Understanding Why ERP is required ? For Beginners

Basic departments in an organization can be consider as Sales from where you receive your bread and butter customer who provide you that bread and butter and other department such as production, inventory external customers such as vendors, third parties etc who help to achieve our organizational goals.

What are the key observation you see in any common enterprise is that they have many Business units and every second these departments exchange data and communicate with each other to achieve organizational goals collectively. So from my statement it is clear that Communication and proper exchange of information helps better in achieving the goals of your organization. Every one is linked with each other for one or other needs say for eg. Sales exchange information with customers, sales provide information to marketing, marketing exchange communication with finance HR and so on. This is not just the basic case where the communication is internally, Exchange of information is with external customers also such as Share holders, creditors, vendors, etc.

Most organizations across the world have realized that in a rapidly changing environment, it is impossible to create and maintain a custom designed software package which will cater to all their requirements and also be completely up-to-date. Realizing the requirement of user organizations some of the leading software companies have designed Enterprise Resource Planning software which will offer an integrated software solution to all the functions of an organization.

Below is some of the major features of a basic ERP system which can help in one or the other ways.

ERP facilitates company-wide Integrated Information System covering all functional areas like Manufacturing, Selling and distribution, Payables, Receivables, Inventory, Accounts, Human resources, Purchases etc.,
It provides core corporate activities and increases customer service and thereby enhances the Corporate Image.
It provides a bridge between other departments to communicate and exchange data.
It not only communicates and exchange data between other departments but also helps across departments.
ERP helps for better Project Management.
ERP allows automatic introduction of latest technologies like Electronic Fund Transfer (EFT), Electronic Data Interchange (EDI), Internet, Intranet, Video conferencing, E-Commerce etc.
It helps in eliminating most of the business problems like Material shortages, Productivity enhancements, Customer service, Cash Management, Inventory problems, Quality problems, Prompt delivery and so on
ERP not only addresses the current requirements of the company but also provides the opportunity of continually improving and refining business processes.
ERP provides business intelligence tools like Decision Support Systems (DSS), Executive Information System (EIS), Reporting, Data Mining and Early Warning Systems (Robots) for better decisions.

Components of ERP
• Sales and Marketing
• Master Scheduling
• Material Requirement Planning
• Capacity Requirement Planning
• Bill of Materials
• Purchasing
• Shop floor control
• Accounts Payable/Receivable
• Logistics
• Asset Management
• Financial Accounting

Soon i will be providing you with a video which will give you a basic summary on why ERP is required in an organisation.