What is enterprise resource planning?
Now that you have an idea about PLM (product lifecycle management), let’s understand the meaning of ERP (enterprise resource planning)!
Enterprise Resource Planning or ERP, as the name suggests, refers to the process of tracking, managing, and optimizing an organization’s processes and resources.
ERP systems are often described as the “core pillar” of modern businesses and organizations because they include functions to help organizations plan their manufacturing, operations and distribution processes in a way that optimizes efficiency. It also assists organizations in achieving and maintaining high levels of efficiency, accuracy, reliability, effectiveness and customer satisfaction.
Many organizations are using ERP solutions to manage all aspects of their business operations—including finance, human resources and procurement—in a single application. This integration allows employees to work more efficiently together across departments and even branches around the world.
History of ERP
The term "ERP" refers to a software system used to manage an organization's business operations. In fact, the early inception of ERP can be traced down to MRP (material requirements planning) systems developed by IBM in the 1960s. MRP was developed in response to problems associated with manual systems that were used before computers became widespread in businesses.
While these programs could not technically be called ERPs yet, they did provide companies with a way to track inventory and raw material procurement using an automated system. However, they didn't really include other functions of modern-day enterprise resource planning, such as supply chain management, financial management and human resources management.
The 1980s marked the beginning of ERP systems. They allowed for more than just inventory control. They began including functions for sales tracking and customer service information processing.
By the mid-1990s, many companies had adopted this new technology, which led to increased efficiency across all departments within an organization at a lower cost than ever before. The emergence of cloud computing paved the way for rapid growth in this field when companies began outsourcing their software development needs due to rising costs associated with maintaining proprietary software installations on premises.
Now, ERP systems are synonymous with manufacturing setups in most industries.
Why businesses need a solid ERP system
ERP systems can help companies across the board, from small businesses to large corporations. The benefits of ERP include:
- Improved efficiency
- Improved productivity
- Improved customer service
- Improved cash flow
- Improved forecasting
- Improved collaboration
- Improved data integrity
- Improved compliance with legislation and regulations (including environmental, health and safety)
- Increased visibility into your business operations
ERP is a big topic with a lot to learn about. It involves change management as well as technology implementation — it's something that needs to be worked at diligently over time until everyone understands how their role fits into this larger system of organization.
If you run a fashion business that’s in dire need of data centralization, visibility and automation, check out WFX Apparel ERP!
