Enterprise Resource Planning (ERP) software is usually packaged in functional “pieces” that can be implemented in various combinations. These ERP software modules address specific functions like inventory control, planning, customer order management, purchasing, production control, general ledger, accounts payable, etc.
This functional organization adds to the flexibility of the ERP product. A distribution company that does little or no manufacturing can license and install the financial applications, purchasing, customer order management and inventory, for example, and have a solution “tailored” to their needs. If at a later time they expand into manufacturing, they can license additional modules that will essentially snap in place and expand the system as needed.
This modular design also allows software developers to put together product offerings for specific industries. By adding a module of food safety software, quality management and lot tracking, or product configuration, for example, an otherwise general purpose ERP system becomes a niche product that is well suited for a company in the food industry. By developing modules with specific functionality, an ERP vendor can assemble a variety of niche products like ERP for automotive suppliers, ERP software for life sciences, ERP for chemicals, etc.
Modular design helps developers focus on specific industries and functional needs while not re-inventing the wheel by duplicating the more universal functions like inventory control and purchasing. Customers benefit by not having to buy and maintain functionality that they don’t want or need.
Most ERP software has grown and broadened over the years in part by adding new modules to the product offerings. Some of these are developed from scratch to capture demand opportunities and some in response to customer requests. Some modules are the result of acquisition: the ERP developer might buy a company with a “point solution” that can be converted into a module of the ERP system.