What Is ERP Software? How Does It Benefit Your Business?

ERP stands for Enterprise Resource Planning. An ERP software is the software used in the small and medium-sized organizations.

Now, what it actually does or what is the need of using this software in business firms?

An ERP software is integrated business software. By integrated, I mean that the single system is used by all the departments or teams in the organizations for their varied purposes.

Departments for different functions such as procurement of raw material, material or warehouse management, production, finance, sales, distribution and customer relationship management, human resource management and administrative functions use this software for their individual needs.

The basic need is to record and keep track of all the activities and materials. But, in addition to this, it is also helps in fulfilling various other objectives.

It is beneficial for different departments in different ways, hence benefitting the overall organization.

Some of the benefits of  ERP software for small businesses can be viewed as below,

Production: Targets for production can be set on daily or periodic basis and can be monitored

Raw materials: Raw materials can be tracked Warehouse management becomes easy

Human Resource : Payroll and leave recording system becomes easy

Finance : Enables financial controls

Sales : Supply chain management

Administration : Can keep track of expenses and order in advance for stationery and other items

 The benefits to the overall organization can be mentioned as below:

1. Easy access to information: Whenever employees require any past records or recent information, they don’t have to search it in files; they can get the same from the ERP system.
   • Saves time
   • Employees can take timely and informed decisions.
2. Central database: All the information is available on a single platform. So, whenever employees of one department need information regarding another department, they can view it on the system. But, all the information is not available to every employee of the organization. The system is set role-based so that an employee can have access only to that information, which is necessary for him to perform his role better.
   • Proper communication
   • Increases efficiency and productivity
   • Top management can set goals and make planning more efficiently and effectively as they have all the required information in an unbiased manner.
   • As the software is role-based, only top management can have access to the strategic data.
3. Accurate forecasting: As planning is done properly and targets are set, easy and accurate forecasting can be done.
4. Quick Accounting: Accounts team does not need to gather information from different departments to record transactions. They can view it on the system and perform their task.
   • Reduce delays
5. Automatic metrics: All the departments can have required reports and ratios, being prepared automatically on the ERP software.
6. Quick response: Customer relationship executives have the necessary information regarding availability of stock as well as the price of all the products or service. Therefore, they can give quick response to the inquiries of the customers, leading to the increase in the customer satisfaction.
7. Decreased operating costs: Organizations now don’t need to incur costs for implementing separate software in all the departments. So, the operating costs are reduced.
8. No duplication of data: This is the most significant benefit of the ERP system. All the data is recorded only once, due to the smartly designed software. Hence, there is no place for confusion or errors.
9. Smooth training: As there is single software on which everyone has to work, it becomes easy to arrange training for the same. Also, the software has a friendly user-interface and is simple and quick to learn and use.

Small businesses are still in the growing stage, therefore, implementing and using an ERP software can help them to reduce costs, boost profits, increase customer satisfaction and can therefore grow the business.