6 Main Components of ERP to Look Out For

No ERP System is a one-size-fits-all. Nothing is tailored to work for every company out of the box. Therefore, an ERP system is a sizeable investment – not just in terms of money, but also in terms of time and effort. It’s not something that can be taken lightly because it is a commitment that a company should adhere to for a long period.

Before integrating, choose the right one that contains the core ERP components to address every aspect of your business. Although, that alone is an effort in itself. That is why managers and business owners should be diligent in choosing an ERP system.

Although the products available in the market have their differences, they all aim to solve specific business issues. And to do that, there are ERP modules that must be present in your system.

Let us dig deeper into the basic components that must be included in your ERP system for it to be considered holistic.

6 Main Components of ERP

1. Supply Chain Management

From the name itself, SCM oversees the entire supply chain. SCMs should provide real-time and accurate data regarding supplier scheduling, purchasing, inventory, shipping, and tracking finished goods to meet demands.

The information provided should also allow managers to spot supply chain-related issues as they happen to implement solutions immediately. SCMs are also vital in planning for effective production plans to maintain production consistency.

2. Human Resource Management

Human Resource Management is among the main components of ERP that helps business owners and managers in their hiring cycles. From recruitment (applicant tracking) to integrating a new employee into the organization (onboarding) and to termination of employment contracts.

Effective HRMs include a payroll software so that payments (including taxes and deduction of benefits) are automated. Ideally, it should include automated timekeeping so that manual timesheets will no longer be needed. HRMs must also track the performance of individual employees.

3. Accounting and Finance Management

Since every decision of a company affects its finances in one way or the other, an AFM system is important. This will help manage the company’s finances including budgeting, financial forecast, accounting, and tax planning and management.

In addition, AFM systems should generate insights regarding company expenditure so that adjustments can be implemented to non-sales-generating activities. Therefore, maximizing profits while reducing company expenditure.

4. Business Intelligence

Business Intelligence (BI) is a new feature among modern ERP systems. This provides insights about business process-related data from multiple sources (or other ERPs used) to make data-driven decisions.

An effective BI tool should deliver those insights in analytical reports so that data can be interpreted. Therefore, this system should have a data visualization feature.

5. Customer Relationship Management

A CRM is an ERP module that helps businesses manage their client-facing operations such as sales, marketing, and customer relations. It keeps data about a customer’s purchase history so that businesses can upsell, or cross-sell their relevant products. Hence, giving businesses a higher chance of generating more sales.

CRMs are also used to monitor advertising/lead-generation campaigns so companies can tailor-fit marketing efforts to their customers.

6. Inventory Management

Working together with SCM, this ERP module helps business owners and managers monitor materials, supplies, order fulfillment and even warehouse stocking. It helps eliminate the need for manual counting of inventory by using different types of tracking numbers and product IDs or SKU.

Final words 

ERP implementation is expensive and time-consuming. That is why companies should stick to an ERP system for a long time.  But before committing, make sure that the 6 main components of ERP mentioned above are present in your system. This makes sure that each aspect of your business has a technological solution attached to it.

Additionally, the system must be able to keep up (and be adjusted) to the changing demands of the company. Otherwise, it would result to significant losses. Thus, choosing an ERP system must be done with meticulous effort with the future in mind. Most importantly, you must be partnered with and guided by industry experts to make sure that mistakes are avoided, and everything is properly executed.

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