What is an ERP system? Planning of financial resources of the enterprise

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2020-05-26 05:20:26

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More and more enterprises of different scales around the world are seeking to implement a powerful management tool, known as ERP system. Its use is intended to establish an effective planning and control of all strategically important for the organization of business processes to optimize the functioning of basic production and auxiliary facilities.

erp system

The Concept of ERP and ERP-systems

Business strategy ERP (EntERPrise Resource Planning) is an integration of all departments and processes of an organization: production facilities, offices, financial, human resources and client profile, and many others. This Association is primarily aimed at optimizing the distribution of various resources within the enterprise.

If this was purely a marketing concept, but now under the ERP system often understand the class of specialized software. In a broad sense it is a methodology of planning and management of all resources of the company. Historically, the strategy of the ERP was formed on the basis of their predecessors:

  • MRP — material requirements planning.
  • MRP II — enterprise resource planning.

In contrast, the ERP system can be used for very large enterprises, often geographically distributed. In this case we are talking about enterprise resource planning as it focuses not only production, but also comprehensive financial planning. A significant feature of ERP systems is also the possibility of its application to any enterprises regardless of the specifics of the work, including those not engaged in production activities. Treating it as a software product, it should be noted equipping a more powerful set of technical tools that facilitate or substitute for the decision-making process.

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Purpose of the ERP system in the enterprise

To decide on fundamental changes in the activities of the company related to the introduction of management information system and implementation of new business strategies, leadership should clearly realize the necessity of this step, which should be expressed in the following key points:

  • Unwillingness to accept the current situation;
  • The existence of the necessity of using modern technologies to strengthen the position of business entities on the market in a competitive environment;
  • Waiting to receive significant benefits from the implementation.

enterprise resource planning

First and foremost, the use of the ERP system is intended to facilitate the successful implementation of a similar business strategy, the implementation of which should ensure an effective enterprise resource planning and management. It is necessary to optimize the performance of its divisions, namely to achieve maximal coherence between them and to reduce administrative costs. This can be achieved due to the advantages provided by the information system. This:

  • Increase transparency of business processes.
  • The Solution to the problems with organizing and finding relevant information.
  • Increase the reliability and relevance of the data.
  • Increase the speed of workflow between departments.
  • Organization of a single information space between the head office and remote branches.
  • Reduced time to complete the documentation and get rid of possible errors.
  • Increase the speed of decision-making at all levels.

ERP-system provides the increase of competitiveness of the object not only through the introduction into its work more efficient business processes. Its use should also lead to a reduction of the overall costs of the enterprise. Advanced tools of modelling and analysis assist in the optimization of production activities, Finance and operation of warehouse, transportation and other units.

Main features of

In different companies, even working in the same business, all business processes can occur completely differently. A standardized scheme of work, which offers an information management system, may differ considerably from that used here before. For this reason we consider it only as a software product is fundamentally wrong, because the implementation of it requires major internal changes in the form of reorganisation of existing business processes.

the enterprise management system

The Conceptual features of these systems are directly linked to their essence. Remember that ERP methodology involves the consolidation of all vital units of the company for effective management of its resources. This pooling is implemented within the information system through a single public database. Information is sent to the store only once, and subsequently can be repeatedly recycled and used by various internal and external customers. Compared to real life, in this case, the reduction of expenses of time and forces of employees on decision-making. It should also be noted that ERP-system is notautomated control system of technological processes and integrated information, based on their abstract model, the information which you enter living people.

The structure of the database as the work of a program complex as a whole, should be designed to reflect the activities of all units without exception. This approach gives the possibility to monitor the common set of resources and business processes of the enterprise in near real time, and thus to implement operational and strategic management.

One of the main objectives of ERP systems is to optimize process planning and control over implementation of the plan. Built-in intelligent algorithms greatly simplify for the user the solution. For example, planning and managing manufacturing enterprise has a lot of specific features related to the heterogeneity of its constituent parts. So, one plant can be a plant working continuously and discretely. From this perspective, the introduced system ERP-class should be universal and contain a wide range of specialized modules.

Since modern day businesses are often geographically distributed, it is very important to and remote from the main office, the branches were provided with full access to the shared information storage. This is the most advanced network technologies involved in the development of ERP systems that also include the rights of user access to stored information.

Functionality of ERP-class

Speaking about features, we should not forget that every product ERP-class — is the enterprise management system as a whole. The range of his possibilities in the first place will depend on the scale and characteristics of the object, for which it is used. Consider the classic set of functions:

Production

  • Conducting design and technological specifications of products or services performed to determine the number of required materials and norms of labor costs.
  • Compilation of production plans.
  • Planning and management of technical capacities in the different approach-from individual units to craft and industrial unions.

