The enterprise resource planning system is a computer based integrated system used to handle the business activities efficiently. Generally, every ERP system combines traditional managerial approach into mechanized and integrated approach controlled through technical know-how and improved technology.
Improved Business Process Integration: Enterprise resource planning system is consist of different kinds of modules where a module represents a particular business segment. When data is entered in one component of business segment for example receiving materials, it automatically other relates other modules such as accounts payable module and inventory module. This kind of processing happens at real time basis i.e. when a transaction occurs. Since, in ERP data needs to be entered only once at the inception of transaction, it eliminates the multiple entries of the same data. Therefore, the possibility of duplication of data is reduced.
Integrated Management Information System: The business organizations need a diverse decision support tool that is available to an ERP system which assists in efficient utilization of resources for example materials management, production process and human resources management. As a component of management information system, an ERP system provides many standard operational reports as and when needed.
Improved Efficiency and Productivity: The enterprise resource planning system offers a significant result to the efficiency of day to day business activities and transactions for example receiving order, on time delivery, total quality management, invoice reconciliation, sales realization, and cash management. Operational cycle time is significantly reduced for sales to generate cash.
Standardized Operations: The enterprise resource planning system helps gaining a competitive advantage over the business competitors, which ultimately builds a standardized business operation. Since overall business activities are controlled through the implementation of ERP systems and therefore, each business operation moves within a standard process.
Flexibility and technical know-how: Due to competitive global business environment, where production plants, distribution channels and corporate offices situated in different geographical locations, business organizations require multi dimensional ERP modules, in order to get success in competitive business environment. The ERP system provides significant resources and help to create business operations as flexible as possible.
While ERP provides so many technical and non-technical benefits; its proper utilization and successful implementation is a strategic decision, involving significant financial resources, and business process re-engineering. There must be dedication from all levels of an organization.