[0:10]So, what exactly is ERP and how does it work? Enterprise resource planning or ERP refers to internal business software that helps organizations manage critical activities relating to everything from supply chain to the shop floor to the warehouse. The ERP system maintains a shared database for real-time information about financial and operational activities across the enterprise. An effective ERP then uses this single source of accurate data to manage and improve how company resources are utilized, which increases the operational efficiency of an organization. An ERP is made up of individual units which are designed to handle individual departmental processes. An ERP helps manage payroll, customer orders, inventory, production capacity and reporting. It gathers data from every process in the organization and then uses that data to inform decision making activities as well as provide automation and greater efficiencies across every department in the organization. The basic units of ERP software are: Procurement, Finance and Accounting, Human Capital Management, Manufacturing Ordering Management, Supply Chain Management, ERP Distribution Unit, CRM, E-commerce, Inventory Management and Warehouse Management. Each unit is designed to meet specific business requirements. These ERP units integrate through data centralization into one platform, which helps employees navigate and accomplish complex tasks. Because ERPs are segmented into units, organizations only need to acquire and utilize the units that suit their business needs based on the nature of their business and its unique challenges. Additional units can be added as the business matures and grows. Let's take a closer look at each of these units. The most important section of the ERP system is Finance and Accounting. This unit allows business leaders to understand the current financial state and future possibilities of the organization. The major features in this unit include General Ledger, Accounts Payable, Accounts Receivable, and tax filing information. The Finance and Accounting Unit automates billing tasks, account reconciliation and vendor payments and helps to prepare key reports such as the business's profit and loss statements. Second, we have purchasing. This unit helps an organization manage and safeguard goods required to manufacture or sell products. The procurement ERP software unit helps automate, track, and analyze quotes. Once a quote is accepted, this unit helps the purchasing department prepare and send a purchase order. It can also keep a list of approved vendors and associate specific supply items with each vendor. Another unit in ERP systems is Order Management. This unit provides a single platform to manage orders from all sales channels, from receipt to delivery and tracks their shipping status, ensuring on-time delivery of orders and that no orders are lost. Because it can manage the people and data connected to the orders, the order management unit delivers visibility and service availability, which increases efficiency and provides a better customer experience. Next, let's look at Inventory Management. This unit allows organizations to gain real-time inventory information including just-in-time inventory, real-time goods receipts, inventory levels, valuation of inbound and outbound inventory, ABC item analysis, inventory audits, accurate forecasting, direct drop shipments, and more. Another critical element of ERP solutions is a unit known as WMS. This part of the software manages high volume warehouse operations and guides employees throughout the operation from putting away to picking, packing and shipping. Warehouse management reduces cycle times and overhead costs while increasing inventory turns, and automatically coordinates and records the movement of inventory. With this unit integrated into an ERP solution, employees can quickly locate and ship the correct product to ensure on-time deliveries. Next, there's Supply Chain Management. This unit tracks every step of the supply chain process and ensures the availability of the right inventory in the right place and at the right time. This unit also manages personnel, products and refunds or replacement orders. Critical to managing the most important asset of any business is the next unit, Human Capital Management. This unit promotes an approach for managing, recruiting and developing human resources, and is a repository for employee data. It helps HR departments onboard new hires and ensures all employees have access to the organization's educational resources. The HCM unit handles payroll, tax withholding, time-off requests, employment agreements, talent management, workforce management, compliance management, and maintenance of all employee data. Next, we have Customer Relationship Management. Customer Relationship Management, or commonly known as CRM software, helps organizations manage their customer lifecycle from initial contact to sales, production, and post-sale maintenance and support services. The best ERP-based CRMs manage information about customers and prospects including their communication and purchase history along with service and warranty agreements. This allows greater efficiency and a faster response to service calls. It enables automated operations such as gathering account receivables, sending notifications, filling out purchase orders, and more.
[5:48]It saves time and eliminates the possibility of manual data entry errors. Because an ERP system touches every department and every process within an organization, it's important to utilize an ERP that is designed specifically with your industry and even your vertical in mind. If you're in manufacturing, ERPs were designed specifically for you. Modern ERPs designed for manufacturers offer several manufacturing specific units besides the units of a general ERP system. These manufacturing specific units are Material Requirements Planning, Advanced Planning and Scheduling, Manufacturing Execution System, Product Lifecycle Management. In fact, the very earliest version of an ERP system was an MRP or Material Requirements Planning, designed specifically with the unique needs of manufacturers in mind. This unit helps manufacturers by synchronizing the flow of materials that are aligned with the production schedule. It focuses on customer retention, cost reduction, and productivity by enabling a view of all demand driven activities. The MRP takes inventory of the materials and components on hand, identifies which additional ones are needed, and schedules their production or purchase. It helps businesses estimate quantities of raw materials to schedule on-time deliveries. The Advanced Planning and Scheduling unit helps manufacturers map every single resource required to fulfill orders and deliver them on time. It automates the process of converting planning into production orders. It also adjusts schedules in real time and forecasts any potential downstream impact to normal operations. The Manufacturing Execution System unit tracks, collects, and monitors detailed data about the production cycle. It controls the actual production phase and shop floor operations. Its functions include work-in-progress reporting, production tracking, labor tracking, equipment utilization, and scrap reporting. The Product Lifecycle Management unit organizes all manufacturing information around the designing, producing, supporting, and disposing of manufactured goods. It may include computer aided design software, bill of material data, and document management. Whether your business is in manufacturing or distribution, you deserve to see what the full features of a modern ERP can do for you. When implemented correctly, the latest ERPs are the key to improved business performance and enable the adoption of industry best practices that overcome business challenges, reduce wastes and ensure operational efficiency. At Ultra Consultants, we've helped hundreds of manufacturing and distribution companies like yours find the best ERP solutions for them. And we stick around to ensure the expected gains and profitability are realized too. With Ultra on your side, you're empowered to gain the tools you need to drive efficiencies that increase your bottom line. For more information and additional resources on how to bring our expertise through your front door, visit us at ultraconsultants.com.
