

Most companies that choose an ERP software solution are looking to integrate their human resource records with their financial data, customer and shipping transactions, inventory, warehouse, and supply chain information–all under a single roof. One database alone allows the ERP to track information for customer relationship, time management, quality control, and financial reporting and projections.

The successful implementation of an ERP system will have many advantages, as indicated below:

  • Business integration and Improved Data Accuracy: ERP solution system is composed of various modules/ sub modules where a module represents a particular business component. If data is entered in one module such as receiving, it automatically updates other related modules such as accounts payable and inventory. This updating occurs at real time i.e. at the time a transaction occurs. Since, data needs to be entered only once at the origin of transaction, the need of multiple entries of the same data is eliminated. Likelihood of duplicate/ erroneous data is, therefore, minimized. The centralized structure of the data base also enable better administration and security provisions, which minimizes loss of sensitive data.
  • Planning and MIS: The various decision support tools like planning engines and simulations functions, form integral part of an ERP system which helps in proper utilization of resources like materials, human resources and tools. Constrained based planning help in drawing appropriate production schedules, thereby improving operation of plant and equipment. As a part of MIS, an ERP solution system, contains many inbuilt standard reports and also a report writer which produce ad hoc reports, as and when needed.
  • Improved Efficiency and Productivity: In addition to provision of improved planning, ERP system provides a tremendous boost to the efficiency of day to day and routine transactions such as order fulfillment, on time shipment, vendor performance, quality management, invoice reconciliation, sales realization, and cash management. Cycle time is reduced for sales to cash and procurement to pay sequences.
  • Establishment of Standardized Procedures: ERP system is based on processes of international best practices, which are adopted by the organizations during implementation. Department silos are purged and maverick practices are done away with. Because of top down view available to management, chances of theft, fraud and obsolescence are minimized.
  • Flexibility and technology: Due to globalized environment, where production units, distribution centers and corporate offices reside in different countries, organizations need multi currency, multi language and multi accounting modes, in an integrated manner. These provisions are available in most of the ERP systems, particularly in products offered by tier 1 and tier 2 vendors. ERP vendors are also quick to adopt latest technologies, from mainframe to client server to internet. Unlike a bespoke system, Upgrading to latest technology for a running ERP system is uncomplicated, involving mostly adoption of service packs and patches.

With Al Roman Technologies, you get enterprise resource planning (ERP) software solutions that focus on your industry to provide you the competitive advantage and flexibility you expect in best-practice business process automation.