You’ve heard of ERPs and have a general understanding of what they do but aren’t sure how they actually work?
Don’t worry – here we’ll give you an explanation of ERPs, talk about who uses them, and break down how they work. We’ll also show you easy-to-understand, real-life examples.
But first, let’s talk about the basics.
What Is An ERP?
Enterprise Resource Planning (ERP) software systems are used by companies to oversee, customize and automate time-consuming daily activities.
This includes business needs such as:
- Financial management
- Human resources
- Project management
- Sales orders
- Warehouse management
- Supply chains
- Sales volume
- Risk management
- Inventory management
The automation that ERP systems utilize saves time and money, and their business intelligence saves headaches and frustration with the management of multiple systems.
ERPs use a common database to streamline company needs instead of multiple standalone systems to organize business processes. This means that all users—from administrative staff to the CEO—can create, store, and use the same data derived through common processes.
Who Uses ERP Systems?
Any business or organization in need of managing time-consuming daily activities in one place will benefit from ERP solutions – this includes mid-market and small businesses.
Here are some examples of industries that use ERPs:
- Manufacturing companies
- Small businesses
- Non-profit organizations
An ERP system’s functionality allows for streamlined workflow and easier business processes no matter what industry you work in.
According to digitalistmag.com, as a business grows in complexity with new products and service offerings, financial functions can quickly become overwhelmed. Because of this, small and mid-size businesses experiencing these growth complexities should consider an upgrade to their ERP system.
How Does ERP Software Work?
Business operations can suffer when companies use multiple standalone systems to manage workflow. Toggling between multiple systems is time-consuming and breaks down workflow progress.
Enter ERP systems.
Using one common database, instead of separate standalone systems, allows multiple users to utilize the same information and get the job done.
ERP implementation merges operational and financial systems to a central database. ERPs are also customizable so you can meet all your business needs and cater systems to each department.
ERP products like Netsuite, SYSPRO, and Epicor allow users to automate time-consuming daily tasks. Instead of losing time each day completing repetitive needs or running reports from multiple systems, you can focus more of your time on your people and your most pressing business needs.
ERP systems also work with Material Resource Planning (MRP) products. Netsuite.com defines MRP as a standard production planning system to help businesses understand inventory requirements while balancing SCM (Supply Chain Management). Companies use MRP systems to effectively manage inventory levels, plan for production, and ensure delivery of the right product on time and at optimal cost.
ERP solutions can also be combined with Customer Relationship Management software (CRM). CRMs manage interactions with customers and potential customers and contains basic information like:
- Telephone number
- Date of birth
- Email address
A CRM also stores communication details like email correspondence and monitors the behavior of your customers. This allows you to track the engagement of your customer base and impacts the way you communicate with individual clients.
Cloud ERP and SaaS (Software as a Service) systems – like Acumatica – are also an option and run on a business’s cloud platform rather than an on-premise network. This allows for access to the system over the internet and removes the need to manage complex software.
3 Real Examples of Large Companies Using ERP
Now let’s take a look at three well-known companies and discuss the ERP vendors they use. We’ll review the name and history of the system, and show you examples of what the software actually looks like, to help you choose what’s the best fit for your business.
Amazon uses an ERP software called Systems Analysis and Program Development (SAP).
SAP was created in Germany in 1972 by five former IBM employees who envisioned a software integration of all business and data processing in real-time.
By 1975, the small company had built applications for:
- Financial accounting
- Invoice verification
- Inventory management
SAP has continued to grow and transform from a small startup company to a global leader in business software, so it’s no surprise Amazon chose this system to run its business processes.
Now SAP business customers can manage their…
- Logistical business needs
- Human resources
- Order management
…and more through just one database.
SAP S/4Hana Cloud is the most modern version of SAP ERP with built-in AI, machine learning, and advanced analytics.
Here we have an example of a SAP customization:
On the left, a menu allows users to choose which area of business they’d like to view – from marketing to third-party order fulfillment, all aspects of the business are provided
Here’s an example of a SAP ERP with a focus on shipment:
This customized solution provides shipment details, a tracking tool, and the ability to view reports.
The interface above allows the user to choose options on the left panel – these include production details, MRP, service, Human Resources, customized reports, and the ability to use an Interactive Analysis.
Starbucks uses Oracle ERP – a cloud-based software solution used to automate back-office processes and day-to-day business activities. It’s a business management software suite that includes financial management, supply chain management, project management, accounting, and procurement.
Oracle E-Business Suite provides users applications for customer relationship management (CRM), enterprise resource planning (ERP) and supply chain management (SCM) processes.
The Oracle ERP above shows revenue analyses and includes information you need to know at-a-glance including:
- Sales data
- Inventory management
- Operations updates
Check out this next Oracle example – it demonstrates the way you’re able to have all business needs listed in a Navigator section, allowing users to view all areas of a business on one screen:
Toyota Industries Corporation is Toyota’s head company. It wanted to expand its reach globally to offer high-quality services like improved operational management accuracy, a paperless system, reduction of work hours, and increase in overall efficiency.
So, Toyota chose Microsoft Dynamics 365 for the job. Dynamics helps manage the after-sales service skills and operations for distributors offering services to their products to customers all over the world.
Here’s an example of a Dynamics Summary page. This section allows the company to view budget information, opportunities for sales, and timelines.
Here’s an example of a Microsoft Dynamics Sales page – notice the ability to create a timeline of events and a customer relationship rating.
How Do I Choose?
With multiple options among Enterprise Resource Planning systems, it can be tough to decide which route to take.
Companies and technology are always growing and expanding, and new companies coming on board provide competition for the old. For example, Infor, a new ERP solution, appears to have recently surpassed all three ERP giants we discussed above – SAP, Oracle, and Microsoft.
To get the latest, check out our guide to the 10 Best ERP Software of 2021 (+ Free ERP Options).
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