Enterprise Resource Planning
Enterprise resource planning (ERP) is a company-wide computer software system used to manage and coordinate all the resources, information, and functions of a business from shared data stores.
An ERP system has a service-oriented architecture with modular hardware and software units or "services" that communicate on a local area network. The modular design allows a business to add or reconfigure modules (perhaps from different vendors) while preserving data integrity in one shared database that may be centralized or distributed.
A D V E R T I S E M E N T
There are many different systems in a large company's "back office," including planning, manufacturing, distribution, shipping, and accounting.Enterprise resource planning (ERP) is a system that integrates all of these functions into a single system, designed to serve the needs of each different department within the enterprise. ERP is more of a methodology than a piece of software, although it does incorporate several software applications, brought together under a single, integrated interface.
An ERP system spans multiple departments in a corporation, and in some cases an ERP will also transcend the corporate boundary to incorporate systems of partners and suppliers as well, to bring in additional functions like supply chain management. Because it is so vast and all-encompassing, the ERP system goes far beyond being just a simple piece of software. Each implementation is unique and is designed to correspond to the implementer's various business processes. An ERP implementation can cost millions of dollars to create, and may take several years to complete.
An ERP system likely represents a company's largest IT investment, so some companies prefer to implement ERP in a more incremental fashion rather than all at once. Some ERP vendors provide modular software units together with a unified interface to allow for this gradual approach.
Some organizations � typically those with sufficient in-house IT skills to integrate multiple software products � choose to implement only portions of an ERP system and develop an external interface to other ERP or stand-alone systems for their other application needs. For example, one may choose to use human resource management system from one vendor, and the financial systems from another, and perform the integration between the systems themselves.
This is common to retailers, where even a mid-sized retailer will have a discrete Point-of-Sale (POS) product and financials application, then a series of specialized applications to handle business requirements such as warehouse management, staff rostering, merchandising and logistics.
Ideally, ERP delivers a single database that contains all data for the software modules, which would include:
- Manufacturing
Engineering, bills of material, scheduling, capacity, workflow management, quality control, cost management, manufacturing process, manufacturing projects, manufacturing flow
- Supply chain management
Order to cash, inventory, order entry, purchasing, product configurator, supply chain planning, supplier scheduling, inspection of goods, claim processing, commission calculation
- Financials
General ledger, cash management, accounts payable, accounts receivable, fixed assets
- Project management
Costing, billing, time and expense, performance units, activity management
- Human resources
Human resources, payroll, training, time and attendance, rostering, benefits
- Customer relationship management
Sales and marketing, commissions, service, customer contact and call center support
- Data warehouse and various self-service interfaces
for customers, suppliers, and employees
- Access control
user privilege as per authority levels for process execution
- Customization
to meet the extension, addition, change in process flow
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