Enterprise Resource Planning (ERP) is defined as an Integrated Computer based planning technique used in Organizations and Enterprises for management and resource planning. Resources here mean both internal and external resources of an organization. Various resources of an organization can include financial resource, tangible resource, human resource and also various material requirements. ERP can also be defined as an application and software architecture that facilitates Information flows between various business functions inside and outside of an organization. It consolidates business environment into a uniform system environment. Basically what ERP systems do is that it integrates and automates processes within an entire organization regardless of the organization’s behaviour.

A traditional definition of Enterprise Resource Planning (ERP) as given by APICS – The Educational Society for Resource Management is given below-

‘ERP is a method for effective planning and control of all resources needed to take, make, ship and account for customer orders in a manufacturing, distribution or service company.’

ERP are used in various Industries and organizations like manufacturing, distribution, transportation, education, healthcare, banking and others. ERP delivers a single database that contains all data for the various software modules. It typically addresses areas such as:

• Manufacturing resource planning: Engineering, bills of materials, scheduling, capacity, workflow management, quality control, cost management, manufacturing process, manufacturing projects and manufacturing flow.
• Supply chain management: Order to cash, inventory, order entry, purchasing, product configuration, supply chain planning, supplier scheduling, inspection of goods, claim processing and commission calculation.
• Financial management: General ledger, cash management, accounts payable, accounts receivable, fixed assets.
• Project management: Billing, time and expense, performance units, activity management.
• Human resource management: Human resources, payroll, training, time and attendance, roistering, benefits.

Advantages of Enterprise Resource Planning (ERP):

• Ease of Use.
• General Purpose.
• Totally Integrated System.
• Readymade solutions for most of the Problems.
• Integration of all functions already established.
• Dependency on Human Resources eliminated.
• Suppliers and customers can do online communication.

Related posts:

1. Human Resource Information Systems (HRIS)
2. Business benefits of ERP systems
3. Planning- Definition and it’s features
4. Concept of logistics planning
5. Production planning- Definition, Objectives and Levels

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