What Are The Key Components of ERP?
Enterprise resource planning (ERP) has transformed businesses and empowered them to achieve operational and financial goals. It provides a unified platform that centralizes data and enables you to manage your business operations. How?
ERP has a modular architecture consisting of multiple interconnected modules for various departments, enabling seamless data flow from one department to another. This article will explore the top 8 modules or components of ERP.
Blog Takeaways
- ERP has a modular structure with multiple modules that can be installed and removed from the system. The cloud ERPās modular architecture makes it scalable.
- The system consolidates data and provides a single source of truth, ensuring data integrity throughout the processes.
- These modules include financial management, customer relationship management, manufacturing, human resources, reporting and analytics, warehousing, inventory, and supply chain management.
What are ERP system components?
ERP system components, or modules, are business management applications that can be installed into the system based on the businessās requirements. They are the building blocks of the centralized ERP platform. These ERP modules are interconnected to ensure seamless operations and provide a consolidated view of operations and respective data. ERP integrates various business components into a single pane, offering consistent data for all stakeholders.
The common ERP components include financial management, customer relationship management, manufacturing, human resources, reporting and analytics, warehousing, inventory, and supply chain management. The system collects data from each department to centralize it and assist in business operations. Consolidating data improves end-to-end business coordination and enhances efficiency.
Understanding ERP components
Each ERP component is designed for a particular business process. It provides real-time data access and visibility and minimizes the chances of supply chain management disruptions, improving business efficiency and performance. This kind of integrated platform is suitable for fully fledged businesses. On the contrary, modular architecture provides a flexible approach to startups. They can upscale and downscale the system depending on their business requirements.
With the right combination of ERP modules, businesses can develop tailored ERP solutions to meet their specific business needs.
Are you looking forward to implementing ERP into your business? Are you confused about where to start or which modules to choose? Consult our ERP experts to discuss your business goals and see how we can help.
Top 8 components of ERP for businesses
Any business looking to leverage ERP must know these 8 major ERP components to meet business goals easily. Here are the core components of ERP and how they help simplify processes:
Manufacturing management
It is a major component for manufacturing businesses. The ERP system offers manufacturing management software solutions, including production management systems, production planning and scheduling software, manufacturing execution systems, and quality assurance. These solutions guide the manufacturing process based on demand and available raw materials, helping them manage product assembly on the shop floor and assuring product quality.
The manufacturing module automates the bill of materials (BOM). Manual BOM is prone to errors, especially when the product is made from numerous parts or when the company manufactures multiple products. BOM improves accuracy and reduces design-to-production time. It enables you to use a standard template, making it easier to understand. You can track these BOMs in real time.
Customer relationship management
The ERP system offers a CRM system that collects, organizes, and analyzes customer data in one place. This customer information includes contact details, purchase history, and service records. You can use it to automate processes to improve customer interactions and relationships and provide meaningful insights. The CRM component can be integrated with finance & accounting and sales and marketing modules.
You can analyze customer buying patterns and understand their behavior. This enables you to provide a personalized experience and improve customer engagement. You can also collect feedback and improve inefficiencies to cater to business demands efficiently.
Human resources (HR)
Enterprise resource planning provides human resources or human capital management (HCM) to manage your workforce. It streamlines HR tasks, including recruitment, hiring, attendance and absentee management, payroll processing, and performance monitoring. The HR module can be integrated with the finance module to track and analyze expenses and revenue.
You can centralize and maintain employee records and track working hours, paid time off, and sick leaves. The system removes the chances of duplicate or flawed data, improving the workforce management efficiencies. You can also offer employees an interface to check on their details, leaves, payrolls, performance, and any major announcements.
Supply chain management
Supply chain management, or SCM, includes all the tasks from procuring raw materials and manufacturing products to delivering them to partners or customers. The ERP supply chain management module empowers businesses to track the movement of raw materials and products until they are delivered to end users. The SCM also includes returns or reverse logistics, refunds, or replacements.
You can install major supply chain components, such as procurement, manufacturing, inventory management, warehouse management, sales management, and logistics.
Warehouse management
Warehouse management is similar to inventory management. It consists of storing, reordering, and managing stock within the warehouse. It focuses on the movement of stock inside the warehouse. On the other hand, inventory management includes tracking and managing overall inventory. The ERP warehouse management module includes layout, material handling, and labor productivity. It can help you improve warehouse efficiency, reduce costs, and accelerate order fulfillment.
This module can analyze operations within the warehouse, identify hurdles, and enable businesses to resolve issues in real time. It also includes informing about receiving, putting away, picking, packing, locating products easily, moving, and tracking goods throughout the warehouse. This boosts warehouse productivity and efficiency.
Business intelligence
The ERP business intelligence (BI) module analyzes large raw data sets collected from multiple sources. It provides a wide perspective on operations, enabling businesses to track and monitor various dependencies between different departments. This allows organizations to maintain alignment between the departments, get real-time insights, and make smart decisions.
An ideal BI solution incorporates predictive models and analysis to give a holistic view of past, present, and potential future performance. The data is processed and presented in the most meaningful and accessible way. The software provides a BI dashboard that presents the businessās key performance indicators (KPIs). These KPIs can be defined based on your requirements. The BI system enables organizations to keep proactive approaches, adapt to changes, and maintain a competitive edge.
An AI and ML-powered BI solution provides insights into consumer behavior, market trends, and competitor performance and assists businesses in developing strategies to improve customer satisfaction and business growth.
Inventory management
ERPās inventory management modules come under supply chain management. It aims to optimize inventory levels while ensuring you donāt overstock or understock. It provides real-time inventory insights and complete visibility and control over stock. Increasing inventory awareness can help you make wise purchasing and reordering decisions, reducing storage costs and preventing stockouts.
Integrating the financial and other modules with the inventory management module offers a comprehensive view of metrics such as the cost of goods sold (COGS), inventory turnover, and shrinkage. The inventory module also enables you to automate replenishment, cycle counts, and demand forecasts.
Finance and accounting
ERP is a centralized system for managing all your financial activities. The finance and accounting management module includes tools to track, store, and analyze financials such as accounts payable (AP), accounts receivable (AR), general ledger (GL), budget, and forecasts.
This module can also perform tasks like reconciliation and manage taxes and fixed assets. Being integrated with every business process, it provides business-wide financial information. This enables businesses to make informed cash management, funding, and finance control decisions.
It also automates and handles invoicing, revenue recognition, and financial reporting to assist businesses in managing, organizing, and planning finances. This minimizes manual entry and chances of errors and allows your employees to focus on more important tasks, resulting in closing the books on time.
Improve operations and profitability with Master Software Solutions
Master Software Solutions uses ERP platforms like Odoo and Microsoft Dynamics 360 to unify your business operation in a single system and provide tailored solutions for your unique needs. Our expertise in various industries, including manufacturing, retail, and food and beverages, makes us experts in offering custom solutions.
At Master Software Solutions, we provide a wide range of ERP services, including ERP consulting, implementation, customization, and integration. Contact us to discuss your business and see how we can help improve efficiency, productivity, and profitability.
