ERP Full Form Name: ERP Meaning
Full Form of ERP :
Enterprise Resource Planning
ERP
Full Form is Enterprise Resource Planning.
ERP is a software designed for business management for integrated applications
used by companies to store, collect, interpret, and manage data from various
activities. Some of the essential activities managed by ERP include
manufacturing, product planning, service delivery, inventory management,
payment, shipping, etc. There are series of benefits in using an ERP system.
Some of them are explained here.
Advantages of ERP:
There
are many advantages of using an ERP system which include (1) One data source
that offers all information related to services and products like information
of vendors, suppliers, orders, etc. This feature provides rapid development in
product launch cycles thereby increasing the market share of a company, (2)
Effective and holistic management of projects aids in crucial business
decisions, (3) Business process automation like invoicing, purchase and sales
orders in the system boosts accuracy in forecasts and planning.
ERP
Full Form – Additional Information
As
explained earlier, Enterprise Resource Planning is actually a kind of software
relating to business management. It is basically an integration of applications
that an organization or institutions use to gather, save, and translate data
coming from different business operations and activities. Such business
activities include shipping and payment, product planning,
marketing and sales, manufacturing/ service delivery, and inventory
management.
ERP
allows the user to have an integrated view of the core processes of the
business with the help of commonly maintained databases, managed by a Database
Management System. The ERP systems help in tracking business materials and
resources such as the capacity to produce, raw materials, cash. The capacity to
produce includes elements such as the current status of commitments, purchase
orders, orders, and payroll.
The
applications that help in creating data the system share data from across
different departments such as purchasing, manufacturing, accounting, and sales,
etc provide the data. This system allows the flow of information among all
business functions and helps in managing communications to external stakeholders.
The
ERP software we are discussing is an industry with multi-billion worth. It is a
part of that industry that manufactures various components that support a
myriad of business functions. Early versions of ERP systems had focused on big
enterprises, however, with the passage of time small enterprises have begun
using these systems more prominently.
ERP
systems have played a key role as an organization utility tool because they
result in the integration of various organizational systems and allow for
error-free productions and transactions. The development of ERP systems,
however, varies from a typical traditional system. These systems operate on a
variety of hardware and configuration of networks, particularly for the use of
the database as a repository of information.
Now
that we have discussed briefly what, in general, ERP systems stand for, we
shall now move to other aspects of the same. We shall begin with the history
behind the origin of its name as well as the system in whole. That segment
shall be followed by other segments such as the expansion of ERP systems,
Functional areas of ERP systems and whatnot.
A
sneak peak at the origin of the ERP systems
Under
this segment, we shall explore certain historical facts behind the origin of
these vital systems. The first use of the term ERP happened when the Gartner
Group used it in the period surrounding around the 1990s. The term was used as
an indication for extension of capabilities relating to Material Requirements
Planning (abbreviated as MRP) and the later Manufacturing Resource Planning
(abbreviated as MRP II), and also Computer-integrated manufacturing. Without
having replaced the term, the term ERP began to be used as an indication of the
evolution of integrated application that went beyond manufacturing. Now you
know how these systems came to be known as ERP systems. It is the time we moved
to the next segment, which deals with the expansion of the ERP systems.
Expansion
The
ERP systems witnessed quick expansion from the 1990s. The reason behind its rapid
expansion is primarily ascribed to the EURP legacy systems. Because of this,
many companies started switching their old systems with the ERP systems.
In
the initial years, the ERP systems maintained their focus on automating the
back office functions, which did not directly cause any effect to customers and
public at large. The integration of certain functions happened at a much later
stage. Those functions included Front office functions, which
included customer relationship management (abbreviated as CRM) and
directly dealt with customers, or e-finance functions and
e-business systems such as e-telecom, e-commerce, and e-government.
The integration of the aforementioned functions was caused by the
simplification of communication with external parties through the internet.
In
the year 2000, the term ERP II was coined. The term was used in an article
titled ERP is Dead-Long Live ERP II published by Gartner Publications. The term
is used to describe web-based software that facilitates real-time access to the
ERP systems to partners and employees. Partners include customers as well as
suppliers. There is an expansion of the traditional roles of the typical ERP
systems with the introduction of ERP II systems. It has expanded transaction
processing and resource optimization.
The
ERP II systems take benefit of the information contained in the resources kept
under its care and management to support enterprise in collaboration with other
enterprises. The traditional ERP systems are not as flexible as the new ERP II
systems because the latter is able to transcend the corporate barriers with the
purpose of interacting with other systems. These systems are also known by an
alternate name Enterprise Application Suite.
Recently,
many developers have started attempting the integration of these systems with
mobile systems. Now ERP vendors have started extending the functions of ERP to
mobiles, alongside many other businesses related applications. Today, the ERP
system covers a wide range of functions such as standardizations,
globalization, transparency, decision making, etc.
Thus,
ERP systems have tread a long path to becoming a successful system in the
corporate world. The discussion under this segment clearly illustrates this
point. Now we shall move to our next segment, which deals with certain major
characteristics of the ERP systems that are crucial for our discussion.
Characteristics
of the ERP systems
The
ERP systems generally possess the following characteristics:
- It is a system that causes
integration, which operates in real time without putting any reliance on
period updates.
- There is a commonly maintained
database that provides support to applications.
- It has a consistent appearance
across modules.
- Installs of the system with
data integration by the Department of Information technology (abbreviated
as IT).
Functional
areas of the ERP
The
ERP system covers functional areas. Many ERP systems, when grouped together,
are called as ERP Modules.
