by December 4, 2001 0 comments

Another of those buzzwords that everyone talks of but no one seems to know much about. ERP (Enterprise Resource Planning) is not just about planning your resources–it’s more about how the various divisions in your Enterprise function. An ERP solution aims to provide a single software which will integrate all the divisions in your organization–planning, manufacturing, sales, marketing, finance, HR–and yet fulfill each division’s information and planning needs.

Though ERP began as something internal to the enterprise, today most systems are Web-enabled, letting you extend them to your external suppliers and end users.

What can ERP do for me?

ERP is passe

Any ERP vendor worth his salt will be the first to point out that they don’t do just ERP. In fact, many may even claim that they do not do ERP any longer, but have graduated to do much more. Fact is that ERP vendors (ok, those who were once ERP vendors) today offer a range of software solutions, including ERP, CRM, etc. 
You get more options from the same vendor, and they in return get more business from you. Is this what one would call a win-win solution?

ERP streamlines processes within your organization and helps you meet business needs more efficiently and quickly. To take a simple example, if you’re a manufacturing concern, your ERP system comes into action from the point your sales representatives in different parts of the country or world, book orders, and feed them into the system. The system helps you track what inventory you have of raw material and finished goods, how much more you need, and how much time it will take you to deliver. Your customer service department can then use this to tell the customer when to expect his order. Your manufacturing department uses the same information to set its production schedules, hire temporary staff, and so on. Your finance department uses it to arrange for money, collect money from previous customers, or pay suppliers. As the goods are produced, the packaging and logistics department can gear up for shipping. Customers can track the shipping status online. 
In the above example, a lot of time and resource inefficiencies of a non-ERP system are minimized. The minute your sales office keys in the order, every concerned department of your enterprise knows the details of the order and the customer. The software keeps track of the order as it travels from one department to the other, and anyone at any point can login to track the status or make changes. It helps you plan inventory better and sync your production plans with customer demand. It also minimizes errors that creep into the data when it’s keyed into different computer systems by each department, and saves productive employee time that would’ve been spent in doing so. A properly implemented ERP system can result in significant cost savings and increased efficiency.

How do I implement it?

ERP implementation is time-consuming and expensive. A typical implementation will take at least a year to give tangible results. However, companies the world over–both large and medium–have benefitted from this system. 
There are specialised ERP systems for most business verticals, like finance and petroleum. Each system comes with modules, like finance and HR. You can choose the ones you want, and add modules over time. The ERP marketplace is huge, and you’ll find solutions to fit different sizes and lines of business. It’s better to take a piece-meal approach–implement the system in one department, see how it works, test it on a real order rather than dummy data, and then move to other departments. Attempting a quick enterprise-wide implementation is inviting chaos. Here are a few pointers to help you chart the road.
Define your goals: Determine what you expect the ERP system to do for you and what your budget is. Then, explore the market to see what is on offer before you sign the contract for implementation.

ERP stems from accounting?

You could think of ERP as originating from good old accounting. Accounting gave you a rupee-paisa view of all your activities. ERP not only gives you this, but also a manpower view, a raw material view, a machine uptime and maintenance view, and so on. ERP provides enough interrelations , so that they are all different views of the same, and not disconnected, with each pulling in a different direction.

Go modular: Decide which modules you want to implement first and which later.

Expect hidden costs: Consultancy for implementation can be a major part of your costs. Apart from the consultancy and cost of software and hardware, the implementation will involve some other costs. Training employees across your enterprise, converting data from legacy systems and integrating it into your ERP system are examples. Loss of productivity in the first few months after you install ERP is also to be expected. Annual maintenance costs and annual costs can also be hefty.

Beyond ERP

With Web-enabled B2B, your ERP system can go much beyond the boundaries of your enterprise. You can integrate it with Business Intelligence to analyze your data. You can couple it with CRM or SCM to increase your involvement with your customers and suppliers. Also various are making these cross-functional.

Pragya Madan

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