What is an ERP system and is it worth implementing in a company?

ERP (enterprise resource planning) is an IT system for enterprise resource planning. It is designed to help manage the entire enterprise, streamline company processes, improve information flow, and reduce costs. The key to an ERP system is the common database used by both employees and management.

When choosing an ERP system, it is worth paying attention to its usability and intuitiveness. Employees mainly use the system, so the system must be user-friendly. Any errors resulting from problems with the use of the system will translate into work results (reports, analysis).

ERP systems, in most cases, have a modular structure, which means that each company can choose the modules it needs and add more as it grows. Such flexibility in the choice of modules means that the system can be perfectly tailored to the operating profile of a given company. The modules are interconnected and allow efficient management of the entire company.

The ERP system is a database of modules:

• finance and accounting

• retail sales and e-commerce

• supply

• warehouse processes

• human resources department

• production

• fixed assets management

• transportation

ERP system allows to:

• automation of processes

• efficient communication between departments, but also between branches of the company

• workflow of documentation

• creating reports and analyzing data -budget planning

Pros of using an ERP system in a company

Nowadays, where the development of the IT industry is at a very high level, service companies are using modern IT solutions to improve the operation of their own business. More and more companies are choosing to implement ERP systems. With so much competition in the market, it is worth implementing modern solutions in the company to compete with other companies and to provide employees with modern work tools.

Why is it worth implementing an ERP system in a company?

• Common, a unified database for the entire company – data entered, for example, in the manufacturing department is available in real-time to other departments, such as the purchasing department. A complete database also allows the generation of reports that help manage and plan future activities.

• Saving employees’ time – automating processes in the company allows for reducing their duration. As a result, employees’ working time can be entirely devoted to practical activities to further the company’s development.

• Fewer costs due to automation of processes and elimination of unnecessary activities. In addition, better, more accurate planning of, for example, production will significantly reduce inventory or storage costs.

• Better document circulation within the company between departments. In addition, most documents are stored electronically, which saves money (no use of paper, envelopes, folders, no postage costs) and space.

• Increased control over inventory, purchasing, or the production process. More efficient production planning, less inventory, and timely purchases translate into real profit for the company.

• The ERP system supports remote work – many companies switched to remote work during the coronavirus pandemic. An office worker, in many cases in his own home, can easily perform his duties thanks to access to the system with the full database needed for work.

For which industries are ERP systems targeted?

ERP information systems aim to manage a company’s resources more effectively, efficiently, and in a more modern way. Thus, it can be said that the system is designed for any industry because any industry can improve its internal operations with an ERP system. ERP implementation can provide an advantage for commercial, manufacturing, transportation, and service companies.

As a rule, larger companies with a minimum of several departments benefit from such solutions. ERP systems are most often implemented in the industry:

• transportation

• manufacturing

• food

• construction and installation

• medical care

Differences and similarities between CRM and ERP systems

We already know that ERP is an information system that supports and empowers the management of a company’s resources. On the other hand, CRM is a system that allows customer relationship management, a tool that facilitates the company’s sales goals. Both systems can improve a company’s operations and allow it to manage its processes. However, each of these systems meets the different needs of the company.

CRM systems are smaller in scope and focus on managing customer contact and the process of selling a product or service. ERP systems focus more on the company itself than on the customer. Their goal is to help manage all the company’s departments and the warehouse, manufacturing, transportation, accounting, sales, and financial processes taking place in them. Thus, it can be said that CRM helps increase profits by increasing sales, and ERP helps reduce costs by automating processes and managing the company more efficiently.

CRM and ERP systems can be implemented separately depending on a company’s needs, but of course, both can complement each other and further improve a company’s operations. When fighting for a better position in the market, more sales, reduced costs, or more efficient management, it is worth implementing both IT systems in the company. If a company does not want or cannot afford to implement both systems, it should choose the one that will be more helpful at the current stage of its business. Companies that focus on selling products or services and want to gain more customers should invest in a CRM system. Such an action will allow for growth and increase the scope of operations. On the other hand, companies with several departments that perform the production, sales, and transportation of products and want to improve the management of these processes should invest in ERP implementation. This will save the company time and money, and the resources can be allocated to more effective activities to support growth.