ERP System in Business – Most companies use ERP system to facilitate business implementation. Choose ERP systems cannot be underestimated, because it can become a serious problem if the system chosen is careless. A number of considerations are needed before determining an ERP system that suit the needs of the company.
Indeed, what are the purposes of using an ERP system in business? Information about ERP, including its meaning and types, will be discussed in the following article. Come on, read.
What is an ERP System?
Enterprise Resource Planning or ERP is a software system that is purposely designed to collect, organize, and integrate business data. ERP will simplify and standardize business implementation. Starting from finance, procurement of goods, human resources, to product distribution.
There will be an ERP facilitate the company to achieve business goals. Of course, with efficient and effective results so that costs in running a business can be saved. These savings will indirectly increase the company’s profits.
Initially, ERP systems were used in manufacturing companies with an Economic Order Quantity (EOQ) model. Formerly still using a paper-based scheduling system, then replaced with a Material Resource Planning (MRP) system. In the 1960s, MRP changed to MRP 2 and finally to ERP software in the 1990s.
Company Purpose Using ERP
The use of an ERP system in business cannot be separated because of the goals to be achieved. The purpose of the ERP system in business is:
Increase Efficiency and Effectiveness
The first goal is definitely to increase efficiency and effectiveness. In the long run, ERP system in business is believed to be able to reduce company expenses. This emphasis will automatically increase profits every year in line with the increasing amount of production.
In addition, the existence of ERP system in business can save time and labor. Not only to create products, but also to control employee working hours, facilitate the division of tasks, and employee payroll. ERP keeps everything under control automatically.
Coordination and collaboration are needed in running a business. Unfortunately, the quality of human resources in each company varies. The existence of ERP system in business is able to overcome the obstacles that exist in HR, so that all lines of work can collaborate with each other to achieve company goals.
ERP system in business can be tailored to the needs of each division within the company. For example, between the support and accounting divisions, different menus are made to complete the work. Although the menus are different, each division can see the menus of other divisions, while connected to the company network.
Ensure Data Security
The ERP system is equipped with firewalls to control and anticipate violations. The menus in it may be visible to all divisions, but cannot be changed arbitrarily. Because, the change is only intended for certain people.
For example, intercash or large transactions within the company should only be accessed by the accounting division and AP department only. So, the AR section and other divisions can only see. Similarly, when there are employees who resign, access to the menu will be automatically cut off so as not to be misused by other employees.
Without an integrated system, work between divisions will fall apart. Between the finance division, marketing, and support must have a different system. This difference will make it difficult for other divisions to obtain information that is still related to their daily work.
The existence of an ERP system in business facilitates this integration process, so that miscommunication can be minimized. Employees can work quickly and precisely, so that performance reports can be prepared on time. Performance in the company improves over time.
The use of an ERP system in business has a major influence on managing inventory, which will later be passed on to the production division. The ERP system integrates everything, so delays in production can be minimized. If supplies start to run low, companies can place orders with producers.
Integration like this makes the company able to meet consumer needs. Fulfillment of consumer needs will increase the company’s existence in society. Thus, the company is increasingly recognized by a wide audience.
Improve Line of Business Accuracy
ERP system in business will combine information from each division centrally. This allows other divisions to get the information they need in real time. The speed of obtaining information can increase the accuracy of business lines, of course, with the right presentation.
As Monitoring Business Activities
Manual monitoring is quite tiring, but this is no longer felt when using ERP system in business. With a centralized system, monitoring can be done easily, quickly, and precisely. Errors in the work are also easy to detect, so repairs can be made immediately.
Compare with the manual method which usually takes time and effort longer to detect an error. With monitoring fast, the company can evaluate the things that are lacking in the business. Then, look for and develop new strategies so that business performance will skyrocket in the following month.
Tailored to Company Needs
The financial recording system between manufacturing, service and trading companies is of course different. The same goes for raw materials and business processes. However, these differences can be overcome by using ERP.
ERPsystem in business can be designed according to the needs of each company. It is not surprising that every company has a different menu on the system used. Reportedly, the menu can be modified if there is a change in the line of business, so it is very flexible.
Based on its implementation, ERP systems are divided into several types. Each has advantages and disadvantages for a company. The types of ERP as follows.
ERP On Premise
Also known as conventional ERP, which is a system that is again popular with large companies. Conventional ERP requires companies to install and maintain ERP systems on self-managed devices. Companies are required to have their own hardware and servers, then ask the IT department to manage the system properly.
Given that it is self-managed, ERP on Premise reportedly much safer. The data in it is difficult to hack. No wonder the operational costs for this one system tend to be expensive.
Open Source ERP
The next type of ERP is open source ERPs. Software one allows companies to create, modify, check, and improve their own ERP performance. ERP can be adjusted according to company needs, so that work using the system becomes more comfortable.
Cloud Base ERP
This type of ERP is designed to integrate a vendor’s server or cloud platform, then can be accessed via the website. The system can be accessed using a username and password. Each employee who works using the ERP system will usually get their own username and password.
Because companies don’t need to install their own servers, the operational costs of cloud ERP are more affordable than on premise. Cloud ERP is widely used by medium to large companies. The data entered in it can be monitored in real time, so that business performance can be seen.
The last type of ERP is hybrid ERP, which is a merger between on-premise ERP and cloud. This ERP system can be accessed online or offline.
Access can be done anytime and anywhere as long as you already have a username or password. Hybrid ERP allows employees in the company to work without interruption. Because, the data will be automatically synchronized even if the internet connection is lost.
Example of ERP System in Business
The existence of ERP system in business makes it easier for companies to implement and manage the business as a whole. The examples of ERP that are often used, both in large and small companies that are successful at home or abroad are as follows:
- Odoo ERP, hails from the United States with over 2,000,000 users and 100,000 customers.
- SAP Business One ERP, developed by Sapphire in the UK. More than 1,000,000 registered users and 50,000 customers.
- Sage Intacct, comes from the United States with more than 300,000 users and 11,000 customers.
- NetSuite ERP, originally from the United States with a total of 600,000 users and customers 30,000.
- Oracle, developed by Oracle Corporation in the United States. The number of users is reportedly more than 40,000 with as many as 2,000 customers.
- ECount ERP, originally from South Korea with more than 200,000 users and 22,000 customers.
Choose an ERP System In Business According to The Needs
Every company has its own business process. If you want to use a system, such as ERP, of course you have to adjust it to the company’s needs. The ERP system is expected to facilitate work implementation, so that company goals are achieved with effective and efficient work results.