Finance

  • Operational accounting, financial, managerial, tax accounting and controlling.
  • Manage enterprise assets, including fixed assets, securities, banking accounts and so on.
  • Comprehensive planning of financial resources of the company and monitoring its results.

Logistics

  • The Formation of the planned indicators of the required quantities of materials, raw materials, parts, components in accordance with production plans.
  • Management of supply and sales: registration of contractors, maintenance of register of contracts, supply chain management, store planning and accounting.

Cadres

  • Manage the recruitment process.
  • Operations personnel and personnel records, maintaining staff schedules, payroll.
  • Manpower Planning.

Marketing and advertising

  • Maintain the sales plans.
  • Manage pricing for various market types for the purpose of formation adequate to the overall strategy of the enterprise transparent policies calculate the value of the goods taking into account discounts and special sales conditions.
  • Planning and monitoring advertising and marketing activities.

Projects. Statements

  • Providing a wide array of standardized accounting, financial and management reporting forms, as well as a flexible mechanism for creating user.
  • Drawing up a common strategy: a phased planning required for the successful implementation of time, material, financial and human resources.
  • Monitoring of key performance indicators of the project.

What companies can use ERP system

At first glance it may seem that systems in this class designed exclusively for big industries, because they increasingly are characterized by a high complexity of the structure of resource flows and processes of various kinds. However, there are situations when the company is small in size may not be sufficient to use the classes in MRP or MRP II. Today on the market you can buy the software products with different capabilities. Depending on the scale of the enterprise in which they can be used effectively, distinguish heavy, medium and light solution.

erp systems

As for non-manufacturing organizations, ERP systems are applicable including for them. For such enterprises will be enough and not too wide functionality. At the moment there is a small integrated or local varieties of systems that can meet the needs of trading companies or organisations working in the service sector. It should also be noted that many developers offer their customers and industry products.

About classification

The Most obvious characteristic that can be classified all the enterprise management system of ERP, is the scale of the organization, where they may be applicable. From this point of view, depending on the number of jobs is accepted to allocatesolutions for:

  • Large corporations (over 10 thousand).
  • Medium enterprises (from 1 thousand to 10 thousand people).
  • Medium-size enterprises (100 to 1 thousand persons).
  • Small enterprises (less than 100 people).

An Important characteristic of systematization of such information products is functionality. Depending on the utilization of the tasks performed there is the following conventional division into:

  • Large integrated.
  • Average integrated.
  • Financial management.
  • Local.

The Local version is usually a boxed standardized product information narrow focus, with relatively little total cost. Most often, it covers one or more blocks in Finance to the organization or its accounting activities. Such systems are suitable for small manufacturing or trading firms.

Financial management is the enterprise management system can be used mainly in non-manufacturing organizations, mainly shopping or working in the field of provision of services. In addition to financial and accounting, there are modules of logistics management.

The Integrated information system depending on the scale of the target object can be medium or large. They cover all business processes of corporate structures, namely the interaction with suppliers and customers, production of the final product, flow of materials and Finance, relations with personnel, logistics, warehousing and distribution, projects and many others.

The Modern market of ERP-systems

All are presented in the domestic market for software products can be divided into two main categories: the Russian and foreign production. The differences between them lie not only in the place of creation, but also in functionality.

Powerful Western development are standards that are called ERP systems. The clearest examples are the products of the firms SAP, Oracle, PeopleSof, SAGE, Baan, Microsoft Business Solution. They can be used on targets of any level, including very large. However, their use by Russian companies can be often difficult because of possible occurrence of the following problems:

  • The Unwillingness of enterprises to a major reorganization of the existing business processes. The scale of such changes is difficult to overstate. Business processes of foreign enterprise management systems are radically different from those made use of in our country.
  • Insufficient number of experts able with the appropriate quality level to implement the project of introduction of imported ERP-system in Russia.
  • The High cost of using such solutions.

Despite the overall lagging behind their Western counterparts, modern Russian developments gradually increase your functionality. They are fully adapted to work with domestic enterprises. And can be successfully implemented, if in a particular instance requires a wide scope of business processes, and it is enough only to establish accounting in some areas of work in ERP-system. Examples of advanced domestic developments — the products of 1C and “Galaxy”.

A look into the future — ERP II

Appeared some time ago, the concept of ERP II is the result of the improvement of the methodology of ERP. Enterprise resource planning and management remain here in the main task. However, the rapid development of the Internet triggered the emergence of new methods, have left their mark, making the traditional business and partly electronic. ERP II is a combination of the classical system of company management with specific solutions to network Commerce.

erp enterprise resource planning

Now, it is extremely important to interact with their counterparts across the network. For this there are two important areas: supply chain management, and customer relations. Intrafirm information ceases to be merely such, goes into the environment and becomes the basis of cooperation with other business entities. A new concept in this case is formulated as resource management and external relations of the enterprise. In addition to the ideological reorientation of ERP system II received its own technological features.

