ERP: Better Business Solution Essay

Submitted By alex42k
Words: 1478
Pages: 6

ERP: Better Business Solutions Enterprise Resource Planning better known as ERP is a business management information system comprised of business applications that companies use to store, collect, manage and interpret information for business activities. “ERP systems are often used by large business and they are customized and analyzed by different teams in order to fit the different priorities and obligations of the business.” (Webopedia, ERP Term). The enterprise applications integrates and connect all areas of operation in a business environment such as Account receivable, Customer service, Finance, Accounting, Human resources, Supply chain and warehousing as seen in Figure 1.
The enterprise resource system software industry has become a multi-billion industry because it provides different application which can support different areas of the business activities. ERP Systems can be modified and customized to meet certain business needs and technical capabilities. These systems have become important organizational tool because it differs from typical traditional systems. The main purpose of ERP systems is to facilitate internal and external management information across the entire organization. The evolution of ERP systems came along with the development of computers, hardware, applications and software systems. In the past prior to the 90’s, most organizations use Material Requirement Planning (MRP I) which was later renamed to Manufacturing Resource Planning (MRP II). These systems were legacy system based on their programming languages and capabilities. MRP I are systems based on production planning and inventory control while MRP II are systems which effectively plan and integrate all manufacturing resource of most companies. This includes financial planning, operational planning and database accuracy. In the early 90’s, ERP systems began to be integrated into large companies as these systems had the ability to connect and combine all areas of the business process which provides easy accessibility and consistency across the enterprise. Over the years, ERP systems have been modified and upgraded to meet new and current business demands and they have become “Extended ERP”. The extended ERP software includes e-business, Customer relations management (CRM), planning and scheduling, supply chain management. The extended ERP is also known as ERP II has become very effective as they can easily support different connecting applications such as cloud, social, mobile and two-tier applications.
The business enterprise using ERP systems have higher value to their enterprise as a successful implementation of this resource improves the overall function of the business enterprise by reducing cost and time. American Production and Inventory Control Society (2001) defines ERP as an “accounting system” for “effective planning and controlling of all the resources needed to take, make, ship and account for customer orders in a manufacturing, distribution or service company”. This ultimately suggest that having an ERP system is the best practice in the industry and either give an organization a leading edge in the industry or meets the industry demands. The business process can easily be simplified as each department in an organization can work effectively with the systems to complete task and duties assigned. There are several functional areas of Enterprise Resource Planning which makes an organization successful includes:
Accounting Management
Customer Relationship Management
Financial Management
Human Resources Management
Manufacturing Management
Production Management
Sales and Distribution Management
Supply Chain Management
Transportation Management
The most common ERP suppliers otherwise known as vendors are PeopleSoft, Oracle, SAP, Baan and JD Edwards. They control over 65% of this multi-billion dollar global industry. Each vendor/supplier and their application is strong in specific aspect but