What is ERP System?

What is ERP System?

Enterprise Resource Planning (ERP) — definition, types and benefits

What is Enterprise Resource Planning (ERP) and how is it used? Learn what you need to know about this topic: In this overview we introduce the types, benefits and costs of ERP systems and what companies should be aware of when implementing them.

Enterprise Resource Planning (ERP) systems help companies to plan resources and business processes as efficiently as possible.
Enterprise Resource Planning (ERP) systems help companies to plan resources and business processes as efficiently as possible.

Definition: What is an ERP system?
An Enterprise Resource Planning (ERP) system is used to plan, control and monitor resources such as equity or materials as well as business processes of a company efficiently and in a strategic way. The entire company is to be represented and all departments are directly linked to each other. The intelligent system is computer- or IT-based and partly also web-based or supported by central data administration. Enterprise Resource Planning (ERP) must be able to store and process extraordinarily large amounts of data.

Enterprise Resource Planning (ERP) is characterized by the fact that it plans complex processes within the company effectively and above all quickly. In this way, these important processes can be controlled at all times. Depending on the solution, an ERP system is suitable for a large number of companies – from large corporations to small and medium-sized businesses. There are hardly any boundaries between industries or sectors of the economy: Enterprise Resource Planning (ERP) can be useful almost anywhere. Providers of enterprise resource planning systems also offer various practical industry solutions.

Distinction from merchandise management systems
ERP and Enterprise Resource Planning (ERP) systems are not the same. The terms should therefore not be used synonymously. The main difference lies in the functions of the two system solutions. An ERP system covers all departments and resources of a company, while a merchandise management system concentrates primarily on goods, raw materials, materials and their storage. Due to the variety of tasks, Enterprise Resource Planning (ERP) is usually much more complex than a merchandise management system.

In addition, an ERP system encompasses the entire company and also includes customers and suppliers, who can intervene in the system independently if required, for example by placing orders or entering deliveries. Finally, Enterprise Resource Planning (ERP) can also be used by companies that deal not only with goods, but also or exclusively with services, for example banks, insurance companies and healthcare companies.

Supply Chain Management
What is Supply Chain Management? Definition, example & objectives!
What are the possible applications of Enterprise Resource Planning (ERP)?
An ideal ERP system covers all areas in a company – from the management of the company to the administration and all departments. These include, for instance:

Finances
Accounting
Payroll accounting
Procurement
Purchasing
Sales and Marketing
Materials management
Determination of material requirements
Production
Research and Development
Customer relationship management
Asset management
E-commerce
Human resources
Finance and accounting
Controlling
Quality management
Project management
Data administration and management
and many more
Enterprise Resource Planning (ERP): These modules are available
An ERP system can be used to control the various areas of a company. These areas are often represented in the form of modules.
An ERP system can be used to control the various areas of a company. These areas are often represented in the form of modules.

An ERP system usually consists of different modules. These are subsystems that can also be combined with each other. Each module represents a specific department of the company. The individual modules are then connected to each other and to a central database. In this way, it is possible to manage corporate processes efficiently and in a timely manner across departments.

Typical Enterprise Resource Planning (ERP) modules include:

Procurement
E-commerce
Logistics
Warehouse and inventory management
Accounting and financial management
Supply chain management
ERP system: What types are available?
As a result of several decades of development, numerous software solutions for Enterprise Resource Planning (ERP) are available today. The two most important types of enterprise resource planning systems are on-premise and cloud ERP. There are also a number of other solutions. They differ primarily in

scalability,
specialization,
their range of functions and
the techniques.
Companies can select and purchase Enterprise Resource Planning (ERP) modules according to their individual demands and needs. If required, individual modules can also be canceled again.