- Customer relationship
management: This includes service, commissions,
customer contact,Sales and marketing, call center
- Manufacturing: This includes work orders, bill of
materials, Engineering, scheduling, workflow
management, capacity, manufacturing process, quality control,
manufacturing projects, product lifecycle management, manufacturing
flow, product lifecycle management, and workflow management
- Financial accounting:This
includes fixed asset, General ledger, payables that
include matching, vouchering and
payment, collections, receivables cash application and
financial consolidation, and cash management,
- Human Resources: This includes Recruiting, diversity
management, training,
payroll, benefits, rostering, retirement, 401K,
separation, etc
- Data services : This includes many interfaces relating to
“self–service” for customers, and/or employees, and suppliers.
Connectivity
to the plant floor information
In
this segment, we shall discuss plant floor information and connectivity to it.
As mentioned above, ERS systems provide communication to real-time transactions
and data in a myriad of ways. These ERS systems are generally configured with
the help of system integrators, which bring peculiar knowledge on equipment,
process, and vendor solutions.
Direct
Integration: The first for our discussion is
Direct Integration. As a part of product offering, the ERS systems connect to
the plant floor information. This has a requirement, which is that the vendors
provide particular support to customers for plant floor equipment for
operation. The vendors we are talking about must hold expertise in their
services and products as well as connectivity to products of other vendors,
which includes products of that of the vendors.
Database
Integration: With the help of staging tables in
the database, these ERS systems provide connection to the plant floor data
sources. These plant floor systems deposit the required information in the
database. The ERS system will read this deposited information in the table. The
advantage of staging is that it does away with the requirement to master
complex equipment integration. The systems integrators are responsible for
connectivity.
Enterprise
Appliance Transaction Modules (abbreviated as EATM): EATM is devices that provide communication to plant floor
equipment with ERP systems directly with the help of those methods, which are
supported by the ERP system itself. EATM cam even makes use of a staging table
for this purpose or even web services, or it can use specific program interface
(abbreviated as APIs). These devices offer solutions, which are off-the-shelf
solutions.
Custom
Integration Solutions: There are several system
integrators that provide customized solutions. These systems possess the
biggest level of early integration cost. They can even have bigger long term
maintenance prices as well as reliability costs. With the help of careful
system testing and meticulous documentation, these long-term maintenance costs
are reduced. Such solutions generally operate on server class computers or workstation.
All of these modules we have discussed greatly help in the functioning of the
ERP systems and therefore, should be understood substantially for better
appreciation.
Implementation
of the ERP systems
In
this, we shall discuss the key issues revolving around the implementation of
the ERP systems. The scope of ERP systems indicates major changes to many staff
practices and work. Typically, there are about three different categories of
services that are available for the effective implementation of these systems.
These are customization, consulting and support. The time of implementation
depends greatly on several factors such as a number of modules, the size of the
business, process changes, and willingness of the customer to take up the
project as owner. ERP systems, which are modular in nature, can be implemented
in different stages.
For
a large enterprise, the implementation would generally take up 14 months and
may require about 150 consultants for the same. Meanwhile, enterprises that are
small sized may require less time though may extend to months. International
enterprises may take years for effective implementation of these systems. Time
of implementation is greatly increased with customization. The business
functions are influenced by information processing, for example, big
corporations such as Wal-Mart make use of an inventory known as just in time.
This effectively reduces storage of inventory and thus, improves the efficiency
of delivery.
Process
Preparation
The
implementation process of ERP systems generally requires amendments in the
present business processes. Many projects fail because of the poor
determination of the required changes for the purpose of implementing. The
reason for such poor determination can be attributed to various factors such as
lack of willingness, poor infrastructure, business process, and lack of good
training.
Thus,
it is important that focus is given towards the assessment of business
processes before the ERP systems are implemented. The assessment of the
business processes helps in identifying those areas, which require
modernization. It allows an assessment of the risk involved in business process
mismatch. It reduces such risks by connecting the present business processes to
the strategy of the organization; assessing the effectiveness of every business
process, and understanding the present automated solutions.
The
implementation of ERP is relatively difficult particularly in decentralized
organizations and this is because these organizations, due to their character,
have different business processes, rules, authorization hierarchies, data
semantics, and decisions centers. This may result in the need to transfer
business units, which may delay the whole implementation process. There is a
potential disadvantage, which is the loss of competition advantage that is a
resultant of adoption of standard processes. Otherwise, it is a good process.
Configuration
of the ERP systems
Configuration
is an essential step in the whole implementation process. The configuration of
the ERP systems is a big matter, considering the fact that it tries to strike a
balance between the organization and the system itself. There are many settings
incorporated in the ERP systems that allow for configuration facilities and
modification of system operations. Take, for example, an organization has the
option of choosing from the type of inventory accounting, which can either FIFO
or LIFO for the user. There are other options such as whether the revenue is to
be determined on the basis of geographical area, distribution channel, or
product line; or whether to pay for customer returns or shipping charges.
Customization
of the ERP systems
Customization
is an essential process because it can potentially increase the whole process
of implementation. The ERP customers are offered many options that help them
reconcile many feature gaps. There are technical solutions provided such as
rewriting the portion of the software delivered, a homegrown module, or
interfacing to an external mechanism. These options given to the ERP customers
comprises varying levels of system customization, the first option though is
the most expensive one for the purpose of maintenance. There are also
non-technical options available to the ERP customers such as changing
organizational policies or business practices to match the ERP feature set
delivered.
Extensions
used
The
ERP systems can be effectively extended with the help of third party software.
These extensions generally offer the following features:
- Capturing transactional data,
for example, scanners, RFID, or tills.
- Advanced planning and
scheduling (abbreviated as APS)
- Providing access to certain
specialized capabilities and data, for associated trend analytics
- Reporting as well as
republishing
- Transmission in real-time