What is ERP?

Enterprise Resource Planning (ERP for short), or enterprise resource planning, is an enterprise management concept proposed by well-known American consulting firm Gartner in 1990. Enterprise resource planning was originally defined as application software, but it quickly became accepted around world. It has now become an important modern enterprise management theory and an important tool for implementing enterprise process reengineering. The original definition of application software is now called "enterprise resource planning system". An enterprise resource planning system is a management platform based on information technology-based systematic management ideas that provides decision and operation tools for decision makers and employees of an enterprise.

The figure below shows a diagram of some typical ERP modules:

What is ERP?

1. Origin

The concept was proposed by Gartner Consulting, an industrial technology research company, in early 1990s based on development of information technology and supply chain management, indicating a trend in development of manufacturing management information systems. ERP is not a completely new system, it was material requirements planning (MRP) in 1970s and gradual development of manufacturing resource planning (MRP II) in 1980s.

The American Production and Inventory Management Association's explanation of term ERP mentions that difference between an ERP system and a typical MRP II system requires technical requirements such as a graphical user interface, a relational database, customer and supplier integration, and various reports. can be done as needed.

To put it simply, ERP is “a large-scale, process-oriented, modular and integrated system that integrates information flows such as internal financial accounting, production, purchasing, sales and inventory, etc., quickly provides information for decision making and improves company's operational efficiency and rapid response capabilities." It is backstage heart and backbone of electronic enterprise. Any client application system is based on it, including EC, customer relationship management (CRM), supply chain management (SCM), etc.

2 extensions

ERP systems developed rapidly in 1990s. Due to Y2K problem and introduction of euro to destroy original system, many companies took opportunity to replace original system with ERP.

The term "ERP II" was coined by Gartner in 2000 in an article titled "ERP is dead, long live ERP II". It describes web-based software that provides real-time access to ERP systems for employees and partners (such as suppliers and customers). The ERP II role extends traditional ERP resource optimization and transaction processing. More than just managing purchases, sales, etc. ERP II uses information about resources it manages to help businesses collaborate with other businesses. ERP II is more flexible than first generation ERP. Instead of limiting functionality of an ERP system within an organization, it extends beyond walls of enterprise to interact with other systems. "Enterprise Application Suite" is an alternative name for such a system.

Developers are now putting more effort into integrating mobile devices with ERP systems. ERP vendors distribute ERP to these devices along with other business applications. Stakeholders of modern ERP technologies are bridging concerns of hardware, applications, networks, and supply chains. ERP now covers more functions and roles, including decision making, relstakeholder relations, standardization, transparency and globalization.

3 ERP management ideas

The main idea is to implement effective management of entire supply chain, which is mainly reflected in following three aspects.

1. Reflection of idea of ​​managing all resources of supply chain.

2. Reflection of ideas of lean manufacturing, simultaneous design and flexible manufacturing.

3. Embody idea of ​​planning in advance and control in process.

4 functional modules

ERP systems cover following general functional areas. In many ERP systems these functional areas are named and grouped together as ERP modules:

Manufacturing management: development, specification, planning, capacity, workflow management, quality control, cost management, manufacturing process, manufacturing engineering, manufacturing process, manufacturing configuration, product lifecycle management.

Inventory Management: Inventory, Order Entry, Purchasing, Vendor Planning, Product Checking, Payment Request Processing, Commission Calculation

Finance and Accounting Management: General Ledger, Cash Management, Accounts Payable Management, Accounts Receivable Management, Notes Management, Fixed Asset Management

Cost management: billing, time and expenses, event management

Human resource management: human resources, payroll, training management, employee shift and attendance management, allowances, employee health insurance, performance appraisal

Supply chain management: various self-service interfaces with customers, suppliers, employees, purchasing, inventory, claims processing, warehousing (receiving, putting away, picking and packing)

Project management: project planning, resource planning, project costing, work breakdown structure, billing, time and cost, units of performance, activity management

Customer relationship management (CRM): sales and marketing, commissions, service, customer interaction, call center support. A CRM system is not always considered part of an ERP system, but rather a business support system (BSS).

Data Services: Various self-service interfaces for customers, vendors and/or employees

5 components

Transactional database

A database transaction (abbreviation: transaction) is a logical unit during execution of a database management system, consisting of a limited sequence of database operations.

Control Portal/Dashboard

Data-driven dashboards allow you to quickly view and understand data by thinking about it. With well-planned dashboards, business leadersInnovators and knowledge workers can ask and answer questions in real time, turn ideas into action, and inspire real innovation.

6 System integration

General ERP software emphasizes following system integration:

All applications must access same database to avoid redundant data and duplicate data definitions.

All modules must have same interface.

Users should be able to access (be able to view with certain permissions) any message in system without further processing

The extension points and main functions of new ERP management system are as follows:

Enterprise resource planning allows you to quickly respond to market changes due to efficiency of market and trade operations; it includes new partnerships between suppliers, manufacturers and distributors, and also includes a flow chain management feature with a focus on instant delivery and instant production; as well as new e-office instant messaging, e-approval and enterprise logistics management joined ERP management.

Advanced graphical user interface, multi-interactive interface, customizable desktop management interface, fourth generation language and auxiliary tools, distributed structure server, web-based EDI, multiple database integration, etc.

The PDM product data management feature enhances design and process data management and enhances integration of manufacturing management system with CAD and CAM systems. production process, etc.) control mode.

According to new form, ERP system can be used in supply chain management, sales and marketing, distribution, customer service, financial management, production management, inventory management, quality management, project management, electronic office management, electronic document management and standard and technological control, etc. Additional features.

The advent of new office equipment has accelerated adoption of ERP. PDAs, mobile phones and high-definition cameras allow you to manage barcode input, quickly import QR codes, and quickly manage and approve electronic office documents in different regions.

ERP is a higher-level management model for modern businesses that must evolve internationally in Information and Data Age. It will complete integrated management of all aspects of enterprise's activities and bring more immediate, broader and longer-term economic and social benefits to enterprise.