(Ping! Zine Issue 63) – The incredible speed at which technology is changing how business and society operate is a reminder of the writer of ‘Future Shock’, Alvin Toffler, who suggested that people could become overwhelmed with a perception of “too much change in too short a period of time.”
Toffler certainly had a point, though writing well before the explosion of the internet and although things move quickly in the business world there are more and more tools to help companies manage their operations effectively. One of the most powerful tools that should be in the forefront of the planning process for big business this year is a software system known as ERP or Enterprise Resource Planning.
This is a process that enables businesses to streamline their management systems, helping to maximize the bottom line and reduce costs by integrating all the departments that make up the enterprise, such as marketing, sales, human resources, manufacturing, finance and supply chain management.
How ERP works
Many big businesses have traditional structures whereby separate departments operate their own management systems, which then feed back to the corporate body. This means there are likely to be several cost centers, with attendant resources needed run the administrative aspects of each one.
ERP rolls all these functions into one, using a range of modules and sub-modules that each represent a specific element of the business. Data entered into one module automatically updates related modules in real time, eliminating the need for departments to make manual updates each time new data becomes available.
One example would be that entering data into a module for receiving goods would update inventory and accounts payable, making it an efficient method of cost effective operation.
Businesses are constantly looking to their bottom lines, especially when world economies are going through choppy waters. Anything that can help to streamline the business and cut costs will be attractive to the decision makers in senior management.
By bringing all cost centers into a single system, there is a reduction in the need for servers and other hardware and with fewer operatives being required for inputting data there can be a significant saving on human resources too.
The ERP database is centralized, allowing details of customers and clients to be found quickly, while the automatic updating process reduces the chances of errors creeping into the system. This speeds up processes, satisfies clients, saves time and enhances productivity. It is, however, essential that those who use the system are properly trained in order to avoid human error at the initial inputting stage.
Another advantage of ERP is that as it is a modular system, as many or as few modules can be chosen and implemented, depending on the specific requirements of the business. If there are a considerable number of departments then implementing more modules is likely to help integration be more effective.
Looking to the future
ERP is highly developed software that gives big businesses real advantages in managing their operations, especially where they are complex; for example, where a diverse range of products or services are involved.