Managing Resources: Enterprise Resource Planning
The term ERP develops a system of “planning and thereby integrating all significant resource planning systems in an organization that, in the context of an operation, integrates planning and control with the other functions of the business.”
Using ERP, the organization acquire and move business resources efficiently and effectively from one state to another. ERP systems differ from the traditional approaches. It is highly suitable in intermittent manufacturing operations. The time of origin is known as MRP (Material Resource Planning) system. Under the MRP system, production material requirements are calculated several weeks in advance of the actual need on the basis of the production schedule, which is updated weekly. Thus it resulted in unnecessary wastage of time as well as manpower resources.
But as the ERP system developed, it acted as a business support system that stores the data required for different kinds of related business functions like Projects, Human Resources, Supply Chain Management, Financials, Manufacturing, and Customer Relationship Management in a single database. It is associated with a modular software design based on a common database which will allow each and every department/activity of a business to store and retrieve data/information in real time. Such information would be reliable, easily shared and accessible across the organization branches. It also contains the utility that allows the business personnel to select the modules they need, mix and match modules from different vendors and add and remove modules as per their convenience to improve the performance of the business. Prior to the advent of the concept of ERP Systems, data in respect of different departments within an organization were stored, maintained and processed in their own customized computer system, which was obviously not integrated.
In those days, it was hardly possible to implement an integrated system of data from potentially different PC/Computer manufacturers and systems. Each and every machine had to integrate using a predefined set of common/unique data that can be transferred/communicated among each computer system. Any simple error or deviation from the data format would cause total integration failure. Gone is the time when each department store its own data only (for example, the PIS department (HR) do only have personal details of employees, the payroll department has pay-related information, and the finance department have data of the financial transaction. Each system would have to rely on a set of common data to communicate with each other. ERP is an integrated system that merged formerly separated specialized applications and simplified the computer infrastructure within a large organization by keeping data in synchronization across the enterprise.