What Is An ERP System - How Do They Work & Why Use One?

ERP System

An Enterprise Resource Planning system is a comprehensive software solution that integrates various business processes and functions across an organization into a single unified platform. This system helps companies manage and streamline their operations, further simplifying the process of planning, tracking, and optimizing resources.

What is an ERP System?

An ERP System is a software suite designed to consolidate and automate the key operational processes of a business. These processes could be Financing, Human Resources, Manufacturing, Supply Chain, etc. An ERP acts as a centralized base that would provide real-time data and facilitate communication between different departments within an organization.

How does ERP work?

ERP systems generally work by integrating various modules or applications that correspond to specific business functions. These modules are separate departments/ operations of the business- like Accounting, HR, Manufacturing, Procurement, Inventory Management, and many more. Data is entered into the system once and then it is accessible across the organization, ensuring consistency and coordination.

Let’s take an example- when a customer places an order, the ERP can further update Inventory Levels, initiate procurement for necessary supplies, schedule production, and generate invoices automatically. Employees in different departments would be able to access this information, which would further enable better decision-making and coordination.

As a Business Owner, Why should you use an ERP?

Following could be some of the reasons why you should use an ERP:

  • Streamlined Processes- ERP Systems eliminates manual- repetitive- redundant tasks. It also helps in eradicating errors and improving efficiency.
  • Data Centralization- All the relevant data of the company is stored in one place, helping in enhancing the data accuracy and accessibility.
  • Improved Collaboration- All the departments can easily share information, facilitating better communication and collaboration.
  • Enhanced Reporting- ERP Systems provide real time insights through customizable reports and dashboards, further helping in making informed decisions.
  • Cost Reduction- By optimizing processes and resource allocation, ERP would help you reduce operational costs.
  • Compliance and Security- ERP Systems have security features and compliance tools to protect your sensitive data and ensure regulatory adherence.
  • Scalability- ERP systems can adapt to the ever evolving needs of a growing business further making it easier to expand.

Now, Let us take you through 5 Best ERP Solutions that you can use for your business:

ERPNext

ERPNext is the new hero in the Open Source world. It is known for its user-friendly interface and extensive features. It covers almost all of the important business processes- be it Accounting, Manufacturing, Procurement, HR & Payroll Management, Inventory Management. It is an easily customizable software and also offers cloud and on-premise deployment.

Odoo

Formerly known as OpenERP, Odoo, was the one who started and is the flag bearer of the Open Source ERP revolution. Odoo is the first name that comes up after the word “Open Source”. Odoo is known for its modular structure, which further allows businesses to choose and integrate the specific modules they require. Odoo also has its very own app store, in which there are thousands of add-ons which have been developed by the partners. You can just buy the app, configure it and you’ll have the added functionality in your database.

SAP Business One

SAP Business One is a comprehensive ERP solution designed for small and medium sized businesses. SAP Business One offers features like Finance Management, Sales and Customer Management, Inventory and Analytics. SAP Business One is known for its scalability and robust reporting capabilities.

Microsoft Dynamic 365

Microsoft Dynamic 365 is a cloud- based ERP solution that integrates with other Microsoft products like Office 365 and Azure. It covers a wide range of business functions, including finance, sales, customer service, and supply chain management. It is highly customizable and suitable for medium to large enterprises.

Netsuite

A product of Oracle, Netsuite, is a cloud-based ERP system that offers a unified platform for financial management, e-commerce, CRM, and more. It is well known for its scalability and is often favoured by rapidly growing businesses.

These ERP solutions vary in terms of pricing, scalability, and specific features, so it is essential to evaluate your organization’s needs and budgets before choosing the one that would best suit your requirements.
In addition to this, you may also consider factors like ease of use, support, and integration capabilities when making your decision.

To summarise, ERP Systems are vital tools for modern businesses who are seeking to streamline their operations, increase efficiency, and gain a competitive advantage in a rapidly changing market.