Everything About Enterprise Resource Planning Software: Part 1

By TechDogs Editorial Team

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Overview

We often take the speed and efficiency of organizations and enterprises such as Amazon and Walmart for granted. We perhaps even tend to overlook the amount of constant effort, flawless communication, accurate planning and execution that allows them to deliver products to our doorstep. One of the biggest saviors for them is an Enterprise Resource Planning Software or ERP in biz jargon. What exactly is modern ERP Software? How does it work and why is it so essential to the functioning of large enterprises? Read our Introduction to ERP Software article series to find out.

TechDogs-Every Successful Team Need A Coach-"Enterprise Resource Planning": Part 1

Wouldn't you agree, Amazon is one of the blessings in disguise for all mankind? We are not just talking about the incredible rainforest in Brazil or DC's all-female society of superhumans that Wonder Woman hails from. We are talking about the Ecommerce giant Amazon, the go-to for everything you need in life, from toothbrushes and earphones to office desk decor (No, Becky, 15 miniature dolls are not too many for your work desk). The one thing we all love about Amazon (apart from lightning-fast deliveries) is that we can continuously track whatever we have ordered, keeping the anticipation and excitement alive. Ever wondered how does that even work? How many different teams work together like clockwork in getting your order to you in time? Even more, how do they always manage to provide such a seamless shopping experience? Every single time!

Right after your order is placed, the customer management team and the vendor management team are informed about the new order. The vendor management team connects with the vendors to source and track your order. After accepting the order, the vendor notifies the delivery team when it is ready to be picked up. Any guesses what happens next? A delivery agent is assigned to your order who will deliver it to your doorstep. Fun stuff, right? Interestingly, you get to see real-time progress and track your shipment from the moment it is dispatched until it arrives at your doorstep.

All of the above steps happen in lesser time than it will take you to read this article. Thanks to a super-sophisticated piece of software that links all the functions and tracks information transfer from one step to the next. This improves operations, communication and collaboration during the entire process. Any guesses what this software is? Drum roll, please. Ladies and gentlemen! Please welcome everybody's favorite - Enterprise Resource Planning (ERP) Software.

In this two-part series, we'll cover what an ERP Software is, how it works, where did it come from, where it is going in the future and everything in between. Let's start with something simple like what is an ERP?

What Is An Enterprise Resource Planning (ERP) Software And How Does It Work?

Eliminating all the jargon, an ERP is a software that helps organizations' manage their day-to-day activities in different functions.

An Enterprise Resource Planning Software works in multifold layers.

Firstly, manufacturing ERP helps plan and manage individual daily activities in various business functions such as supply chain, manufacturing, customer services, finance and human resources.
Secondly, it integrates all functions and ensures seamless communication amongst each other.

History And Evolution Of ERP

Time and again, it's been proven that “necessity is the mother of all inventions.” This holds true for the birth of an ERP Software as well. ERP was born in factories during the Third Industrial Revolution (think 1950's and the birth of computing). As factories began to scale, their owners had one goal: produce and deliver more in the least amount of time. To accomplish their goal, manufacturers needed to plan, track and control their inventory and that is when one of the manufacturing companies adopted a computing software to plan manufacturing, purchasing and deliveries, which was termed "Materials Requirement Planning (MRP)." As these factories evolved into more substantial businesses and enterprises, MRP evolved into ERP, a software that helped manage each business function, not just manufacturing.

Did that end there? Absolutely not! The second wave of evolution in ERP happened with the integration of all the functions into one software. As a result, not only did you work faster but also in complete synchronization with other verticals of your organization. This was the evolution from a non-integrated ERP system to an integrated ERP system. The graphic below demonstrates the difference between the two.

TechDogs-History And Evolution Of Enterprise Resource Planning-Graphic Describing "Non-Integrated And Integrated ERP System"

So far, we have learned about what an ERP is and how did it evolve over the years. However, why do most businesses need an ERP Software? Let's find out.

Why Do Businesses Even Need ERP Software?

It's like asking why does a football team needs a coach? A coach is more than a guide to improve the players' performance. The coach is a critical ingredient in ensuring that the players perform well as a team. An ERP Software system is similar to an automated coach for business functions. It improves the functioning of all business verticals such as sales, marketing, manufacturing, etc. and ties them all together in a single centrally operated business unit.

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To err is human and that's the real reason you need an ERP Software. Imagine you recently launched a mobile app for your business. However, few bugs went under the radar and are creating problems within the app. This tragic story's real victims are the customers who immediately start facing issues while performing certain functions using the app. Using a cloud ERP solution can help you mitigate this situation strategically. To begin with, it will alert your customer service team about the situation and sometimes even come up with a possible solution. Simultaneously, it will alert the consumer about the issue via an email or a push notification and assure them that you are fixing it.

