Understanding The Benefits Of ERP SystemsThe evolution of Manufacturing Requirements Planning (MRP) has given birth to Enterprise Resource Planning (ERP). ERP plans cover much wider perspectives as compared to MRP. There is no doubt that the benefits of ERP systems are enormous from both the business and technology aspects. From the business point of view, ERP has grown from mere coordination of manufacturing processes to enterprise level integration of back-end processes. From the technology point of view, ERP has expanded from legacy implementations to more sophisticated client-server applications. Enterprise Resource Planning brings a number of benefits to various organizations. The different activities that take place in an organization fall in to three major categories. These are, namely, strategic activities, management activities and operational activities. The scope of all the three activities in an organization is quite vast. Therefore, they require proper procedures to manage them. ERP systems provide strategies for strategic control, management control and operational control. Let us examine the benefits of using an ERP system. ERP system integrates various processes that occur in a business organization into a single enterprise level information system. This integrated system improves coordination among functional departments within the organization. Hence, it increases the business efficiency. ERP system implementation helps to reduce the operating cost, production cost, inventory control cost, marketing costs and help desk support cost. In fact, all of this work is done by the ERP system. The system manages day-to-day activities in an enterprise. Thus, data could be accessed easily for decision-making activities or for managerial approach. ERP system tracks cost linked with various activities of an organization and performs costing based on these activities. ERP systems are designed to support resource-planning unit of strategic planning. Strategic planning encourages planning and designing of strategies for various activities of an organization. The systems integrate with other e-business applications like Supply Chain Management, Customer Relationship Management, Knowledge Management etc. All the e-business practices are a combination of technology, strategies and processes to manage enterprise resources and to coordinate internal and external business processes. Thus, to make all this possible, ERP systems should be tightly integrated with other e-business applications. Now let us look at the approach that propels ERP systems while they function. ERP systems follow a phased approach. An ERP project can be broken down in to phases and could be used as individual pilot programs. Some IT companies first choose a pilot program out of an ERP project and study its benefits. If they find the performance of the pilot program satisfactory, they go for the complete ERP project. An ERP system has its own goals, components, and boundaries. Its implementation has greatly reduced operating cost and has provided facilities in managing day to day activities plus strategic planning. As can be seen, the benefits of an ERP system are huge. Take time to research the various vendors and suppliers of systems and then make the choice based on the needs of your organization. |