Enterprise resource planning (ERP) deals with the managing of the internal activities of your business – the management control, resource planning, and operational control. This came into being after manufacturing resource planning (MRP) which is a method used in the effective planning of the use of resources available to a manufacturing outfit. This also was an offshoot of the material requirement planning (MRP) which is a system used in the managing of manufacturing procedures.
ERP has to do with the logistics, manufacturing, accounting, invoicing and inventory for a company. It is an internal system that does not directly involve your suppliers, clients and the public in general. ERPs are enterprise-wide and cross-functional, and all departments of an organization are incorporated in one system.
ERP facilitates business activities through the use of softwares. Utilizing reusable, cost-effective software which is applicable to a wide variety of industries is more effective than making use of custom ERP softwares that are expensive. New ERP softwares can be tailor made to suit the needs of government departments, manufacturing industries, hospitals and other business sectors.
The heart of an ERP System is an ERP software which contains different modules. Each module has its own peculiar function it performs. ERP modules include:
- Human resources- maintenance of complete employee archive.
- Financial – generating of financial reports and gathering of data.
- Marketing – direct campaigns and support
- Sales – implementation of invoicing, shipping and booking order.
- Inventory control-maintenance of average stocking level of warehouse.
- Purchasing – acquisition of raw materials, potential supplier and price negotiation.
- production planning – the use of manufacturing capacity, resources and components
ERP sofware is a very useful tool because it helps in managing all of the operations of a department from the point of production to distribution and also accounting all in one integrated system.