ERP guide – What does it mean? What is this?

Many business owners or managers who are starting to look for software for their company find the abbreviation „ERP.“ The question „What is it anyway?“ arises, and in the maze of complicated definitions, finding a simple answer is not so easy. That is why we decided to introduce the meaning of the ERP term and suggest how the ERP system supports running a business.

ERP is short for „Enterprise Resource Planning.“ It literally means „enterprise resource planning.“

From our entry you will learn:

• What are enterprise resources?
• What is it for and what is the ERP system?
• What areas does ERP support?
• Why the ERP system means security?
• What are the benefits of an ERP system?

What are enterprise resources?

These are all those tangible and intangible elements that the company possesses and has at its disposal. So they can be:

• human resources – i.e. company employees, workforce, personal skills
• information resources – information needed for the functioning of the company and knowledge used to work in the company, e.g. used technology
• financial resources – cash
• material resources – buildings, equipment, raw materials, land owned, etc.

The key to success in business and achieving greater profit is rational and optimal management of owned resources. If we have equipment – we want employees to use it for their current work and no downtime. When we invest in an area, we assume that we will control the result and be able to observe positive effects in the future.

Perfect control over your resources in real time means competitive advantage, even if the dynamics of change is high. The faster we adapt to market expectations, to changing conditions or technological challenges, the better it will go.

Businesses have to deal with many challenges.  We need to learn and use them from the very beginning of running a company, proper management, quick decision making, resource planning and optimization of business processes. The lack of human resources cannot be compensated for when we do not have full knowledge about customer demand, task assignment or the exact state of financial resources. We will not reduce costs if we cannot optimize transports and fill the space with goods to the brim.

What is it for and what is an ERP system?

ERP class software is a system that helps in quickly acquiring knowledge about resources, supporting daily work and its control as well as automating many activities. It is worth mentioning that ERP systems are not only dedicated to large companies with huge resources. There are also ERP solutions on the market for micro, small and medium businesses. Typically, ERP software consists of modules that perform various functions – for example, you can manage resources such as human resources and payroll. When you decide to buy an ERP system, you do not have to buy all the elements at once. Some will only be needed when your business grows, while others may not be used at all.

In turn, large international companies will definitely benefit from all ERP modules as well as increasingly popular add-ons that develop the system’s capabilities – for example, analyses in the Business Intelligence module. Thanks to the professional ERP system it is possible to manage the entire group from the holding level as well as individual companies.

What areas does ERP support?

The ERP system will help you in many areas of business management. These include: production planning, document flow management, project and supply chain management, accounting and finance, human resource and payroll management, marketing and sales as well as creating reports and analyses.

Regardless of the modules we use to create our software, the unique advantage of ERP is in being an integrated system. This means that data entered into the system is available to employees of many departments. For example, if you enter a customer order in the sales department into the system, then in the production department, such an order is the basis for planning for production orders. This solution avoids the re-entering of information by subsequent employees. Thanks to this, we save time, avoid mistakes and automate work. Employees have faster access to information and know where to find it each time. In addition, at the stage of analyses and drawing conclusions for the future, managers receive standardized data. This significantly simplifies reporting and speeds up decision making.

Why does the ERP system mean security?

The ERP IT system is currently operating as an additional pair of hands to help for companies. It’s difficult to calculate all the benefits of implementing an ERP system in a company. The software will automatically keep an eye on important dates, for example, when the company car inspection or employee rights end. In the case of manufacturing companies, it protects them from the resources side and allows them to meet demand, maintaining minimum inventory. Otherwise, we are not able to maintain production continuity, and with too high stocks we incur unnecessary storage costs.

The ERP system will help us detect the company’s weaknesses and will suggest the best solution based on the collected data, i.e. where to increase the margin and by what percentage. In addition, thanks to the ERP program we have a guarantee of functioning in accordance with the latest legal regulations in a given country. Accounting is also much simpler and safer when we check directly in the system whether our contractor has the status of an active VAT taxpayer.

What are the benefits of an ERP system?

To sum up, ERP systems are irreplaceable when integrating the many everyday processes in every company. Thanks to them, we work faster, more efficiently and eliminate all so- called Bottlenecks. They lead to increased profits thanks to risk and error reduction. Due to the conclusions of current activities, it is possible to improve the offer and increase the quality of customer service. Thanks to the development of mobile and cloud services, ERP supports business owners, managers and employees while performing professional duties from anywhere in the world.