What is ERP and Why Do You Need it?

What is ERP?

ERP stands for Enterprise Resource Management. In a nutshell, ERPs help organisations to manage their day-to-day business activities, such as accounting, procurement, project management, risk management, compliance, and supply chain operations. ERP systems tie together many business processes and enable the flow of data between them. By collecting an organisation’s shared transactional data from multiple sources, ERP systems eliminate data duplication and provide data integrity with a single source of truth.

What are the Typical Features of an ERP?

Enterprise resource planning systems are complete, integrated platforms, either on-premises or in the cloud, managing all aspects of a production-based or distribution business. They have many different features, and all provide slightly different final solutions. For example, Oracle NetSuite is great for multinational companies as it is a leader in financial consolidation and multi-currency transactions, whereas Acumatica is very well suited to manufacturing organisations due to it's advanced manufacturing modules. 

In short, these are some of the features that you'll typically see in most ERP systems: 

1. Financial Management

• General Ledger: Core accounting functionality for recording all financial transactions.
• Accounts Payable and Receivable: Managing outgoing and incoming payments.
• Budgeting and Forecasting: Tools for planning and predicting financial performance.
• Financial Reporting and Analysis: Comprehensive reports and dashboards to monitor financial health.
• Multi-Currency Support: Handling transactions in multiple currencies for global operations.

2. Human Resources Management

• Employee Records Management: Centralised database for employee information.
• Payroll Management: Processing salaries, wages, bonuses, and deductions.
• Recruitment and Onboarding: Managing hiring processes and new employee integration.
• Performance Management: Tools for appraisals, reviews, and performance tracking.
• Training and Development: Managing employee training programs and career development plans.

3. Inventory Management

• Inventory Tracking: Real-time monitoring of stock levels.
• Warehouse Management: Optimising warehouse operations, including picking, packing, and shipping
• Order Management: Handling sales orders, purchase orders, and returns.
• Supply Chain Management: Managing suppliers, procurement, and logistics.
• Demand Planning: Forecasting future inventory needs to meet customer demand.

4. Customer Relationship Management (CRM)

• Contact Management: Centralised database for customer and prospect information.
• Sales Management: Tracking sales opportunities, pipelines, and performance.
• Customer Support: Tools for managing customer service requests and support tickets.
• Marketing Automation: Managing campaigns, lead generation, and customer engagement.
• Sales Analytics: Insights and reports on sales performance and customer behaviour.

5. Manufacturing Management

• Production Planning: Scheduling and planning production activities.
• Bill of Materials (BOM): Managing the list of materials and components needed for manufacturing.
• Work Order Management: Tracking and managing production orders.
• Quality Control: Ensuring products meet quality standards through inspections and testing.
• Maintenance Management: Scheduling and tracking equipment maintenance activities.

6. Project Management

• Project Planning and Scheduling: Tools for creating project plans, timelines, and milestones.
• Resource Management: Allocating and managing project resources.
• Task and Time Tracking: Monitoring project tasks and time spent on activities.
• Budget Management: Tracking project costs and ensuring they stay within budget.
• Project Reporting: Insights and reports on project status, progress, and performance.

7. Procurement Management

• Supplier Management: Managing supplier relationships and contracts.
• Purchase Order Management: Creating and tracking purchase orders.
• Inventory Replenishment: Automating the replenishment of stock based on demand.
• Invoice Processing: Handling supplier invoices and payments.
• Spend Analysis: Monitoring and analysing procurement expenditures.

8. Reporting and Analytics

• Business Intelligence: Advanced analytics and data visualisation tools
• Customisable Dashboards: Personalised views of key metrics and KPIs.
• Real-Time Reporting: Up-to-date reports on various business operations.
• Data Integration: Combining data from multiple sources for comprehensive analysis.
• Predictive Analytics: Using data to forecast trends and inform decision-making.

9. Compliance Management

• Regulatory Compliance: Tools to ensure adherence to industry-specific regulations.
• Audit Trail: Detailed records of transactions and changes for auditing purposes.
• Document Management: Secure storage and management of critical documents.
• Risk Management: Identifying and mitigating business risks.

10. E-commerce Integration

• Online Storefronts: Integration with e-commerce platforms for seamless order processing.
• Inventory Synchronisation: Real-time updates of inventory levels across sales channels.
• Customer Portal: Providing customers with access to their order history and account information.
• Sales Analytics: Tracking e-commerce performance and customer behaviour.

These features collectively enable an ERP system to provide a comprehensive solution for managing a wide range of business processes, helping organisations improve efficiency, reduce costs, and drive growth.

So, Why do You Need an ERP System?