Enterprise Resource Planning
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Enterprise resource planning is a suite of applications that help businesses manage their core processes such as inventory, accounting, sales, purchasing, customer support and human resource by integrating them into a single system. It brings order to the chaos by allowing users from the C.E.O to the accounts receivable clerks to create, store and use the same data obtained through common processes.
SAP-ERP is an excellent example of enterprise resource planning software that consists of various modules fully integrated to cover virtually every aspect of the business. Microsoft Dynamics is another example of ERP developed by Microsoft. ERP Next and NetSuite ERP are open source ERP’s systems for small and medium-sized businesses. Odoo is also an open sourced ERP with commercial features aimed at companies with information technology development teams (Sumner & Hamers, 2012).
There are countless advantages realized upon successful implementation of Enterprise Resource Planning. First, Enterprise Resource Planning improves the efficiency of the organization by reducing time and effort required by the employees to carry out the day to day activities. It eliminates the repetitive manual processes which free up team members to concentrate on profit generating tasks. Second, implementing an ERP system across the departments allows the organization to have a single reporting system for each and every process. By creating a single source of information, it enables the company to generate useful reports and analytics at any time.
Third, it allows increased collaboration and workflows since information from various departments is easily accessible from a centralized database. This allows the employees to analyze and compare functions across various departments without the hassle of multiple calls or emails. It also increases the company’s visibility by making data from various departments to be easily accessible to the employees. Fourth, adopting an ERP system reduces the operational costs of the organization by ensuring there is accurate inventory, procurement and demand forecasting features (Sumner & Hamers, 2012). It also lowers the information technology related costs by reducing the training costs for the end users since they only need to be conversant with only one system rather than interacting with many individual applications. Finally, ERP systems allows end to end tracking of the customer which eventually improve the customer’s satisfaction through better customer interaction.
As an IT manager, I would encourage my company to use financial management module of ERP to manage the flow of capital into and out of the company. It would help the finance department in standard accounting and financial transactions such as payments, balance sheet, expenditures, general ledger and tax management. It would also generate financial reports for the various departments and for the overall business. The human resource management department would use its HRM module to match employees with their skills and competencies through the use of special tools such as skills matrix, timesheet, and job profiles. They would also use the payroll system that has been integrated with the finance department to manage salaries, reimbursements and travel expenses (Monk & Wagner, 2009).
The company would use the customer relationship management module to boost its customer service delivery. It offers a customer’s profile by consolidating data such as purchase history, social media activities and past interactions with sales support teams which improves future customer interactions with the sales team (Monk & Wagner, 2009). In an Enterprise resource planning, CRM is integrated with sales and marketing module in order to streamlined workflow. The sales and marketing module takes care of sale processes such as sale orders, inquiries, quotations, and invoices. It also provides a special feature for shipping tracker. The customer relationship management and sales module work together to speed up the sales cycle.
Without purchasing module, the company would not be able to manage the various processes involved in procurement such as purchase orders, supplier listings, stock updates and quotation requests. In an ERP setup, it is integrated with the supply chain management module. The supply chain management module covers critical aspects of supply chain like purchase order management. It oversees product flow from manufacturing to consumer and vice versa in case of returns or recalls. A special feature of this module is process automation that streamlines the supply chain by making it adaptive to market changes. Inventory management module also known as material management module assists the company to measure stock targets, track products and standardize replenishments. It makes use of product serial numbers to track items and locate them within the company. The module is integrated with purchasing module (Monk & Wagner, 2009).
Businesses often make tough decisions on how to manage operations, and one of the decisions they might be debating right now is whether to implement an Enterprise resource planning. Although it takes a lot of time, financial resources and effort to adopt and use it regularly, its benefits outweigh the initial cost, effort and time associated with its implementation.
Monk, E. F., & Wagner, B. J. (2009). Enterprise Resource Planning. Australia: Cengage
Sumner, M., & Hamers, R. (2012). Enterprise resource planning. Amsterdam: Pearson Benelux.
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