An ERP (Enterprise Resource Planning or ‘Business Resource Planning’ in Spanish) is a management system that allows you to automate the main processes of a company, centralizing information on a single platform.
Reducing processes, increasing collaboration and centralizing a company’s data are actions that support the success of a business not only in cost reduction, but also in the productivity that can be achieved within work teams.
An ERP allows these actions to become a common denominator of the companies that use it.
Do you want to know how an ERP works, what are its advantages and how to choose the ideal software for your business? Keep reading and take advantage of all the tips in this guide! 📝
What is an ERP?
Enterprise Resource Planning (or ‘business resource planning’ in Spanish) is a management system that allows you to automate the main processes of a company, centralizing information on a single platform and streamlining workflows.
ERPs are also known as Business Management Systems and are designed to improve the efficiency of processes, in order to reduce operating costs, increase productivity and make collaboration between different departments of a company more efficient.
With software of this type it is possible to connect different areas of a company, such as production, stock, finance, logistics, human resources, marketing, among others.
Another important function of ERP is to reduce manual work and repetitive tasks through automation. Instead of sending emails and filling out forms, teams can resolve various issues in just a few clicks within the software.
The ERP also serves to unify the most important business metrics in a single database, allowing all company employees to access the same information. This avoids problems related to duplicate and outdated data, which can compromise management efficiency.
For all these reasons, implementing an ERP is an important step for any company that wants to increase its productivity, grow and sell more.
Create your free online store now!
How does an ERP work?
These types of solutions work by linking the different processes that are generated within an organization, with the possibility of managing and understanding them from a single platform.
An ERP manages the data resulting from these processes and streamlines access to information regardless of the area from which it is requested.
It works with a centralized data structure where, in general, a single database is used that is fed with information from different areas.
The ERP is the place where the entire company meets to know the data of some process, sale, client or activity of any department.
Example of the operation of an ERP
Suppose you entered a customer order in the .
First the sales area is notified; then (or at the same time) a notice arrives to the production department, so that it can and know if the raw material necessary to create the product is available.
Once this is determined, the process continues to the production stage, where the manufacturing budget is calculated and the necessary inputs are deducted from the inventory.
Finance and accounting will also be notified to make the collection and invoicing and, finally, the logistics area will proceed to make the shipment.
This entire process is recorded in an ERP and the collaborators will be able to review each phase of the journey in real time.
Likewise, the system keeps the data and actions carried out in the company up to date.
How did the ERP come about?
According to one , the ERP that we use today is inspired by the old industrial production management software, which was used in the 1960s.
Those systems were called Manufacturing Resource Planning (MRP), that is, Manufacturing Resource Planning.
At that time, software had limited functions and was focused on the industrial sector. However, starting in 1980, companies in all segments began to adapt MRPs to manage their businesses.
This is how in 1990 the consulting firm Gartner created the term ERP. By that time, the systems had already incorporated functions related to accounting, sales and human resources.
In 1998, the Netsuite company created the first ERP in the cloud, which was stored on an external server that was accessed 100% online.
This change made ERP more accessible to small and medium-sized businesses that, in the past, could not use such technology due to high costs.
Since then, ERP solutions have evolved and incorporated new features to streamline the routine of business.
What is the difference between ERP and CRM?
The difference between an ERP and a CRM is that the former is aimed at managing all areas, processes and data of a company, while the latter is focused on managing customer service.
The meaning of the CRM acronym is corroborated by: Customer Relationship Management (in Spanish, Management of Customer Relations).
In practice, both systems are of great importance for the digital management of companies. For this reason, it is essential that they integrate and work together.
We recommend choosing a CRM that is compatible with the ERP of your business. Today, many of these systems are connected through (Application Programming Interfaces or Application Programming Interfaces), which function as links between different software.
In summary: while the ERP is used to monitor processes such as the control of orders, budgets, sales balance and the management of accounts receivable; The CRM collects personal data from customers and records all interactions with the company.
Know more:
Article
Types of ERP for companies
ERPs vary according to their operation and the role assigned to them within companies. In this sense, the types of ERP for companies can be:
- Local
- Cloud or SaaS
- Hybrid
- generic
- tailored
1.Local
In this type of services, a local server owned by the company is required to be able to implement the solution.
It involves a higher investment than other types of ERP, but has the advantage of greater data confidentiality and security, since the information is not stored in a public cloud.
2. Cloud or SaaS
It is a service installed in the cloud that has a charge for use according to the resources consumed or by membership.
In general, ERP providers are the ones who provide the data storage service in their own clouds, although they can also use a third party as a cloud provider.
The acronym SaaS stands for Software as a Service, which is just the marketing model for this type of service managed by another company other than the one that uses the system.
3. Hybrid
In this model, the two previous ones are used simultaneously, that is, some of the applications operate on the company’s local servers and others in the cloud.
This allows companies to prioritize tasks and organize their resources as they see fit.
Generic
This is the name given to the ERP model that has a predefined modular structure, which is generally adapted to the most common needs of companies.
It is usually one of the ERP options with the lowest cost and is very functional when a specific development for a specific area is not required.
Custom or parameterizable
This type of ERP requires a greater investment, because, as the name indicates, it is about creating a personalized solution tailored to the specific needs of a company.
It requires a deep diagnosis of the particular needs of the business, where even some providers can generate specific module developments, according to the demand of the company’s operation.
Characteristics of an ERP
In order to provide greater clarity on this type of system, we break down all the aspects that characterize an ERP.
Flexibility
Flexibility refers to the ability to adapt to changes. In technology it becomes really necessary to be flexible, since the speed with which updates occur requires structures and products capable of supporting them.
The flexibility of an ERP is associated with the degree of customization that it allows. It is very feasible that you will have to make adaptations to the real needs of the business.
Integrations
While an ERP can manage most processes within a company, the ability to integrate with other tools makes management even easier.
To choose an ERP, it is necessary to have mapped all the resources that the business already uses, with the aim of guaranteeing that they are correctly integrated into the chosen system.
In this way, the ERP will adapt to the specific operation of the company, and not the other way around.
Modularity
This feature allows you to decide when to scale and add more modules if the business operation requires it or, on the contrary, disable some of those that can be dispensed with.
This facilitates the implementation of new processes without affecting other areas.
The main modules of an ERP within a company are:
- Financial management: module that allows control of cash flow, costs, accounts payable and receivable, generation of reports, etc.
- : function where the inventory is prepared, as well as the calculation of stock rotations to guarantee the correct quantity of each product.
- Purchases: through which orders are made digitally and simplified to suppliers.
- Sales: in this module you can keep track of the sales made, budgets are managed, discounts are established in the case of specific promotions and all this is integrated with the stock and finance areas.
- Fiscal and accounting management: from here the , accounting and bank accounts are controlled, the payment of the taxes that apply according to the regulations of the AFIP, among others, is carried out.
- Production: this functionality allows the automated management of the inventory of raw materials and supplies and the management of warehouses, as well as the control of material losses and production time.
- Logistics: is the module that is responsible for transport management, control of products and storage and distribution centers.
- Human resources: from this section payroll, vacations and overtime are managed and benefits for employees can be automated, as well…
Facebook Comments
Disqus