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What is ERP and How Do ERP Systems Work?

24 Dec, 2020 | Business Tips

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As a business owner, you’ve got a lot on your plate. Especially as your business grows and you are no longer able to handle everything on your own, you’ll need a clear system to bring all aspects of your company together. You simply can’t be everywhere at once to constantly monitor the happenings of every department, so how can you be sure that your business is operating like the well-oiled machine it should be?

One of the best solutions for getting all of your departments and daily operations in one convenient place is an ERP, or Enterprise Resource Planning, System. ERP is an incredibly valuable tool for any business owner and can drastically reduce the time and money you spend trying to track every department individually. Here, we’ll give you a full breakdown of ERP to help you decide if an ERP System could be beneficial for your business’s current stage.


What is ERP?

As we mentioned, ERP stands for Enterprise Resource Planning. This process involves gathering data from every department of your business and organizing that data into one workable piece of software. In short, ERP is designed to facilitate the happenings of every department and allow you a place to see everything at once.

The concept of ERP has been around for a while, even if it didn’t go by that name at first. Systems like the economic order quantity (EOQ) model and material resource planning (MRP) tools were early predecessors of the ERP we know today. The first modern ERP software came about in the 1990s with the rise of computers. “ERP” as a term was created by the Gartner Group to specifically describe the digital tools that manufacturers could use to handle their entire business (of course, ERP goes far beyond manufacturing today).


How Does Enterprise Software Work?

Enterprise software works by connecting every department of your company and bringing the data together in one place. ERP software often has capabilities for accounting, inventory, sales, and other departments. Every section of your business will be able to access software elements that are beneficial to them, and they all come together seamlessly to give you up-to-date data at all times.

Not only will you be able to see everything that’s happening within your business, but often, departments can look at what’s happening with each other. The different sections of your business can’t operate independently and often have to rely on each other to get things done. Enterprise software serves as a hub to let departments check in with each other and make sure tasks are getting done efficiently.

Let’s say you run a candle business. Just within your manufacturing, you have various providers for your containers, wicks, oils, labels, and any other supplies you may need. You also have departments within your company that handle the manufacturing, shipping, advertising, bookkeeping, customer service, and many other tasks that keep the company running from day to day. 

Your ERP software will serve each of these aspects individually and give you one specific place to see how everything is running. If your wick supplier is running behind schedule or your marketing team needs help, you’ll know about it all right away. You’ll even be able to track sales and keep track of your budget so you know exactly where you can cut costs or where you should consider spending a little extra. 


Types of ERP

ERP is certainly not a “one size fits all” type of software. There are actually a few different types of ERP software that vary in the way they are implemented. The type of ERP software you select will depend mostly on the size and scope of your business. Some of the most popular options include:


  • Open Source: An open source ERP software allows you to inspect, change, and improve your ERP source code depending on your needs, leading to a more personalized solution.
  • On-premise: An on-premise ERP software is deployed right into your on-site devices and are most appropriate for small and medium businesses, though they can be used for companies of all sizes.
  • Cloud-based: A Cloud-based ERP is simply made available through a Cloud-hosting service rather than being deployed into your on-site devices. Many larger companies choose this option thanks to the appeal of getting real-time data from anywhere with an Internet connection.
  • Hybrid: A hybrid ERP combines the services and benefits of on-premise and Cloud-based ERP solutions. 


ERP in Different Industries

In addition to the various implementations, you’ll also find ERP solutions that are designed to work within certain industries. For instance, let’s take higher education. An ERP software designed for higher educational institutions may include capabilities for admissions and records, tuition billing, grading, scheduling, and a whole host of other tasks that are more specific to the needs of an academic institution.

On the other hand, a construction company would need completely different ERP capabilities. So, a construction ERP might help with construction task management, tracking labour, ordering materials, and handling subcontractors. Some businesses opt for an industry-specific ERP to ensure they don’t have to deal with tons of features they won’t actually use and can instead use that space for more customized capabilities.


Benefits of ERP

The benefits of ERP software for your business can truly be unlimited. First, ERP ensures you can have a customized solution to keep your company running smoothly. You can find software that meets the requirements of your industry and of your specific business, so you get everything you need and nothing you don’t. Some ERP software even lets you adjust modules as you go to consistently meet your business right where it is.

ERP can also help tremendously with data security. As our world becomes increasingly more digital, there’s an increased risk of your business’s most sensitive data becoming compromised. However, your ERP software can come with real-time risk management tools that automatically audit your data and monitor for fraud, giving you a leg up. Plus, since everything your company does is in one place, you don’t have to worry about sending sensitive information across multiple channels, which can increase your risk of exposure.

As your business grows and your various departments become larger and more expansive, it can be difficult to ensure that everyone is always on the same page. ERP software keeps all information up to date at all times, so there’s a much lower chance that wires will get crossed or a message will slip through the cracks. This aspect of ERP can be especially helpful when your business has multiple locations.

In order to move your business forward and encourage growth, you need the most accurate data for every aspect of your company. The power of ERP collects all the most precise figures and combines them into overarching reports to help you analyze trends and determine the best course of action for the future. You can use these reports for your own internal decision-making or present them to shareholders and team members to keep everyone updated on your business’s progress toward your goals.

Finally, and perhaps most importantly, ERP software allows you to save time and effort connecting the various segments of your business. Your entire workplace will benefit from increased visibility and transparency, encouraging all parties to stay on top of their assignments. You won’t have to spend countless hours acting as the middleman between your departments; instead, they can now communicate more directly to ensure projects are completed as they should be.


ERP from DEAR Systems

As you can see, ERP software can go a long way in increasing the productivity and efficiency of your business. Many companies turn to ERP software to make their interdepartmental relationships more streamlined and to ensure that any roadblocks along the way are handled as effectively and quickly as possible. At DEAR Systems, we realize how big of a difference ERP software can make for your business, which is why we’ve developed our own cutting-edge technology to help you get the job done.

Our Cloud ERP software takes every aspect of your business and puts all the moving parts into one convenient place, keeping you constantly updated with the most accurate, relevant information at all times. DEAR’s software includes features to help you with purchasing, sales, inventory, POS, automation, manufacturing, and so much more. 

We’ve helped countless clients in a number of industries thanks to our customizable ERP solutions. Our satisfied customers run businesses in retail, manufacturing, wholesale, distribution, food and drink, health and supplements, and more. In addition to its internal features, our ERP also integrates with many of the solutions you likely already use, like Amazon, PayPal, Square, Shopify, and others. 

We are proud to have created the #1 rated Cloud ERP software in the United States and to serve clients from all across the globe. There’s truly no limit to the potential of your business when every aspect is integrated into a top-notch ERP software. Contact us today to learn more and to start your 14-day free trial!

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