A Comprehensive ERP Definition

ERP, short for Enterprise Resource Planning, has become a very popular way of becoming more efficient as a company. However, if you are just beginning to realize a need to have different parts of your company work together better, you may not know what ERP really means. The ERP definition that follows is a thorough explanation of what the proper system can do for your business.

ERP by Definition

ERP is by dictionary definition, “A process by which a company (often a manufacturer) manages and integrates the important parts of its business. An ERP management information system integrates areas such as planning, purchasing, inventory, sales, marketing, finance, human resources, etc.” This ERP definition makes it pretty clear the systems are designed to connect the various parts of an organization. What this definition does not do is describe how this is done, what it means to connect separate parts of a business, and the potential benefits.

ERP Software – How Does it Work?

So, connecting inventory and human resources sounds like a stretch, and perhaps not all that important. However the ERP definition makes it clear that is what is going on, among other things, so how does this happen? The key, like most things it seems these days, is technology, and more specifically software. As far back as the mid 90’s, companies were beginning to understand that there were inefficiencies between departments, and those inefficiencies were costing them time and money, and most importantly these could be fixed.

Software companies realized this and have put together programs that allow many different systems from inventory, sales, to HR and much more to talk to each other. As they have learned from their customers, they have refined the software and have instituted some best practices to help you company learn from thousands of others.

ERP Definition – What Does it Mean?

What does it mean to have all these parts connected? What it means is that you now have one company. Instead of a bunch of separate little parts and individual silos, now each part of your company is working together. According to this ERP Definition, every resource, both people and material, every batch of information, and every function is pushing your business in the same direction. It means that you have greater control than ever over the direction of your company.

Benefits of ERP Software

The most obvious benefit has already been mentioned. Your entire company is now on the same page, and pulling the proverbial sled together. No longer are different parts of your company unintentionally fighting against one another, impeding progress. This also has the added benefit of saving you time and expense. With the parts of your company connected, decisions can be made more quickly, and with fewer errors.

The collective wisdom of your entire company can work on solutions. You can also forecast sales and track orders far more successfully than before. Finally, your data is more secure, because instead of all the data being spread throughout the company, it is now housed in one place. More efficiency, more collaboration and less risk all ensure your company is more profitable. That is a benefit we all can appreciate.