Enterprise resource planning (ERP)

Enterprise resource planning or ERP is a comprehensive computer based operations management system which builds on MRP and links all operational information systems of a business through specific applications and a shared database system which allows the sharing of information between applications to simplify many administrative tasks; from procurement and production scheduling to inventory management accounting, Sales and supply chain. When integrated appropriately, it can achieve large cost savings and efficiency improvements through reduced waste of resources in running a business. Although to achieve these savings it may be necessary to change, sometimes dramatically, the current information or processing systems. The cost of updating or changing these systems and applications to run with the ERP system can sometimes be the most costly and complicated part of installing a business wide ERP system, depending on the size of the business and differences within departments. A full analysis of system requirements, current systems, and potential risks should be done before implementing a new ERP system. A FMEA analysis can also be of great benefit during this analysis.

Most ERP systems are sold by third party vendors; these are major software and database software supply companies. They have slightly different products but all aim to achieve the same objective of uniting the different business departments onto one computer system which shares live information and automates many admin tasks. When deciding to implement an ERP system one should first analyse the current individual software/computer applications used for Manufacturing and distribution, inventory management and ordering, accounting, sales, and HR. The objective of implementing a standard ERP system is to introduce a standardized and efficient way of handling information within the organization. Most software vendors will also offer consulting services to also facilitate the implementation and use of their ERP software. If the implementation and training is not performed properly the users will revert to previous processes or feel frustrated with the new system and the organization will fail to reap the full benefits of such a system.