What Is Enterprise Resource Planning (ERP)?

Enterprise resource planning (ERP) software helps integrate management, staff, and equipment, combining all aspects of the business into one system in order to facilitate every element of the manufacturing process. ERP groups traditional company and management functions (such as accounting, human resources [HR], manufacturing management, and customer relationship management [CRM]) into a coherent whole. Manufacturing management also includes inventory, purchasing, and quality and sales management.

Enterprise Resource Planning Business Drivers and Benefits

ERP systems aid in the control and communication of business activities, such as

• efficient handling of order processing and production scheduling
• management and analyses of business processes within an interactive environment
• synchronization of departmental activities (e.g., within human resources or finances) with the needs and output from production facilities
• monitoring, sharing, and tracking of information throughout the organization

Enterprise Resource Planning Risks

Organizations without effective ERP software run the risk of company-wide inefficiencies:

• uneconomical use of resources
• miscommunication between departments
• errors in financial maintenance and production cost tracking