What is ERP, Anyway?
As one of the longest standing ERP vendors, the fundamentals of ERP seem second nature to us here at MAX, and it isn’t until we’re posed with the question, “what actually is ERP?” that we’re reminded of how complex and intimidating the topic can seem to someone who’s new to the world of ERP. A quick Google search doesn’t quite answer this question either, which is what prompted us to write this blog series in the first place.
So, What is ERP?
ERP is an industry acronym for Enterprise Resource Planning, but even the full name doesn’t give a great explanation of what ERP does. Broadly, ERP refers to a system that automates and integrates a company’s core business elements to increase efficiency and simplify operations. It is a comprehensive system that includes all the software pieces you might need to run your manufacturing operation.
For a deeper understanding of what ERP does, it’s helpful to take a step back and think about all of the processes that are essential to running a manufacturing business, including production planning, materials management, financials, customer relationship management (CRM), quality and compliance programs, customer service, and beyond. The purpose of ERP software is to have one complete system that supports and integrates all of these functions, in order to streamline processes and information across an entire organization. By creating a smooth flow of information that is always in sync, employees across all divisions (for example, accounting and sales) have access to the same, consistent information.
Most commercial ERP systems also offer synchronized reporting and automation tools. Instead of relying on separate databases and spreadsheets that employees need to consistently update, and then putting someone in charge of manually merging them all to generate reports, some ERP solutions give you the ability to pull reports from one central system. For example, with sales orders automatically flowing into the financial system without the need for the additional step of manually entering and sending new orders to the order management department, the order management department can process new orders more quickly and accurately, and the finance department can close the books faster.
