What is an ERP?

Until two years ago I was ignorant of this word, despite having used ERP for years. One day in one of my master’s classes (in project management) the teacher asked us to develop the costs of a project using an ERP, so I had no choice but to ask my colleagues from administration careers and accounting What was an ERP?

Here is its description and part of its history:

ERP Which is the most suitable for my company?

ERP: Enterprise Resource Planning.

Company Resource Planning.

In 1997 the ERP boom developed, with a large number of companies in the world that provide and use such systems. ERP systems are designed to model and automate many of the basic processes in order to integrate information throughout the company, eliminating complex connections between systems from different providers.

An ERP is a software architecture that facilitates the flow of information between the manufacturing, logistics, finance and human resources functions of a company. ERP is the acronym in English for Enterprise Resource Planning, which stands for Enterprise Resource Planning. ERP is a general term in the software world that encompasses a wide variety of software packages, generally multi-modular, that offer integrated solutions designed to support multiple business processes.

An ERP can contain software for production management, customer management, purchases, accounts payable, accounts receivable, general accounting, invoicing, inventory management, human resources, payroll or any other function that you have to develop within the company. ERPs are considered «packaged software» (translated from English as: packaged software) as opposed to custom software designed for a particular customer. This means that when a company buys an ERP, it buys it as it is, since the manufacturer does not adapt it to its needs, and in any case it requires an adaptation, a specific contract is required.

Enterprise resource planning (ERP) building flow module icon vector design art

Generally an ERP is purchased together with specific development tools that can be used by the client to alter that packaged software and adapt it to each particular need. Some even allow the use of standard programming languages ​​to make these alterations, if not, the modifications and adaptations will also have to be contracted. When a company decides to buy an ERP, it must also hire the installation service (generally a consultancy) to put it into operation. The time required for these implementations varies greatly depending on the ERP, the modules implemented and the size of the company. These applications have established themselves as integral solutions in most of the functions to be developed by the company. This helps these companies to better understand their activity, standardize your business processes and define better policies. ERPs help create more efficient processes so that companies can focus more on other efforts, such as serving their customers and maximizing profits.

 There are six main ERP vendors, accounting for 64% of the total in this market ( SAP *; Oracle *; PeopleSoft *; JD * Edwards; Baan *; Siebel *). These manufacturers set the tone for the ERP market. All offer solutions in the main product lines and each one contributes something different and all have their solutions integrated into the e-business concept, with full support for the use of their applications with the Internet.

Although each manufacturer has its own product lines and solutions, and they differ in modules that make them more remarkable, or more perfect, with this they create many variants, but almost all cover the following:

-Financial applications (general accounting, billing, accounts payable, accounts receivable, asset management, purchases, etc.)

– Human resources and payroll management.

– Solutions for manufacturing management

– Supply chain solution (SCM)

– Solution for customer relationship management (CRM)

– Inventory management

– Online purchasing management – Company performance analysis solution (EPM)

Some of the basic characteristics of ERP are the following:

• Centralized databases

• ERP components interact with each other, consolidating all operations

• In an ERP system the data is entered only once. The data must be consistent, complete and common.

• Companies must modify some of their processes to align them with those of the ERP system.

Other features

• An ERP system includes a set of ERP applications or modules.

• Theoretically there is a software for each functional unit

• The current trend is to offer specialized applications for certain industries

Limitations of ERP systems:

• Long, expensive and difficult implementation. The implementation can cost several times more than the license.

• The Company has to adapt its processes to the system.

• Dependence on a single provider.

• Setting a standard sometimes leads to adopting the lowest common denominator. Are ERP systems appropriate for all companies?

• Imposing an ERP system from above can be a big mistake.

• Changing and highly decentralized companies should not use an ERP

• Some providers have specialized in certain industries. The second wave of ERPs is adding new applications to the ERP platform, such as: sales force support, customer management, data mining and supply chain management.

Now you know what an ERP is, and I mean it for us electrical mechanical engineers, since it is not a common term in our area even though we have been generating purchase orders, maintenance orders, etc. for years. in SAP.

Here are some manuals that I found on the net.Manual_SAP DownloadIntroduccion_SAP_R_3 Download

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