What is ERP (Enterprise Resource Planning) ?
ERP programs are software packages that enable the integration of all the information flow that is created in a business in the process. ERP stands for "Enterprise Resource Planning" in Turkish and is called corporate resource planning. ERP software are the most necessary high-level corporate information software systems that have gained importance in recent years and are widely used worldwide.
What is the ERP program? What is it used for? ERP system is a system that emerged from production planning. Along with the need for planning due to the complexity of production, ERP software systems have emerged as a result of the question marks created by thousands of materials, machines, employees and financial resources created by purchasing processes, in order not to have a disruption and to prevent production interruption. The management of all departments that need to be managed well has become more efficient with the power of software. The ERP system is not only planning but also includes managing the entire company. The fact that it is a system where all physical resources, financial resources, human resources, customers and suppliers can be managed holistically creates the digital footprints of companies.
A Brief History of ERP
ERP's history dates back to the 1960s. The name ERP was first used by the Gartner Group in the 1990s. But enterprise resource planning systems actually have their roots in the manufacturing industry, back to the 1960s. Since then, growth has taken place to encompass many industries and job roles. It has become the term that defines the ERP software we know today by providing the unique integration of many different departments over the past time. Firstly, in 1960, as Inventory Management and Control, information technology and business processes entered our lives in order to maintain the appropriate stock level in a warehouse. By the 1970s, it led to the creation of Material Requirements Planning (MRP), which helps in planning production requirements and conducting appropriate inventory control. More and more manufacturers began to adopt MRP systems, and in the 1980s MRP systems evolved into what is known as MRP II or Production Resource Planning systems. With more production processes added to the original MRP systems, the first true ERP systems came into use in the 1990s. These systems have come in a format that includes other departments and functions such as accounting, finance and sales. Having these functions enabled previous iterations to go beyond basic inventory control and production processes. All these systems have laid the groundwork for ERP solutions, which we hear a lot today, by integrating multiple processes and departments into a single system. Besides commercial vendors, open source ERP systems have also evolved. These systems mainly meet the needs of small and medium sized enterprises.
What is ERP Software
ERP software consists of various modules. The most used of these;
ERP MRP - Material Requirements Planning
is a common need for businesses to track stocks accurately and manage them efficiently. Increasing customer demands in number and variety in current market conditions require working with high-value stocks. With Material (Stock) Management, stocks can be planned and controlled depending on the production system and production programs. Efficient management of stocks can be achieved with precise 'expiry' dates according to product types, and product waste can be minimized. In addition, decreases in stock numbers and historical sales statistics can be viewed instantly with detailed monitoring, and supply and production operations can be organized with the right strategic planning.
Sales and Distribution Management
Typical sales process includes sales queries and inquiry analysis and operations, preparation of quotes, accepting sales orders, preparing sales invoices with appropriate taxation, shipment of materials or services, tracking pending sales orders. All these sales transactions are managed by the sales module of ERP.
ERP CRM - Customer Relationship Management
CRM department helps to increase sales performance by establishing better customer service and a healthy relationship with customers. All stored details of the customer are available in the CRM module.
The CRM module helps manage and monitor detailed information such as customer contact history, calls, meetings, customer purchasing details, contract duration. The CRM module can be integrated with the Sales module to increase sales opportunities.
Users can create a detailed control plan for each material purchased or produced by the Quality Management module and perform the quality control process for all specified criteria. Control plans can be defined for business centers and periodic controls can be made accordingly. In addition, various reports can be prepared on the module according to the control results to prevent any errors.
Production Planning and Control
Production module is a great helper for the manufacturing industry to deliver the product. This module consists of functions such as production planning, machine scheduling, raw material usage, (Bill of Materials) preparation, daily production progress tracking, production forecasting and actual production reporting.
Human Resources Management
Human Resources module helps the HR team for the efficient management of human resources. The HR module helps manage employee information, track employee records such as performance evaluations, assignments, job descriptions, skill matrix, time and attendance tracking. One of the important sub modules in the HR module is salaries, payment reports etc. Payroll System that helps to manage. It can also include tracking travel expenses and reimbursement.
All money / capital inflows and outflows are managed by the finance module. This module tracks all account-related transactions such as expenses, ledgers, budgeting, bank statements, payment receipts, tax management. Financial reporting is an easy task for this module of ERP. All financial data required to run the business can be used with a single click in the finance module.
Supply Chain Management
Optimizing the supply chain is an essential business process that needs to be done but is not always completed efficiently. Supply chain management is complex due to its large number of moving parts, so it is beneficial to integrate this module with the rest of the company system.
Similar to standalone supply chain management software, real-time data, supply chain management is a vital feature of ERP software modules. The ability to make decisions based on the most up-to-date information is a huge advantage for companies that have it. For example, with the real-time visibility of the supply chain, disruptions in the production or distribution process can be easily detected. Also, the average time it takes to produce a product can be measured.
Purchasing modules are related to all processes that are a part of the procurement of products or raw materials required for the organization. Purchasing module; It consists of processes such as supplier / vendor listing, supplier and product linking, sending quotation requests to vendors, receiving and saving quotes, quotation analysis, preparing purchase orders, tracking purchasing items and updating stocks.
In our country, ERP has gained more importance, especially with the increase in production and the use of computers. In the world, cloud-based systems are popular now because, up to date, anyone can instantly access a new feature. With various security systems, private information created during the use of ERP is protected.