Solution to the issue of the choice

Selecting a software of this level — the process is extremely responsible. Incorrect decision on this issue, especially for large-scale projects may entail imposing time and monetary costs in the absence of the expected result.

manufacturing enterprise management

Effective implementation of a large-scale system, which, for example, must provide for the efficient management of a manufacturing plant necessarily require the reengineering of business processes. It is important to prevent a situation where upon completion of program implementation it would collect unused data or would not solve the required tasks. For this reason, it is better for the project to invite the cooperation established in this case a team of experts.

There is some list of criteria on which basis the project team in coordination with the administration of the target company can be made optimal, cost-effectivethe decision on the choice of software:

  • Compliance with the technical and functional capabilities of the system the main objectives of the company.
  • Total cost of ownership must fit within allocated for these purposes in the budget. In addition to the cost of purchasing the system, this includes operating and other indirect costs.
  • Implementing the information system of ERP-class must match all the common technical requirements and, therefore, to be scalable, reliable, robust to possible failures and to have anti-virus and anti-hacking protection.
  • Supplier should be guaranteed for the subsequent maintenance and support of installed software.

The Process of implementation of ERP systems

The Implementation of ERP systems in enterprises realization on them of the same name strategies. This procedure depending on the scale of the target object usually lasts from several weeks to several years. To introduce the organization may, on their own or take the help of specialized companies. It is possible to allocate the main stages of this process:

  1. Primary organization. Here it is necessary to define strategic goals, tasks and outline the expected benefits from the implementation for a particular organization. On the basis of these data it will be possible to make the technical project plan.
  2. Development of the project. At this stage, you analyze the current activities of the organization: strategies for its promotion, the business processes. On the basis of its results we construct a model of the system, and work to make appropriate refinements.
  3. The execution of the project. Because the rules of the business process dictates the implemented ERP system, they are transforming according to the unified requirements. If necessary, develop reporting forms and algorithms migrate data from previously used accounting programs. If the previous steps identified the failure of the system functions for the object is improvement. In conclusion, conducted user training and pre-testing.
  4. Commissioning. In use, identifying and eliminating possible errors and Troubleshooting.

management System ERP

Control System of the ERP class today — not just installed on all the computers in your organization a copy of the expensive software, but the main driving force promising business strategy. Choice should be based on existing needs and capacities of the target object. From the correctness of the decision and the execution of the subsequent steps of implementation depends on the further success of the business as a whole.


Article in other languages:

AR: https://www.tostpost.com/ar/business/22451-what-is-an-erp-system-planning-of-financial-resources-of-the-enterpris.html

BE: https://www.tostpost.com/be/b-znes/39912-shto-takoe-erp-s-stema-planavanne-f-nansavyh-resursa-pradpryemstva.html

DE: https://www.tostpost.com/de/business/39427-was-ist-ein-erp-system-die-planung-der-finanziellen-ressourcen-des-unt.html

ES: https://www.tostpost.com/es/centro-de/39199-qu-es-erp-la-planificaci-n-de-los-recursos-financieros-de-la-empresa.html

HI: https://www.tostpost.com/hi/business/24066-erp.html

JA: https://www.tostpost.com/ja/business/22021-erp.html

KK: https://www.tostpost.com/kk/biznes/40323-b-l-erp-zh-yes-zhosparlau-k-s-porynny-arzhyly-resurstaryn.html

PL: https://www.tostpost.com/pl/biznes/42125-co-to-jest-system-erp-planowanie-zasob-w-finansowych-przedsi-biorstwa.html

PT: https://www.tostpost.com/pt/neg-cios/41759-o-que-um-sistema-erp-planejamento-de-recursos-financeiros-da-empresa.html

TR: https://www.tostpost.com/tr/business/36846-nedir-erp-sistemi-planlama-finansal-kurumsal-kaynak.html

UK: https://www.tostpost.com/uk/b-znes/40769-scho-take-erp-sistema-planuvannya-f-nansovih-resurs-v-p-dpri-mstva.html

ZH: https://www.tostpost.com/zh/business/32278-what-is-an-erp-system-planning-of-financial-resources-of-the-enterpris.html






Alin Trodden - author of the article, editor
"Hi, I'm Alin Trodden. I write texts, read books, and look for impressions. And I'm not bad at telling you about it. I am always happy to participate in interesting projects."

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