ERP (Enterprise Resource Planning) systems are already in use in the majority of companies, but not in all of them. These systems should help companies to digitally map processes and optimize them. The mere use of an ERP software does not, however, ensure that it becomes a miracle software.
The range of really large systems is still manageable, but not for small and medium-sized companies for some time. The market is flooded by various providers, which is why the overview can quickly get lost.
In this article we would like to look at how an ERP system is structured, which companies benefit from it and what advantages and disadvantages such software brings with it.
Functionality and structure of an ERP system
ERP software can be used in almost every area of a company: starting with materials management through finance to human resources management and research. But documents, products and marketing can also be supported. In the individual areas, ERP software helps a company to efficiently map various processes:
- Purchasing in logistics
- Workshop control or production planning
- Accounting and accounting
- Management of employees
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In order to be able to use an ERP system effectively, the data of all areas must be summarized in a cross-departmental database. The software is able to map any number of processes in a company. Depending on the situation in the company, either one ERP system can be used for all departments or a separate one for each department. These can then in turn be networked with one another.
Normally, when a product leaves the warehouse, for example, this is documented in the system. This information must reach the department so that production knows about it, so that it may be able to produce again. An ERP system helps to ensure that these arrive there safely and are not lost via various interfaces.
Because all data is in a database, it cannot be lost when it is transported from department A to department B. Each department can pull the data from the same database. An ERP software ensures an automated process with various functions that only need to be released.
Which companies benefit from an ERP solution?
The everyday processes in companies differ drastically. Several companies from the same industry can design processes completely differently. It is therefore essential for companies that the ERP software is modular and can be adapted as required to its own situation. Many therefore use standard software, as this can be expanded with numerous modules and thus also meet specific requirements.
Comparisons have shown that almost 80 percent of companies use an ERP system.
Companies in the manufacturing sector and in retail primarily benefit from such software. More specific industries such as medicine, IT and cosmetics, on the other hand, have a harder time because there are no standard solutions. These industries depend on the development of extensions by partner companies who have in-depth knowledge of this industry.
What are the advantages and disadvantages of an ERP system?
ERP systems ensure that processes can be summarized digitally, which minimizes the risk of failure. This also saves time and money. In addition, there is no redundant storage of data thanks to the central database. Because this is permanently available, it is possible to access the data from anywhere at any time, just like with a cloud.
Since the software has a modular structure and all departments are networked with one another, there is a certain degree of transparency. Each department can access and use the data from the other areas if necessary.
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But as is so often the case here, too, such a system can have disadvantages. This is especially true when companies still work very old-fashioned and rely on their proven processes. In the case of digitization, the change would not only cost a lot of effort, but also time and money. The selection of the system is also extremely important. If a system is chosen that is not very user-friendly, the problems are inevitable.
Overall, induction and training of employees is mandatory. Initially, the effort may be higher, but once the process and systems have been converted, it pays off after a relatively short period of time.