It should first be noted that companies that fail to utilize systems such as ERP may find themselves using various software packages that may not function well with each other. In the long run, this could make the company less efficient than it should be.
There are a number of processes that a company may need to integrate together. One of these processes is called design engineering. When a company is in the process of designing a product, the process of actually creating it is just as important as the end result. ERP can be useful in helping a company find the best design process. Another area where ERP can be useful is order tracking. When a company receives orders for a product, being able to properly track the orders can allow the company to get detailed information on their customers and marketing strategies. If different software packages are being used, this data may not be consistent.
Perhaps one of the most important advantages of ERP is its accounting applications. It can integrate the cost, profit, and revenue information of sales that are made, and it can be presented in a granular way. Enterprise Resource Planning can also be responsible for altering how a product is manufactured. A dating structure can be set up which can allow the company to be informed of when their product should be updated. This is important, because it will allow the company to keep better track of their products, and it can allow the products themselves to be produced with a higher level of quality. Another area where ERP can be an indispensable tool is the area of security. It can protect a company against crimes such as embezzlement or industrial-espionage.
However, with all the advantages that ERP offers, there are a number of disadvantages as well. Perhaps one of the biggest disadvantages to this technology is the cost. At this time, only large corporations can truly take advantage of the benefits that are offered by this technology. This leaves most small and medium sized businesses in the dark. A number of studies have shown that the biggest challenges companies will face when trying to implement ERP deals with investment. The employees must be continually trained on how to use it, and it is also important for companies to make sure the integrity of the data is protected.
According to Anthony, R. A, organizational processes fall into three levels -strategic planning, management control and operational control. Even though much of ERP success has been in facilitating operational coordination across functional departments, successful implementation of ERP systems benefit strategic planning and management control one way or other.
Help reduce operating costs
ERP software attempts to integrate business processes across departments onto a single enterprise-wide information system. The major benefits of ERP are improved coordination across functional departments and increased efficiencies of doing business. The immediate benefit from implementing ERP systems we can expect is reduced operating costs, such as lower inventory control cost, lower production costs, lower marketing costs and lower help desk support costs.
Facilitate Day-to-Day Management
The other benefits from implementing ERP systems are facilitation of day-to-day management. The implementations of ERP systems nurture the establishment of backbone data warehouses. ERP systems offer better accessibility to data so that management can have up-to-the-minute access to information for decision making and managerial control. ERP software helps track actual costs of activities and perform activity based costing.
Support Strategic Planning
Strategic Planning is "a deliberate set of steps that assess needs and resources, define a target audience and a set of goals and objectives, plan and design coordinated strategies with evidence of success, logically connect these strategies to needs, assets, and desired outcomes, and measure and evaluate the process and outcomes." Part of ERP software systems is designed to support resource planning portion of strategic planning. In reality, resource planning has been the weakest link in ERP practice due to the complexity of strategic planning and lack of adequate integration with Decision Support Systems (DSS).
Industry wise advantages
Manufacturing Sector Speeding up the whole process.Distribution and retail Stores Accessing the status of the goods Transport Sector Transmit commodities through online transactions. Project Service industry Fastens the compilation of reports. The advantage and disadvantage of ERP is best understood by studying them under differentcategories. Hence the next paragraph presents information on corporate as a whole because the advantage of ERP systems in a company is different when compared industry wise.
Advantages in a corporate entity
The accounts department personnel can act independently. They don't have to be behind the technical persons every time to record the financial transactions. Ensures quicker processing of information and reduces the burden of paperwork. Serve the customers efficiently by way of prompt response and follow up. Disposing queries immediately and facilitating the payments from customers with ease and well ahead of the stipulated deadline. It helps in having a say over your competitor and adapting to the whims and fancies of the market and business fluctuations. The swift movement of goods to rural areas and in lesser known places has now become a reality with the use of ERP. The database not only becomes user friendly but also helps to do away with unwanted ambiguity. P is suitable for global operations as it encompasses all the domestic jargons, currency conversions, diverse accounting standards, and multilingual facilities .In short it is the perfect commercial and scientific epitome of the verse "Think Local. Act Global". ERP helps to control and data and facilitates the necessary contacts to acquire the same.