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How does an erp system work?

Updated April 17, 2017

Computers have become so complex and commonplace in organisations, it is much easier to integrate all of the data and processing software modules and hardware into one large unit that is easier to access and control. This is called Enterprise Resource Planning, or ERP. Normally ERP systems use the same database throughout an entire company to store various types of data for different computerised functions. When first developed, ERP systems were used only for large manufacturing companies. Today, they benefit all sizes of companies, even those that are quite small.

Enterprise Resource Planning

Computers have become so complex and commonplace in organisations, it is much easier to integrate all of the data and processing software modules and hardware into one large unit that is easier to access and control. This is called Enterprise Resource Planning, or ERP. Normally ERP systems use the same database throughout an entire company to store various types of data for different computerised functions. When first developed, ERP systems were used only for large manufacturing companies. Today, they benefit all sizes of companies, even those that are quite small.

Importance of Integration

The primary objective of using an ERP system is to integrate the data and processes of a business to enhance work flow. Although most organisations would like one ERP to be integrated for all its functions, many larger companies establish a primary ERP from which standalone units are attached to improve performance.

Ideal ERP System

In an ideal world, the ERP system includes integration of all of the software modules, which can include manufacturing, finance, human resources, supply chain management and inventory, projects, customer relationships and the data warehouse.

Increased Productivity

Instead of having each computer system acting on its own, the ERP system allows everything to work together in a compatible harmonic whole. This increases productivity, improves quality and reduces costs. It makes the organisation more competitive against other like companies.

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About the Author

Sharon L. Cohen has 30-years' experience as a writer and editor. Her Atlantic Publishing book about starting a Yahoo! business is being followed by one on Amazon.com and another about starting 199 online businesses ( See http://online-business-guide.com). Clients love her excellent high-quality work. She has a B.A. from University of Wisconsin, Madison and an M.A. from Fairfield University Graduate School of Corporate and Political Communiation.