Features of enterprise resources planning (ERP)


ERP is a software package developed for optimum use of resources of an enterprise in a planned manner. ERP integrates that entire enterprise starting from the supplier to the customer, covering logistics, financial and human resources. This will enable the enterprise to increase productivity by reducing costs. ERP is a package for cost saving. Once the ERP is implemented, a single solution addresses the information needs of the whole organization.

Features of ERP:

The general ERP model has a central data base shared by all functions of the enterprise, represented by four quadrants in the figure. The figure represents the concept of enterprise resources planning and execution; symbolizing integrated functionality and the global nature of today’s enterprises.

Some of the salient features of ERP are,

1. Accommodating variety: The ERP software solution provides both multi lingual and multi-currency capabilities. Also multi mode manufacturing and multi-facility provide the capability required to compete and succeed globally.

2. Integrated Management Information:

(i) Today’s business managers use ERP for Flexible reporting tools to extract the information as and when needed without depending on an information system department (MIS department).

(ii) Electronic data interchange (EDI) to electronically accept customer information like purchase orders, schedule amendments, or cash payment and electronically send order acknowledgement and invoices to customers.

(iii) Imaging to provide the ability to display drawings or specification, ability to- store original sale orders, purchase orders, and quotations, and contracts.

(iv) Data base creation: Starting with time and attendance reporting, monitoring and control of machines and post-sales statistics.

Supply chain management:

End-to-end supply chain management is crucial for enterprises having multiple manufacturing units and distribution networks. Intelligent resource Planning (IRP) is used to optimize the overall flow of demand and supply data and to build relationship between various activities to optimally identify the demand supply chain.

Resource management:

The resources such as equipment and human resources should be effectively managed. To facilitate effective management of equipment resources, on line records of equipment location and status need to be kept and proper accounting methods need to be followed in respect of operating costs and maintenance costs.

To manage human resources effectively, functions such as employee database job descriptions and evaluations, applicant tracking, requisition management, performance review, cost benefits, career and succession planning, creating alternate organization structures, taking care of training needs etc are provided by the ERP software package.

To facilitate total quality management (TQM), the ERP provides for quality planning required for ISO 9000 certification.

Benefits of ERP:

ERP brings together, people who work on shared tasks within the same enterprise or in their dealings with suppliers and customers and ensures the smooth flow of information at all levels and accessibility to up-to-date information.

Some of the tangible benefits of ERP are:

1. Reduction of lead time by 60 percent.
2. 99 percent on-time shipments.
3. Doubled business.
4. Increase of inventory turnover to over 30 percent
5. Reduction of cycle time to 80 percent.
6. Reduction of work in process inventory to 70 percent

Some of the intangible benefits are:

1. Better customer satisfaction.
2. Improved vendor performance.
3. Reduced quality costs.
4. Improve resources utilization
5. Improved information accuracy.
6. Improved decision making capability

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