Typical Enterprise Resource Planning (ERP) System Components

An enterprise resource system or ERP integrates management components across a company. They typically aggregate accounting and finance, manufacturing, customer service, human resources, sales, and other departments. The benefits of ERP software include:

  • Easier management of connections to customers and clients
  • Closing the supply chain loop to balance supply and demand
  • Lower costs and inventories by producing at the level of demand
  • Improve information flow between different departments
  • Meets information system requirements for the organization

While features found in an enterprise resource system vary by system, they generally include a database and management portal that allow for flexible, in-depth reporting. Integrated search and document modules allow employees to search for, edit, and create documents as needed. Workflow or project management modules allow for project control and oversight of working groups.

Let's explore the typical components in depth.

Accounting and finance - This module aggregates financial reports, business accounts, accounts payable, accounts receivable, cash book, and general ledgers. Financial reporting and business analytics capabilities allow you to run reports and drill down to the level of granularity requires.

Manufacturing and or Distribution - This function streamlines inventory, supply, and demand information to provide a quick snapshot of current stock, future needs, and past trends. View details on labor, equipment, existing orders, satisfied jobs, and shipments.

Customer service - This function lets employees track customer calls, emails, and other service-oriented contact. Over time, this improves customer service because employees have access to all customer transactions, and management can analyze the qualitative data for trends, making improvements in weak areas.

Human resources with Payroll - When HR functions are folded into an ERP system, employees can access documents, paperwork, vacation calendars, and other information through the ERP interface. This allows human resources employees to manage the information quickly and effectively, while giving employees easy access to job functions.

Sales and Inventory - Like manufacturing, the sales and inventory module provide insight into the demand for products. View recent and past sales data, see which orders are still outstanding, manage wait lists for out-of-stock inventory, and analyze sales by client, product, and other factors.

Not every company needing an enterprise resource planning system will desire all of these functions. That's fine. Because most ERP solutions are built as modules, you may implement only the required components for your business needs and unlock new functionality within the ERP system as your business grows and changes.

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