ERP (enterprise resource planning) is an organizational strategy for the integration of production and operations, human resource management, and financial and asset management. It is focused on continuous balancing and optimization of enterprise resources through the specialized integrated application software package that provides the common data and process model for all fields of activity.
The ERP system is a specific software package that implements the strategy of ERP.
The ERP strategy is the development of the concept of MRP II. It covers almost all areas of the enterprise, but the ERP system does not replace the CRM system that controls external relations and the PLM system that manages intellectual property.
Characteristics of the ERP strategy:
- The use of a single transaction system for the vast majority of operations and business processes of the enterprise. All operations are consolidated into a single database for further processing and real-time balanced plans.
- Replicability: ensuring the possibility of using the same software package for different organizations (possibly with different settings and extensions).
- Support in a single system of multiple currencies and languages.
- Support of several legal entities, several enterprises, several accounting policies, and various taxation schemes in a single system; it is necessary for its use in corporations, including transnational ones.
The software package that implements the ERP strategy is usually implemented as a set of modules, the list of which may vary depending on the size and characteristics of enterprises in which the ERP system is being implemented. The standard set looks like this:
- Finance and accounting.
- Personnel management.
- Customer relationship management (CRM).
- Supply chain management (SCM).
These modules may be implemented in stages. You can choose only those of them that are necessary for the enterprise at this stage of its development. You can even create solutions based on several ERP systems, choosing the best ones in their class from each module.
Usually, all modules are divided into 3 groups: finance, personnel, and operations. The main components of the ERP system are financial modules and, above all, the general ledger.