Explain the ERP.

Mumbai University > Mechanical Engineering > Sem 7 > Production planning and control

Marks: 5M

Year: May 2016


ERP is a software architecture that facilitates the flow of information among the different functions within an enterprise. Similarly, ERP facilitates information sharing across organizational units and geographical location.

  • It enables decision-makers to have an enterprise-wide view of the information they need in a timely, reliable and consistent fashion. ERP provides the backbone for an enterprise-wide information system.
  • At the core of this enterprise software is a central database which draws data from and feeds data into modular applications that operate on a common computing platform.
  • In recent years, ERP system started supporting inter-organizational linkages as well standardizing business processes and data definitions into a unified environment.
  • With an ERP system, data needs to be entered only once. The system provides consistency and visibility or transparency across the entire enterprise.
  • A primary benefit of ERP is easier access to reliable, integrated information.
  • A related benefit is the elimination of redundant data and the rationalization of processes, which result in substantial cost savings.

Element of ERP architecture

  1. Financial Accounting and Controlling FICO
  2. Material Management MM
  3. Sales and Distribution SD
  4. Production Planning PP
  5. Plant Maintenance PM
  6. Human Resource HR
  7. Project System PS
  8. Quality Management QM

Tangible benefits are those measured in monetary terms and intangible benefits cannot be measured in monetary terms but they do have a very significant business impact.

Tangible benefits:

Improves the productivity of process and personnel

  • Lowering the cost of products and services purchased
  • Paper and postage cost reductions
  • Inventory reduction
  • Lead time reduction
  • Reduced stock obsolescence
  • Faster product / service look-up and ordering saving time and money
  • Automated ordering and payment, lowering payment processing and paper costs

Intangible benefits:

  • Increases organizational transparency and responsibility
  • Accurate and faster access to data for timely decisions
  • Can reach more vendors, producing more competitive bids
  • Improved customer response
  • Saves enormous time and effort in data entry ;
  • More controls thereby lowering the risk of mis-utilization of resources
  • Facilitates strategic planning
  • Uniform reporting according to global standard
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