Enterprise resource planning (ERP) software is a group of programs and functions integrating corporate accounting and resource management with production schedules and customer orders. ERP may not be a direct focus of operations and design engineers; however, ERP is one of the most critical technological shifts an organization can make. ERP solutions seek to streamline and integrate the operation process and information flows in the company to synergize the resources of an organization namely men, material, money and machine through information.
The resulting impact of the corporate information management system is profound, such that the entire organization, even plant-floor process control, for example, must adapt to it. ERP replaces manufacturing resource planning (MRP II), which was unable to meet the ever-changing challenges provided the international manufacturing world. ERP is proactive (i.e., ―if we get
this order, which plant has the skills/capacity to handle it‖) while MRP II is typically reactive (i.e.,
―the order rate has changed – what do we need to do to respond?‖).
The term ―enterprise resource planning‖ was coined to demonstrate the fact that these systems have evolved well beyond their origins as inventory-transaction and cost accounting systems. The software now acts as the means to support and expedite the entire order fulfillment process. ERP can also lead to business-process reengineering. By removing barriers between functional departments and reducing duplication of effort, the systems increase flexibility and responsiveness.
The vision of ERP is evolving to include the extended enterprise. Extended ERP is an inter- enterprise vision that includes balancing and optimization of not just the enterprise, but the value network, or the entire set of supply and demand business processes that drive the enterprise‘s delivery of goods and services. Extended ERP is customer focused and dynamically balanced through asset optimization and real-time transaction processing.
Some prominent features of ERP are:
• ERP provide multi-platform, multi-facility, multi-mode manufacturing, multi-currency, multi- lingual facilities
• It supports the strategic and business planning activities, operational planning and execution activities, creation of materials and resources. All these functions are effectively integrated for flow and update of information immediately upon entry of any information
• Has end to end supply chain management to optimize the overall demand and supply data
• ERP facilitates company-wide integrated information system covering all functional areas like manufacturing, selling and distribution, payable, receivable, inventory, accounts, human resources, purchases etc
• ERP perform core activities and increase customer service, thereaugmenting the corporate image
The characteristics of ERP can be summarized as:
Flexibility: ERP system should be flexible enough to meet the changing need of the enterprise. Modular and Open: ERP system should have open system architecture. This means that any module can be interfaced or detached whenever required without affecting the other modules.
Comprehensive: 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 within organizational boundaries, rather should support the online connectivity to the other business entities of the organization.
Best Business Practices: It must have a collection of the best business processes applicable worldwide. An ERP package imposes its own logic on a company‘s strategy, culture and organization.