What is ERP?

What is ERP? ERP stand for Enterprise Resource Planning. In the simplest terms, ERP is a software suite designed to support and automate the business processes across an organization. But what does that mean? What is ERP software, really?

Well that’s a bigger question.

The overall goal of an ERP system is to help employees do their jobs more efficiently and effectively by breaking down barriers between business units, teams, and software systems; ERP bring s it all into one central database. An ERP system is many things and it covers many different parts of an organization. Some of the major roles played by an ERP system are listed below, please note that this is not a full list, there are many more that could be added, some of the most common functions of an ERP system are:

  • General Ledger
  • Accounts Payable
  • Accounts Receivable
  • General Journals
  • Trial Balance and Financial Reporting
  • Bank Reconciliation
  • Cash Management and Forecasting
  • Budgeting
  • Purchasing, Tracking & Sales Shipments of Inventory Items
  • Track by Lot and/or Serial numbers
  • Track Quality Tests
  • Warehouse Management functions
  • Manufacturing Automation functions
  • Track the conversion of raw materials into finished goods
  • Track Labor, Overhead and Other manufacturing costs
  • Provide the total cost of production
  • Track and monitor post sales service to products in the field
  • Warranties
  • Service Contracts
  • Product Lifetime Costing has become standard functionality in current ERP solutions.

If you only need a basic understanding of ERP, then the above explanation should be enough. But for those of you who need to know in more detail, there is much more to know. There are many different parts and pieces that go into fully understanding the answer to the question, what is ERP? In future blog articles we will touch on some of the major characteristics of ERP, important vocabulary, best practices, and more.

In the meantime, we have other blog articles that you may find helpful