An ERP (enterprise resource planning) is a technology-based system that is currently being used by most companies of various types and sizes to integrate all their business data and processes into a comprehensive single or unified structure.
Mainly, ERP system helps a company to improve its data or information handling and management across its sections. The system makes sure of a single source information thus reducing or eliminating any possible data inaccuracy or duplication. ERP centralizes the companys historical and authoritative data into a single database, which also results for an immediate data entry, and information access and retrieval.
Further reasons on why companies are continually adopting this advance approach in their business includes: 1) better communication; 2) improved visibility; 3) source of information is singled; 4) improved planning and estimation; 5) reduced wasted resources and efforts; 6) reduced company costs across its different departments; 7) reduced levels of inventory; and 8) reduced business cycle and lead times.
Moreover, ERP system also serves as a tool for a company to reduce it operational costs (labor and material), which leads to an improved financial control and reduced inventory levels. In addition, ERP system can help the company to carry out an effective production planning resulting to an improved and increased in productivity, improved customer service, and reduced, if not eliminated product defects or failures.
An ERP system has the potential to provide both tangible and intangible benefits in just a short amount of time. And for the company to maximize on this potential, it has to make sure that implementation of the system is carried out properly and strategically.