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How Does an ERP Help Improve Business Operations?

What is ERP?
To succeed in today’s increasingly competitive and complex business environment, you need to put systems in place that allow you to easily streamline, automate, and scale. This resource will put you on the right track toward choosing, implementing, and managing an ERP system at your organization. ERP stands for Enterprise Resource Planning. ERP software is comprised of powerful and strategic business process management tools that can be used to manage information within an organization. While every company and organization operating today is different, they all face a common challenge: in order to stay competitive in today’s business environment, they need a dependable and efficient way to store and access information. That’s where ERP systems come into play. ERP systems integrate all facets of an enterprise into one comprehensive information system that can be accessed by individuals across an entire organization. With effective ERP software in place, business owners and leaders can automate and streamline tedious back-office tasks, help employees become more productive and successful in their roles, and get real-time visibility into the inner workings of their operations. This resource will provide you with an in-depth overview of the topic of Enterprise Resource Planning.
Evolution of ERP & Current Trends
The term “ERP” or “Enterprise Resource Planning” was originally coined by industry analyst, The Gartner Group, in the 1990s. It evolved from MRP, a term that was already well-known in business at that time. MRP stands for both Material Requirements Planning (MRP) and Manufacturing Resource Planning (MRPII). These systems were created back in the 1960s when manufacturing-based companies were looking for ways to improve efficiency and decision-making for production line managers.
In the 1990s, The Gartner Group and other businesses sought to apply MRP systems to other business types, and desired to expand capabilities and processes to other areas within an organization, and thus ERP as we know it today was born. In its early days of existence, ERP focused on organizing data and streamlining processes that related to back-office areas, such as inventory management, fulfillment, purchasing, human resources, accounting, IT, manufacturing, planning and scheduling, and other related areas.
Later, with the introduction and widespread use of the Internet, ERP was expanded further to include other areas of a business, such as customer relationship management (CRM), supplier relationship management (SRM) and supply chain management (SCM), human capital management (HCM), business intelligence and ecommerce.
Today, ERP systems integrate into all areas and functions within an organization, with the primary purpose being to help leaders and managers better understand all moving parts of their operations, identify opportunities, and make more informed decisions that will ultimately have an impact on the future success and viability of their businesses.
Despite the use of the word enterprise in the name, ERP systems are used by businesses of all sizes, large and small. There are two primary types of ERP systems being implemented at organizations today, On-Premises and Cloud-Based. The differences between the two will be explained in another section in this resource.
“The Compass software reports have been especially eyeopening. For example, the low margin sales and cost change reports have helped us stay on top of pricing,” said Braaten. “We’ve increased our margins by adjusting items that weren’t priced correctly. Our soft lines margins have increased by 6 percent companywide.”
Basic ERP Concepts & Glossary of Terms
There are hundreds of concepts and terms that relate to enterprise resource planning, but here are ten worth understanding now, before you decide whether you want to implement an ERP solution at your business:
• Enterprise Resource Planning (ERP): Business process management tools that can be used to manage information across an organization.
• On-Premise ERP: ERP software that is installed locally on your hardware and servers, and managed by your IT staff.
• Cloud-Based ERP: ERP software that exists and is managed off-site by your provider.
• Supply Chain Management: the flow of goods and services from origin point to point of consumption.
• Third-Party Vendors: Businesses or partners that can be integrated into your ERP system.
• Capacity Requirements Planning: A method used to determine the available production capacity of a company.
• Mobility Solutions: The ability to access your data through your ERP from anywhere, and by using mobile devices.
• ERP Deployment Options: The types of ERP system you can implement at your organization.
• Business Architecture: How an organization is structured; all the moving parts.
• Customer Relationship Management: Tools that businesses use to manage interactions with customers.

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