ERP System Definition
March 19, 2020
According to the APICS dictionary, enterprise resource planning (ERP) is a “…framework for organizing, defining, and standardizing the business processes necessary to effectively plan and control an organization so the organization can use its internal knowledge to seek external advantage.”
The ERP system definition, then, would be a set of software applications that allow you to efficiently and effectively plan and control your business. Essentially, ERP systems offer a digitized, 360-degree view of your business, embodying the products and processes, information flow, procedures and relationships between functions, people and activities. A set of planning applications can provide recommendations for what must be accomplished in order to meet the forecasted demand and keep the business functioning smoothly.
Planning is at the core of ERP and is embodied in a top-down hierarchy of functions—master planning, detailed material and resource planning and execution (production control and purchasing). Master planning is the executive level function that maintains the operational business plan and supports the sales and operations planning processes.
Detailed material requirements planning uses bill of material and inventory information to develop a complete manufacturing and purchasing plan for all products, assemblies, components and materials. At this same level, capacity requirements planning tie the production plan to resource availability—which provides visibility for work center capacity and loading.
Clustered around the planning core functions, additional software modules provide support for executing the plan (production control and purchasing), gathering information for tracking status and feedback to planning (closed loop), and for accounting and control. Additional modules help manage customer orders and fulfillment, forecasting, costing (often integrated within the execution functions), master data (bills of material and routings), finance (accounts payable and receivable, payroll, general ledger, financial reporting and analysis), quality, and shop-floor data collection.
Based on your industry, it may be beneficial to ensure your provider offers industry-specific software modules. For example, if you’re in the food and beverage or chemical manufacturing industries, traceability functionality is essential. While EDI and direct-to-consumer shipping aid consumer packaged goods distributors and importers.
Though ERP solutions look different from vendor to vendor, it’d be impossible to define ERP systems without some mention of the technology infrastructure. Your ERP solution must be built on a single, comprehensive database management system. Data analysis and reporting tools are also an essential part of the system, allowing full utilization of the information the system will manage.
If you’re considering an ERP for your business, it’d be valuable to shop around for an industry-specific ERP solution, that way you have folks building something specifically for you and the unique challenges you face. Aptean does this really well. Whether it’s for food and beverage, consumer goods, discrete manufacturing or anything in between—Aptean solutions are purpose-built for the demands of your industry.
Another essential technology characteristic is internet connectivity, e-business links for e-commerce and customer service, supplier relationship management, and collaboration. Modern systems employ thin-client, highly graphical, tailorable role-based user interfaces with simple connections to and from Microsoft Office applications and email. ERP systems are available on a variety of hardware and software platforms, including cloud-based software as a service (SaaS) subscription alternatives.
While there are a lot of ERPs in the marketplace, it’s important to do your research and find the right one that meets your business and industry needs. Aptean ERPs can help your organization operate more effectively by enhancing visibility, promoting fluid workflow between departments, streamlining operations and creating more efficient, profitable business practices.
If you’d like to talk more about how an Aptean ERP can support you and your business, reach out; we’d love to talk.