Enterprise Resource Planning (ERP) systems are basically management information systems that integrate and manage many of the businesses related to production or manufacturing, distribution, storage, and various activities necessary for the delivery of goods or services.
The purchase of an Enterprise Planning System (ERP) by organizations has been touted as the solution to survive in this e-commerce based economy. ERP systems have been the solution to integrate the different departments of the company with the promise of improving their efficiency and productivity as a whole.
ERP systems are comprehensive management systems for the company. They are characterized by being made up of different parts integrated in a single application. These parts are of different use, for example: production, sales, purchasing, logistics, accounting (of various types), project management, GIS (geographic information system), inventory and warehouse control, orders, payroll, etc. We can only define an ERP as the integration of all these parts. The opposite would be like considering a simple billing program as an ERP for the simple fact that a company integrates only that part. This is the fundamental difference between an ERP and another management application. The ERP integrates everything necessary for the operation of the company's business processes.We cannot speak of ERP at the moment that only one or a small part of the business processes is integrated. The ERP definition itself indicates the need for "Availability of all information for everyone all the time".
The main objectives of ERP systems are:
- Optimization of business processes. Access to all information in a reliable, accurate and timely manner (data integrity). The possibility of sharing information among all components of the organization. Data elimination and unnecessary reengineering operations.
The fundamental purpose of an ERP is to provide support to business customers, quick response times to their problems, as well as efficient information management that allows timely decision-making and decreases total operating costs.
The characteristics that distinguish an ERP from any other business software is that they must be comprehensive systems, with modularity and adaptable:
Integral
Because they allow the different processes of the company to be controlled, understanding that all the departments of a company are related to each other, that is, that the result of one process is the starting point of the next. For example, in a company, the fact that a customer places an order represents the creation of a sales order that triggers the production process, inventory control, product distribution planning, collection, and of course their respective accounting movements.. If the company does not use an ERP, it will need to have several programs that control all the aforementioned processes, with the disadvantage that by not being integrated, the information is duplicated, the margin of contamination in the information grows (especially due to capture errors). and a favorable scenario for embezzlement is created. With an ERP,the operator simply captures the order and the system takes care of everything else, so the information is not manipulated and is protected.
Modular
ERPs understand that a company is a set of departments that are interrelated by the information they share and that is generated from their processes. An advantage of ERP, both economic and technical, is that the functionality is divided into modules, which can be installed according to customer requirements. Example: sales, materials, finances, warehouse control, human resources, etc.
Adaptable
ERPs are created to adapt to the idiosyncrasy of each company. This is achieved through the configuration or parameterization of the processes according to the outputs that are needed from each one. For example, to control inventories, one company may need to manage the batch partition, but another company may not. The most advanced ERPs usually incorporate 4th Generation programming tools for the rapid development of new processes. Parameterization is the fundamental added value that any ERP must have to adapt it to the specific needs of each company.
ERP systems require a lot of work to adapt it to the specific needs of the company. Implementations of information systems are notoriously difficult, but nevertheless, the implementation of an ERP has much more complicated challenges technologically and organizationally speaking than traditional implementations. A conventional ERP contains 8,000 to 10,000 configuration tables and 800 to 1,000 business processes. ERP systems require a lot of design and adaptation in order to configure the system to fit what the company requires (Scott & Kaindl, 2000).
A manufacturer who does not have an ERP, based on their needs, may encounter many closed software applications, which cannot be customized, and are not optimized for their business. Engineering design for product improvement, customer tracking from acceptance to complete satisfaction, complex interdependency management of material receipts, real-world structured products, engineering changes, and overhaul and improvement, and the need to develop substitute materials, etc. The advantage of having an ERP is that all this, and more, is integrated.
Sources
- Liaquat H, Patrick, JD & MA Rashid. (2002). Enterprise Resource Planning: Global Opportunities & Challenges. Hershey, PA, USA. Idea Group Publishing.ERP. Recovered from
