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What Is an Enterprise Resource Planning (ERP) System?

Businesses use enterprise Resource Planning (ERP) software in a wide range of industries.

What Is an Enterprise Resource Planning (ERP) System?

ERP is software that automates and integrates a business’s core business processes. Historically, these were systems used by large, international corporations. Why? Because of their high operating costs and the need for a dedicated IT team to manage their implementation and maintenance.

But, with the advent of cloud ERP, smaller firms across various industries are increasingly utilizing ERPs. While these systems are not practicable for small firms, many small to medium-sized businesses (SMBs) have used ERP systems.

Why an ERP System?

There are a few critical trends that show if a company should deploy an IFS ERP system, including:

Periods of Expansion

When the organization is expanding. Alternatively, it has expanded or intends to grow significantly.

Operational Issues

When enterprise software is required. This software will improve the organization’s process management.

Acquisitions or Mergers

For instance, when the parent organization’s processes must be streamlined across all subsidiaries.

Antiquated Legacy Systems

When the company’s current plan is outdated and not upgradeable. Alternatively, it no longer adequately serves the business and its users.

In general, companies increase their efficiency and effectiveness, increasing their productivity and profitability. A properly configured ERP system helps to increase productivity in various ways:

  • By evaluating company data across all departments
  • ERP software helps expedite business operations
  • Automates tedious chores
  • Highlight opportunities for development

However, how the ERP accomplishes these improvements varies for each company, as each runs using its own distinct set of processes.

Benefits Of ERP

By running the correct ERP system, your company can gain speed, efficiency, and accuracy in its business operations. This happens since most ERPs are designed to support current industry best practices.

Here are a few key benefits to ERP:

Improved Business Processes

  • Automate regular or repetitive activities
  • Put in place more intelligent workflows
  • Increase efficiency

The ERP system boosts your company’s efficiency. At the same time, it decreases time and labor costs through automation and integration.

Better Decision Making

If your company does not use an enterprise-wide solution, such as an ERP system, each function is likely handled differently. As a result, numerous challenges might develop when firms manage multiple operations independently.

These include the following:

  • Data Duplication and errors
  • Lack of Visibility
  • Conflicting decisions due to misaligned data
  • Break down of communication between departments often referred to as silo’ism

An ERP solution organizes and connects all of these diverse company operations into a single system.

Drive Down Costs

Many companies struggle endlessly with inventory management. Yet, this is arguably the area that an ERP system is passing on the most benefit. Manual or ineffective inventory management is costly. Moreover, it leads to losses and shrinkage.

Enhanced Customer Experience

One of the advantages of implementing an ERP system is that it acts as a centralized communication platform for all departments. It provides staff with a consolidated picture of all customer communications. This begins with the initial point of contact and ends with the most current.

Let’s look at an example. A customer contacts the company to resolve a technical issue or acquire extra services. Then employees can quickly review previous transactions, preferences, and service history.

Finding the Right ERP System

This article discussed only a few of the benefits of the correct ERP system.

Purchasing and implementing ERP software is a considerable expense for most firms. In addition, modern technologies have brought ERP into the cloud.

Your company’s ERP software decision should be based on business-specific criteria. This is because a well-fit ERP solution can result in a high return on investment (ROI). In contrast, an ill-fit ERP solution might result in additional costs or even a failed deployment.

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