Enterprise Resource Planning (ERP) is software businesses can use to integrate information regarding costs, marketing and sales, inventory management, shipping and payment, and other business activities. This data can be collected, stored, managed, and interpreted using a common database.
Contrary to CRMs, which are better for small to medium-sized businesses and more front-end operations, ERPs are better for back-end activities. They can be customized to work for most businesses; however, they are more common within larger enterprises. ERP software can manage:
- Distribution processes
- Supply chain processes
- Financial data
- Business procedures
- Lower purchasing costs
- Business resource tracking
- Business order status tracking
- Data sharing across departments (manufacturing, sales, accounting, etc.)
ERP software allows decision makers to create data-driven business strategies. Data is collected and organized from the various levels of an organization, giving a simplified look at how operations are running. This provides a transparent insight on the business as a whole, allowing decisions to be based on real-time information. Strengths and weaknesses can be easily identified, helping to better forecast future business operations.
By aligning business departments to operate as a whole, ERPs aid in workflow and improve efficiency. The software cuts back on duplicate work, as it is all available for employees within the different departments.
The overall benefits of an ERP system include:
Functionalities, such as new processes or departments, can be added to the system as the needs of the business change
- Improved Data Quality
ERP systems record and store data better than manual record-keeping processes. This helps standardize the data collection.
- Business Analytics
High-quality data and built-in analytics features help lead to strategical decision making, by determining where strengths and weaknesses exist.
- Better Operations
Managing inventory, the supply chain, and demand forecasting helps improve business operations and aid market responsiveness.
- Lower Cost of Operations
Having responsive operations and real-time data collection helps eliminate delays and reduce the overall cost of business operations.