The economic boom means massive expansion in operations for decent-sized entities. Not only will firms intensify the business lines they already have, but many will be looking to expand these lines into other locations — locally or even internationally — while others will be experimenting with new products altogether.
Enterprise Resource Planning (ERP) is a method that’s meant to integrate the firm’s operations at every level as a facilitator to this kind of expansion. The ambition of ERP software, therefore, is to overcome the bureaucratic chaos of modern business by joining all departments and functions together into a single system that, at the same time, can serve the needs of each.
Though ERP originated in the manufacturing and logistics sector, its techniques are becoming important to entities in many other areas. Even nonprofit institutions such as private colleges are looking to ERP to help to streamline their operations and cut costs.
ERP is a huge topic, to which this post only offers a short and very basic introduction in the form of a brief Q&A. Future posts will look at ERP in the context of different sectors, the operations of different departments and the specific methods of ERP suited to each of these, in order to make its potential benefits as clear and concrete as possible.
Q: What is Enterprise Resource Planning (ERP) and who uses it?
A: An enterprise resource plan is a system linking all of the computer systems in your firm’s various departments to maximize efficiency. So instead of the warehouse, accounting, HR, manufacturing and legal departments having their own programs and networks, now they’re tied together in a single program that still can distinguish between each department’s needs, assign permissions and so on.
This method was first developed in the 1990s for manufacturers who were trying to overcome the data entry problem. It used to be that when customers placed an order, it would proceed step by step around the company. Businesses that had grown piecemeal and acquired new lines, operations and teams along the way incorporated the software that people happened to be using at the time they joined the team.
Eventually, this got terribly frustrating because each order from the sales team would have to be sent to finance, which would have to get it to the warehouse and then shipping, and so on. Error was being invited along every step of the way, and no one actually knew what the status of an order was. ERP was a way to cut all of that out and replace it with a unitary system for maximum efficiency.
Q: What does ERP software look like in practice?
A: ERP software manages resources from a central repository, but also is designed to carry out all of the functions different departments require. Most frequently, the way this is done is by sorting the different functions into modules: an ERP might include a sales/customer relations module, a production module, a supply chain module, a credit and financing module, and an overall management module.
There are ERPs that serve specific industries (vertical ERPs), general ERPs that can adapt to the needs of industries, usually through cloud computing, ERPs tailored to serve bigger or smaller entities, and even a small but growing number of open-source ERPs that allow those entities that have their own technology to develop creative ways to integrate their processes.
Q: Why should my firm have an ERP?
A: The standardization, automation and efficiency you will enjoy when you have an ERP will save your core team, managers and employees a number of massive headaches — and could save your business millions of dollars in the long run. The first and most basic function of many ERPs is to make every operation within your entity visible and accessible by senior management. Not only does this allow better planning for expansion of sales and investment, it allows a number of tasks that every department used to have to negotiate with all of the others to be streamlined and made completely collaborative.
ERPs are customizable to your business needs, combining not only the different modules but different applications and different platforms, all now made coherent and easy to access. At the dawn of ERPs, they saved employees thousands of hours lost in manual entry operations to concentrate on activities that actually generate revenue. Today, every company with an effective ERP can use it to implement industry best practices, cutting fat from the budget and freeing up its senior management team to concentrate on its core business.
Implementing an ERP that works with your business model can make a world of difference in how your entity operates. Disparate systems become unified, and redundant practices are phased out and replaced by effective, efficient management and cooperation.
Diligent is on the cutting edge of ERP development for your board, leaders and other teams. Our solutions offer secure means of sharing information across the huge variety of operations a 21st-century business needs to juggle. We hope to be your first entry point into a safe and effective strategy to incorporate management of your resources across your whole entity. Please call or email us to discuss this and our other solutions.