The Advantages of ERP

There are many advantages of ERP; regardless of the company’s size or industry. An effective ERP system allows a company to apply lean manufacturing techniques throughout the organization and optimize communications both internally and externally.

When implemented and managed correctly, an ERP solution allows a company to consolidate many software applications that do not work well together and that can make any company less efficient. ERP software seamlessly consolidates accounting functions and reports, supply chain communications, production scheduling, and much more to curb costs, eliminate waste, and deliver goods and services in a timely manner. With an ERP software solution in place, management has access to a number of reports and forecasts that will allow them to make better decisions using accurate, real-time information.

Another important advantage of ERP is the control and tracking tools provided that are ideal for a manufacturing company that converts one or more raw materials into a final product. In such a business, there are a number of tasks that need to be integrated with each other for efficiency. The three-way match between purchase orders, inventory receipts, and costing allows companies with an ERP solution to analyze inventory levels, finished goods, and work-in-progress in real-time.

Orders can be tracked from acceptance all the way through fulfillment, which can reveal production bottlenecks and suggest best practices. Cost accounting is also more accurate with an ERP solution through which trial balances and other financial reports are available in instantly to enable upper management to view the organization’s status at any time.

Another advantage of ERP is that ERP solutions offer tools to track a company’s revenue cycle from invoice through receipt of payment for goods and services. Management of the many complex interdependencies of a bill of materials is one of the many advantages of ERP.

Revenue, profit, and cost can be tracked on a granular level to provide management with real-time visibility into the company’s finances that can enable better decision making. One of the most important advantages of ERP is its computer security. Employees are only able to see information that pertains to their jobs, which helps to eliminate data tampering and other crimes of collusion. Companies are also protected from many types of industrial espionage and embezzlement that can provide savings and risk mitigation across the enterprise.

The best ERP software systems integrate all functionality of a company into one central database. It helps an organization align all business processes and all information about the company that is available on one single platform. Early ERP systems were geared almost exclusively toward large scale businesses, but there are now ERP solutions available for businesses of all sizes at a reasonable cost.

There are so many tangible and immediate advantages of ERP system today that any business larger than a mom and pop store needs ERP to compete in an increasingly global market.