Enterprise Resource Planning Revision

Enterprise resource planning systems or ERP systems are software platforms used by companies to manage key aspects of business operations like inventory and expenses.

Aspects that are generally managed by the system are:

• finance

• human resources

• manufacturing - including schedules, capacity, lead times and tracking

• stock control and warehousing

• customer orders and order histories

• delivery schedules

• business strategy and market research

• quality

Advantages:

• Real time data sharing between departments, increasing communication.

• Reduces delays and increases responsiveness to new updates within the company.

• Improves chain efficiency, tracks stock levels and lead times, ensuring overproduction or material shortages don’t occur.

• Through cost tracking it helps companies to make an informed decision about pricing, investments and budgeting.

Drawbacks / Disadvantages:

• Expensive to implement and maintain.

• Requires substantial financial investment continuously.

• Employees must be trained which could limit productivity until every staff member is familiar with the system and work is able to resume at a standard rate.

• ERP systems must be customised to fit with the company’s specific workflow. If the system is not customised to the specific company it may cause disruptions to the workflow.

• An entire system can be compromised if one working part fails, meaning the process would collapse and stop production.

Overall,

It enhances co-ordination and optimises workflow but companies must weigh implementation costs and staff training against long term benefits.