Additionally, the ERP Software will alert your development team about the bug, giving them a jumpstart on resolving the issue. Wasn't this a better way of handling an issue than panicking in the office hallway and screaming the sky is falling?

At the end of the day, an ERP helps you achieve any business's primary goal: customer satisfaction.

Along with that, it reduces your costs and increases your profits. Nifty, right?

Features Of An ERP Software Needed By An Enterprise

What does adopting an ERP for a business intelligence look like? There are three key features of an ERP Software that helps businesses the most:

Comprehensive Integration

ERP Software is the conductor of the orchestra that is your business. The comprehensive integration feature of an ERP Software will bring all the violins, the trumpets, the harps together to give you a beautiful symphony.
Real-time Tracking

The second key driver in an ERP Software is its ability to offer real-time analysis of various processes. From tracking inventory at the warehouse to getting order delivery updates, all this and everything in between in real-time. With an ERP platform, you get real-time data at your disposal to solve issues easily and quickly.

TechDogs-"Features Of An ERP Software"-Real-time Tracking-Comprehensive Integration-Central Database

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Central Database

Single storage for your data, AKA, a single source of truth, is the third most important ERP Software feature. It prevents your business from turning into an out-of-control kindergarten classroom where nobody knows what's really going on and the teacher is crying on the inside (Excuse The Graphic Mental Picture).
An ERP Software tracks all data across your organization. For instance, Becky's Amazon order for yet another desk decor item is delayed by 3 days and she is fuming on her swiveling chair. However, who's responsible for this? With an ERP Software, Amazon would know that the order was held up at the warehouse for 2 nights because the item that arrived from the vendor was damaged. Based on such insights, Amazon may choose to add another level of quality check at the vendor level so that deliveries are not delayed in the future. Therefore, the central database feature of an ERP

Software helps businesses to make more informed decisions.

While these features will hold true for an ERP module for any business, the scope of an ERP for each company varies.

Scope Of An ERP Software

ERP is indeed a potent business operations and financial management tool. It will streamline your operations chain management, automate processes for material requirements planning, capture data, perform extensive data analysis and provide accurate data management for operational efficiency, all within an intuitive, integrated framework of business need. That being said, not many businesses can utilize an ERP system to its full potential. This is because disparate systems for companies don't understand what features of the ERP will help them the most.

A retail business like Walmart will use professional services of an ERP integration derived business process primarily for inventory management, ERP vendor management and delivery management. On the other hand, a bank will use ERP applications for data storage, data management and providing better digital services to its customers. An Ecommerce giant like Amazon would probably use an ERP implementation for all of the above. Thus, the usage and scope of an ERP project varies from business to business, depending on the function they apply it to.

That’s all for now! Check out part 2 of our Enterprise Resource Planning Software series that enlists essential functions that an ERP takes care of for a business.

Frequently Asked Questions

What is an Enterprise Resource Planning (ERP) software and how does it work?

An ERP software is a comprehensive tool designed to assist organizations in managing their day-to-day activities across various functions. It operates on multiple layers, primarily aiding in planning and managing activities in areas such as supply chain, manufacturing, customer services, finance, and human resources. Furthermore, ERP software integrates all these functions, ensuring seamless communication and collaboration between different departments within an organization.

Why do businesses need ERP software?

Businesses require ERP software for several reasons. Similar to how a football team needs a coach to improve overall performance, an ERP system acts as an automated coach for business functions. It enhances the functioning of various business verticals and brings them together into a single, centrally operated unit. Additionally, ERP software helps businesses address issues promptly, improve customer satisfaction, reduce costs, and increase profits. Its real-time tracking capabilities and comprehensive integration features enable businesses to make informed decisions quickly and efficiently.

What are the key features and scope of an ERP software?

The key features of an ERP software that are essential for businesses include comprehensive integration, real-time tracking, and a central database. Comprehensive integration ensures that all aspects of the business are interconnected, allowing for seamless operation. Real-time tracking provides up-to-date insights into various processes, facilitating quick decision-making. Meanwhile, a central database serves as a single source of truth, enabling businesses to make informed decisions based on accurate data. However, the scope of an ERP software varies from one business to another, depending on their specific needs and functions. While some businesses may focus on inventory management and delivery, others might prioritize data storage and management or providing better digital services to customers. Therefore, the scope of an ERP project is tailored to meet the unique requirements of each business.

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