Explain the need of Enterprise Resource Planning (ERP) system and give its general model. Enumerate different characteristics of an ERP system.

A Management Information System ICT Revision Questions and Answers

In the competitive business environment of today, there has too much great interaction between the customers and manufacturers. This means, in order to produce goods tailored to customers‘ requirements and provide faster deliveries, the enterprise must be closely linked to both suppliers and customers. In order to achieve the improved delivery performance, decreased lead times within the enterprise an improved efficiency and effectiveness, manufacturers need to have efficient planning and control systems that enable very good synchronization and planning in all the processes of the organization.
In addition to above, there is a need of strong integration across the value chain. Hence there is a need for a standard software package, which equips the enterprise with the necessary capabilities to integrate and synchronize the isolated functions into streamlined business process in order to gain a competitive edge in the volatile business environment. Therefore rather than having a customer-designed software package, an integrated software solution to all the functions of an organisation may be designed and prepared. ERP is the step towards this need.

A general model of ERP is shown in Fig. 1

ERP is the latest high end solution. It has given to the business applications. This software integrated operation process and information flows in the company to synergise the resource of an organization namely men, material, money and machine through information.
ERP has filled the need of industry as it has integrated functional areas of an enterprise like logistics, production, finance, accounting and human resources. ERP has one database, one application and one user interface for the entire enterprise.

An ERP system is not only the integration of various organization process, but has following additional characteristics:

An ERP system should be flexible to respond to the changing needs of an enterprise. The client- server technology enables ERP to run across various database back ends through Open Database Connectivity (ODBC).

Modular and Open:
ERP system has to have an open system architecture. This means that any module can be interfaced or detached whenever required without affecting the other modules. It should support multiple hardware platforms for the companies having heterogeneous collection of systems. It must support some third party add-ons also.

It should be able to support variety of organizational functions and must be suitable for a wide range of business organizations.

Beyond the Company:
It should not be confined to the organizational boundaries, rather support the on-line connectivity to the other business entities of the organization.

Best Business Practices:
It must have a collection of the best business process applicable world wide. An ERP package imposes its own logic on a company strategy, culture and organization.

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