ERP SYSTEM

An enterprise resource planning (ERP) system is an integrated computer-based application used to manage internal and external resources, including tangible assets, financial resources, materials, and human resources. Its purpose is to facilitate the flow of information between all business functions inside the boundaries of the organization and manage the connections to outside stakeholders. Built on a centralized database and normally utilizing a common computing platform, ERP systems consolidate all business operations into a uniform and enterprise-wide system environment.
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An ERP system can either reside on a centralized server or be distributed across modular hardware and software units that provide "services" and communicate on a local area network. The distributed design allows a business to assemble modules from different vendors without the need for the placement of multiple copies of complex and expensive computer systems in areas which will not use their full capacity

Advantages
In the absence of an ERP system, a large manufacturer may find itself with many software applications that cannot communicate or interface effectively with one another. Tasks that need to interface with one another may involve:
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ERP systems connect the necessary software in order for accurate forecasting to be done. This allows inventory levels to be kept at maximum efficiency and the company to be more profitable.

Integration among different functional areas to ensure proper communication, productivity and efficiency

Design engineering (how to best make the product) Order tracking, from acceptance through fulfillment The revenue cycle, from invoice through cash receipt Managing inter-dependencies of complex processes bill of materials Tracking the three-way match between purchase orders (what was ordered), inventory receipts (what arrived), and costing (what the vendor invoiced)

The accounting for all of these tasks: tracking the revenue, cost and profit at a granular level.

ERP systems centralize the data in one place. Benefits of this include: Eliminates the problem of synchronizing changes between multiple systems - consolidation of finance, marketing and sales, human resource, and manufacturing applications Permits control of business processes that cross functional boundaries

Enables standard Product naming convention and other infrastructure titles. Provides top-down view of the enterprise (no "islands of information"), real time information is available to management anywhere, anytime to make proper decisions.

Reduces the risk of loss of sensitive data by consolidating multiple permissions and security models into a single structure.

Shorten production lead time and delivery time Facilitating business learning, empowering, and building common visions

Some security features are included within an ERP system to protect against both outsider crime, such as industrial espionage, and insider crime, such as embezzlement. A data-tampering scenario, for example, might involve a disgruntled employee intentionally modifying prices to below-the-break-even point in order to attempt to interfere with the company's profit or other sabotage. ERP systems typically provide functionality for implementing internal controls to prevent actions of this kind. ERP vendors are also moving toward better integration with other kinds of information security tools. [edit]Disadvantages Problems with ERP systems are mainly due to inadequate investment in ongoing training for the involved IT personnel - including those implementing and testing changes - as well as a lack of corporate policy protecting the integrity of the data in the ERP systems and the ways in which it is used.
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Disadvantages
Customization of the ERP software is limited. Re-engineering of business processes to fit the "industry standard" prescribed by the ERP system may lead to a loss of competitive advantage. ERP systems can be very expensive. (This has led to a new category of "ERP light" solutions.) ERPs are often seen as too rigid and too difficult to adapt to the specific workflow and business process of some companiesthis is cited as one of the main causes of their failure. Many of the integrated links need high accuracy in other applications to work effectively. A company can achieve minimum standards, then over time "dirty data" will reduce the reliability of some applications. Once a system is established, switching costs are very high for any partner (reducing flexibility and strategic control at the corporate level). The blurring of company boundaries can cause problems in accountability, lines of responsibility, and employee morale. Resistance in sharing sensitive internal information between departments can reduce the effectiveness of the software.

Some large organizations may have multiple departments with separate, independent resources, missions, chains-of-command, etc., and consolidation into a single enterprise may yield limited benefits.

Commercial applications
Manufacturing Engineering, bills of material, work orders, 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, call-center support Data services Various "self-service" interfaces for customers, suppliers and/or employees Access control Management of user privileges for various processes

The term "enterprise resource planning" originally derived from manufacturing resource planning (MRP II), which followed material requirements planning (MRP).
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MRP evolved into ERP when "routings"

became a major part of the software architecture and a company'scapacity planning activity also became a part of the standard software activity. ERP systems typically handle

themanufacturing, logistics, distribution, inventory, shipping, invoicing, and accounting for a company. ERP software can aid in the control of many business activities, including sales, marketing, delivery, billing, production, inventory management, quality management, and human resource management.
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ERP systems saw a large boost in sales in the 1990s as companies faced the Y2K problem in their legacy systems. Many companies took this opportunity to replace such information systems with ERP systems. This rapid growth in sales was followed by a slump in 1999, at which time most companies had already implemented their Y2K solution.
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ERP systems are often incorrectly called back office systems, indicating that customers and the general public are not directly involved. This is contrasted with front office systems like customer relationship management (CRM) systems that deal directly with the customers, or thee-business systems such as ecommerce, e-government, e-telecom, and e-finance, or supplier relationship management (SRM) systems.
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ERP systems are cross-functional and enterprise-wide. All functional departments that are involved in operations or production are integrated in one system. In addition to areas such as manufacturing, warehousing, logistics, and information technology, this typically includesaccounting, human resources, marketing and strategic management.
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ERP II, a term coined in the early 2000s, is often used to describe what would be the next generation of ERP software. This new generation of software is web-based and allows both employees and external resources (such as suppliers and customers) real-time access to the system's data. EAS enterprise application suite is a new name for formerly developed ERP systems which include (almost) all segments of business using ordinary Internet browsers as thin clients.
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