ENTERPRISE RESOURCE PLANNING (ERP)

ENTERPRISE RESOURCE PLANNING (ERP)

Environment in which business firms are operating today is very competitive. Hence it is necessary to manage the resources of an organization effectively inorder to meet this competition and to achieve its objective. This requires the integration of various activities of an organization. ERP enables the organization the achieve this integration.

ERP software makes an attempt to integrate all departments and functions across a company into a single computer system that can serve all those different department’s particular needs.

Enterprise = Group of people with common objective

Resource = Human resource, financial, technological etc..

Planning = Deciding in advance the future course of action

Thus ERP is the method of planning all the resources of an enterprise to achieve its objectives with minimum effort. In other words ERP is multi-module application software that helps a company to integrate and manage various important parts of a business.

NEED FOR ERP IN BUSINESS

There are 5 major reasons why companies undertake ERP

• INTEGRATE FINANCIAL INFORMATION

• INTEGRATE CUSTOMER ORDER INFORMATION

• STANDARDISE AND SPEED UP MANUFACTURING PROCESSES

• REDUCE INVENTORY

• STANDARDIZE HR INFORMATION

FEATURES OF ERP

• ERP makes an attempt to integrate all departments and functions across a company into a single computer system that can serve all those different department’s particular needs.

• ERP performs core corporate activities and increases customer service and there by augmenting the corporate image.

• The ERP bridges the information gap across the organization.

• ERP provides for complete information of systems not only across the departments in a company but also across the companies under the same management.

• ERP is the only solution for project management

• ERP allows automatic introduction of latest technologies like EFT, EDI, INTERNET, E-COMMERCE etc…

• ERP eliminates the most of the business problems like customer service, cash management, quality problems etc…

• ERP not only addresses the current requirement of the company but also provides the opportunity of continually improving and refining business processes

LIMITATIONS OF ERP

• HIGH COST

• REDUCE MORALE OF EMPLOYEES

• RIGIDITY

• ADDITIONAL STAFF

• UNABLE TO SUPPORT E-COMMERCE

• MORE TIME

• HIGH COST

The high price of the software, associated license and annual charges are main problems of ERP

• REDUCE MORALE OF EMPLOYEES

There is a very high cost of training involved with most ERP packages. Employees have to be trained and re-educated. This will reduce the morale of.

• RIGIDITY

ERP packages are often very rigid in design and wording. Eg. SAP

• ADDITIONAL STAFF

Experts are required for operating ERP software, so additional employees may required.

• UNABLE TO SUPPORT E-COMMERCE

As a result of ERP packages at present being unable to support E-Commerce, businesses currently have to invest additional funds into E-Commerce packages which need to run side by side to the ERP packages.

• MORE TIME

Businesses which have embraced ERP often criticize the ERP software companies who taking excessive amount of time to bring about changes.