What is an ERP? Functions and why a company should have it

Acronyms ERP means Enterprise Resource Planning and it is a computerized planning and business management system capable of integrating all the processes of a business such as: administration, accounting, resource acquisition, production, suppliers, purchasing, sales...

The ERP is a suite composed of a set of integrated software, called modules, where each one has the corresponding functions. This planning tool The right configuration is capable of improving coordination, increasing productivity, optimizing the supply of materials, the production phases, etc. Furthermore, if models based on the Artificial Intelligencecan have predictive capabilities for decision making and generate early warnings of non-payments for the optimization of management systems, profitability and security of your customers' operations.

How an ERP system works

The basis of ERP systems is the centralized collection of data from different departments and commercial activities. In this way, the problem of data duplication and misalignment is eliminated. In this way, the company can count on a single and complete database, capable of being updated in real time every time a user from any department or hierarchical level makes changes.

In general, an ERP solution is divided into three parts:

• The suite is the overall structure of the ERP. It is the information system composed of modules selected and configured according to the specific needs of the type of company.
• Modules are the different software applications that manage a specific business process: accounting, production, warehouse, purchasing, sales, etc.
• Functions are the individual operations that users can perform within each module. and correspond to the different activities to be performed by each department of the company.

New generation ERP systems

While in the past, ERPs focused mainly on the administrative and logistical activities of the company, today they have incorporated a plurality of functions such as integrated customer relationship management (CRM) and algorithms capable of relating customer orders with the production capacity of the departments, in order to plan the purchase of materials and organize production with greater precision, reducing waste and errors.

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Nowadays, ERP systems also cover the field of Business Intelligence by offering increasingly advanced reporting features, such as multidimensional data analysis and the creation of customized reports updated in real time.

Finally, new generation ERPs are able to exploit the possibilities offered by web-based interfaces and cloud logic, making the enterprise an open system and enabling the implementation of increasingly intelligent business management models based on collaboration, flexibility and lean production.

Why companies should have an ERP

In the current scenario, the 82% of Spanish SMEs have already installed ERP software and a company's ability to minimize waste and errors is increasingly crucial to maintain adequate levels of competitiveness in the market. The main objective of ERP is precisely to support this optimization challenge. With ERP software, you will be able to achieve:

• Work on a single database independently of multinational companies or companies with different locations.
• Streamline and make the company's management structure and processes more efficient.
• Improve the efficiency and effectiveness of production processes by reducing errors and waste.
• Achieve better decision-making and planning skills thanks to immediate access to all information and the ability to easily consult and process company data.
• Increase the efficiency of the flow of activities by minimizing the number of operations required for each task and standardizing their duration.
• Optimize the allocation of human resources and evaluate personnel based on specific and measurable results.

The implementation of an ERP system is now a must for any large company that wants to be competitive. The flexibility of the modular structure allows small and medium-sized companies to benefit from the advantages that these powerful tools offer. In addition, with artificial intelligence in the new systems ERP important advantages for the companies, such as the predictive capability where the corresponding actions can be decided and executed automatically.