Four Fundamental Components of ERP

When it comes time for your organization to evaluate ERP systems, whether you are replacing a small business accounting package or an aging ERP, it’s important to clarify the components.  Each piece (often called module) of the ERP system delivers different value for your organization. To get the most from the full system, make sure your evaluation team understands the fundamentals.

Financial Management
At the core of ERP are the financial modules, including general ledger, accounts receivable, accounts payable, billing and fixed asset management. If your organization is considering the move to an ERP system to support expansion into global markets, make sure that multiple currencies and languages are supported, as well as regulatory compliance in the U.S. and in foreign countries.

Other functionality in the financial management modules will include budgets, cash-flow, expense and tax reporting. The evaluation team should focus on areas that are most important to support the strategic plans for your organization.

Business Intelligence
Business Intelligence (BI) has become a standard component of most ERP packages. In general, BI tools allow users to share and analyze the data collected across the enterprise and centralized in the ERP database. BI can come in the form of dashboards, automated reporting and analysis tools used to monitor the organization’s business performance. BI supports informed decision making by everyone, from executives to line managers and accountants.

Supply Chain Management
Supply Chain Management (SCM), sometimes referred to as logistics, improves the flow of materials through an organization by managing planning, scheduling, procurement, and fulfillment, to maximize customer satisfaction and profitability. Sub modules in SCM often include production scheduling, demand management, distribution management, inventory management, warehouse management, procurement and order management.

Any company dealing with products, from manufacturers to distributors, needs to clearly define their SCM requirements to properly evaluate an ERP solution.  It’s easy for a vendor to focus on their applications’ strengths and not address the full needs of the company.

Human Resource Management
Human resource management ERP modules should enhance the employee experience – from initial recruitment to time tracking.  Sub modules can include payroll, performance management, time tracking, benefits, compensation and workforce planning. Self-service tools that allow managers and employees to enter time and attendance, choose benefits and manage PTO are available in many ERP solutions.

Manufacturing Operations
Manufacturing modules make manufacturing operations more efficient through product configuration, job costing and bill of materials management. ERP manufacturing modules often include Capacity Requirements Planning, Materials Requirements Planning, forecasting, Master Production Scheduling, work-order management and shop-floor control.

Integration
Key to the value of an ERP package is the integration between modules, so that all of the core business functions are connected. Information should flow across the organization so that BI reports on organization-wide results.

ERP can be easier than you imagine – Microsoft Dynamics ERP is cost effective and familiar to your users. If you are thinking about upgrading your systems to a fully integrated ERP system, give us a call.

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