The advantage of ERP's being cloud-based is that it not only manages the operations and processes within the company, but also makes it easier to become more open systems by interacting with customers and suppliers. With quick and easy access to customer and supplier information, companies can take quick action at any opportunity or crisis.
Companies That Use ERP
Enterprise resource planning (ERP) systems are used by organizations that want to manage their business processes in a central and integrated system. ERP is widely used by companies operating in the supply chain to assist in tracking all moving parts of production and distribution. However, ERP can be used by a number of different industries, including healthcare, nonprofit groups, construction, and hospitality. Especially in the service sectors, the use of ERP has started to increase in recent years.
As service sectors;
- Justice Services (Advocacy, Consultancy, etc.)
- Accounting Services
- Tourism Sector
- Computer Services
- Banking Services
- Food Services
- Repair and Repair Services
- Special Education and Education Service
- Entertainment Service
- Automotive Services
Most of the transactions between companies and consumers are made through the service sector. Service sectors and the rise of service economy have increased the use of ERP software.
Benefits of ERP
The competitive nature of modern markets forces entrepreneurs to seize every available opportunity, including technological advances, to maximize efficiency and stay ahead of their competitors.
ERP systems have long established their dominance in software solutions for businesses. So what are the benefits of ERP?
High Performance Management
ERP consultancy and solutions act as a data center linking all aspects of corporate activities requiring management, including human resources, production, sales, customer support, stock and procurement. ERP software provides the fastest and most efficient automatic data processing with the help of computer technologies.
As a primary advantage, enterprise resource planning solutions greatly reduce paperwork and the need for manual data entry. This benefit results in significantly less chance of human error that could disrupt the production flow.
Accurate Information and Availability
This advantage is the main advantage that affects all other enterprise resource planning benefits. Advanced ERP systems enable efficient and centralized collection, processing and storage of information about e.g. production, sales, consumables or customers. Therefore, a single data system is used and maintained instead of several separate databases that need regular checks and synchronization to remove old or duplicate records.
The increased quality of internal data of all types, coupled with its easy accessibility to staff in any relevant department, is an invaluable achievement that enables further performance optimization at all levels of the business. Supply chain and inventory management, in particular, is the activity that benefits most from the ERP application.
unified system containing all business-related data enhances the collaboration between corporate branches or departments. ERP software improves efficiency by reducing communication delays across the entire company. This is particularly helpful if a company has a distributed affiliate network in several states or even on different continents.
Easy access to most of the business information greatly simplifies analysis for planning further development courses. The company's management staff and business analysts can use aggregated data more effectively to design new strategies or suggest improvements to the existing strategy.
Advanced Reporting Technique
As a result of less paperwork and improved communication between departments, ERP software provides the appropriate environment for quick and easy submission of all kinds of reports, from financial to inventory, from customer behavior to technical maintenance.
Another natural benefit of ERP software is determined by its modular structure that allows it to adjust its scale to current needs and conditions. Thanks to this feature, a resource planning system easily adapts to the growth or decrease of the company at every level.
New products, workers, production facilities, suppliers, departments, etc. Even the most insignificant changes in company structure and functioning, such as its emergence, require high flexibility of ERP solutions. Whether growth involves increased production, inventory expansion, or the addition of new functions, services or users, ERP systems can handle all these changes and much more.
As a result of the reduced paperwork and optimization of daily routines, many - the reduction of repetitive tasks, ERP systems allow to reduce costs in administrative needs. It also greatly speeds up business operations involving various information requests and approvals, such as resource planning solutions, logistics, stock and supply management, and others.
Easier Access to Management Systems
According to special needs in resource planning context, ERP systems can be implemented as web or mobile applications developed with cloud technologies. This way they can run on smartphones, laptops or other portable devices and are accessible anytime and from almost anywhere.
Improved Customer Service
Another practical benefit of modern ERP software is the optimization of customer relationship management. A central data repository collects all necessary sales and customer-related information, making it easier for sales managers and customer support personnel to communicate with customers and reduce latency before responding to customers' requests.
Faster access to customer history with improved accuracy also adds to the other benefits listed here. For example, accurately collected and analyzed data on customer behavior patterns can lead to strategy optimizations or more precise demand forecasts that must be met accordingly and at the appropriate time.
This last benefit is actually a summary of all the advantages mentioned above, conveyed from a business profits perspective. The important point is that ERP systems provide the business with the most needed competitive advantage, an extra device to perform better than its competitors. While some companies adhere to methods proven over time or simply cannot afford ERP solutions, others improve their business with technological advances and make a profit.
- Optimization of business processes
- Accurate and timely access to reliable information
- Ability to share information among all components of the organization
- Elimination of unnecessary operations and data
- Reduction of cost
- Increase the performance of all business units that make up its business due to better usage time.
- Optimizing the control and analysis of management decisions in the long term in order to increase performance and save time Ability of
- customer service to keep the customer satisfied thanks to fast returns
- Strong competitive advantage
- loyal information pool
ERP for Service Companies
Enterprise Resource Planning systems more production Although it is known as a software system used by companies that make it, it is actually not. The software system used by service companies in the world and providing company management is Professional Services Automation (PSA). Service companies should use ERP system software as much as manufacturing companies. Because in the digital world, each digital footprint created by companies is an important part of the future of that company. It means not keeping unrecorded positive or negative data; Making the same mistake a second time can mean not getting the same success again. Software usage is used in the accounting department in most companies in our country, but it is not carried out on a single system in other departments except accounting. But at the end of the day, company data should be collected in a common corporate memory. Excel etc. The sustainability and safe storage of the data tried to be stored with the tools are not high.