Companies use enterprise resource planning (ERP) software to manage the various aspects of their operations—finance, human resources, marketing, purchasing, distribution, etc.—in a single, integrated way.
ERP software helps companies operate efficiently, effectively and flexibly by eliminating silos (isolated pockets of activity that may duplicate efforts or create process gaps). It also eliminates difficulties associated with having different IT systems in different parts of your business. As well, it gives people in the various departments of an organization insight into what’s happening elsewhere in the business.
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The following is an illustration of how ERP software helps integrate the different parts of a business.
ABC Co.’s sales department receives a large order for a popular product. Using ERP software, the sales team checks the company’s inventory to confirm it can fill the order. Because the other departments see that the order has come in, they start preparing to fulfill it—for example, by coordinating logistics between the warehouse and shipping to ensure on-time delivery as the order is processed. The company’s finance department immediately sees the sale has been recorded and can track both the revenues and related costs associated with processing the order.