Enterprise Resource Planning Systems

Enterprise resource planning (ERP) are applications that have the capacity to offer a suite of integrated business applications. ERP tools include end-to-end operational procedures applicable in finance, distribution, human resource management, the supply chain, and services. ERP automates and supports many administrative as well as functional business procedures in many industries. Some business processes supported by the ERP include customer-facing, asset management, and administrative business processes. ERP can lead to a successful business organization depending on the manner of application. The business benefits of ERP include its role as a catalyst of business innovation, a platform supporting the efficiency of business processes, a vehicle to standardize processes and a way to save on costs incurred by I.T. applications (McCue, 2021). Most companies focus on ERPs ability to enhance efficiency and save on costs; however, the power of ERP to catalyze innovation and to improve business process efficiency has the most significant impact on a business.

ERP systems started as calculating machines for enterprises in the 1940s. Innovators then created solutions in the 60s to increase factory output.  Applications that addressed inventory management and control came to the foreground in the 60s. In the 1960s, innovators introduced ERP systems that helped in inventory control and management. The innovated ERP system was a result of joint efforts between J.I. Case corporation- a tractor manufacturer, other construction companies, I.T. and IBM. The collaboration of the mentioned groups led to the establishment of the Materials Requirements Planning (MRP) software. The term ERP was conjured in the 1990s; the ERP was able to deal with business functions such as finance, accounting and engineering, human resource management, accounting processes, and project management. In 1996, Netsuite established an ERP system that offered various business functions akin to today’s ERP systems.   The Gartner Group then established ERP II in 2000. The ERP II is an Internet-compatible software that provides real-time access of ERP solutions (McCue, 2021). The application also provides external functionalities, such as supply chain management, customer relationship management, and business intel.

Some of the world’s largest companies use ERP. Amazon, one of the most successful e-commerce companies in the world, applies the Systems Analysis and Program Development (SAP) ERP software (Bischoff, 2021). SAP was developed in 1972 by IBM to integrate business processes and data processing in real-time. SAP has now evolved into an application where uses can manage logistics, finances, human resources, order management, and sales. Other firms that have applied ERP include Starbucks and Toyota (Bischoff, 2021). The highlighted companies have registered tremendous success compared to organizations that do not use ERP systems.

Companies that use ERP experience better business reporting compared to those that do not use ERP. The platform has advanced reporting tools that give real-time information. Businesses that use ERP offer improved customer service. These businesses access customer information more conveniently, record on-time deliveries and better order accuracy. The ERP systems also improve inventory management by helping companies avoid high overhead costs or insufficient inventory that does not fulfil consumers' needs (Haddara & Firagal,  2015). The flow of cash in organizations applying ERP is better due to effective invoicing and the use of collection tools to bring in money quicker. Cost savings is a significant advantage caused by using ERP. Cost savings arise from better inventory planning, enhanced procurement management, and improved relationships with business vendors. Supply chain management is significantly improved when using the ERP. Supply Chain Management employs efficient demand forecasting and a lean inventory. Supply chain management further reduces bottlenecks in production and fosters transparency of the business. Companies using ERP are also poised to experience business process improvements that enhance efficiency and leads to better workflows.

Enterprise Resource Planning Systems Outline

Definition of Enterprise Resource Planning functions and business processes.

            Definition

Enterprise resource planning (ERP) are applications that have the capacity to offer a suite of integrated business applications.

Business Process

ERP tools include end-to-end operational procedures applicable in finance, distribution, human resource management, the supply chain, and services.

Brief historical background

History

ERP systems started as calculating machines for enterprises in the 1940s. Innovators then created solutions in the 60s to increase factory output. 

Company’s using ERP

Some of the world’s largest companies use ERP. Amazon, one of the most successful e-commerce companies in the world, applies the Systems Analysis and Program Development (SAP) ERP software (Bischoff, 2021).

Summary of the benefits of Enterprise Resource Planning systems.

Companies that use ERP experience better business reporting compared to those that do not use ERP.