ERP – what is it? How does it work?

The importance of computerisation of management processes in organisations, especially in enterprises, has been growing steadily in recent years. The success of business entities depends increasingly on the effective acquisition, collection, processing and use of information for the purpose of conducting and developing business. The role of information in management is extremely important. The opportunity to use information systems, including ERP, as tools to increase opportunities and improve a company’s competitive position, has emerged in the digital age.

ERP – what is the abbreviation?

ERP is an acronym that can be translated as Enterprise Requirements Planning. It is an example of a central information system implemented at enterprise level. The system allows access rights to be precisely defined for individual users. Similar systems generally provide management support for decision-making at operational, tactical as well as strategic levels.

Concept of system and information system

In answer to the question of what a system is, it should be defined that it is a collection of interconnected elements that interact with each other. These elements form a certain composition and contribute to a synergy of benefits for the organisation using such a system. An example of a system is an information system as a group of devices working on the basis of customised software, allowing automatic data processing.

Organisations use information systems as specific ICT (Information and Communication Technologies). These are solutions implemented to improve the receipt, manipulation and transmission of information for business development purposes.

What is an ERP system? How does an ERP system work?

System is based on comprehensive information management for business development, working through software installed on the company’s computer hardware.

An ERP is an integrated system that combines several main modules to manage information and support decision-making in an enterprise. Among the ERP modules are, such as:

• storage;
• sales;
• order management;
• production planning and production service;
• purchasing;
• human resources management (including human resources and payroll);
• supplies management;
• accounting and finance;
• logistics;
• delivery tracking;
• managing contacts with customers.

In answer to the question of what an ERP system is used for, it can be pointed out that it allows the management of information concerning both the internal and ecternal planes of the company’s operations. Integrating both these perspectives is a prerequisite for success in a competitive market.

ERP – examples, most popular systems on the Polish market

Among the most popular ERP systems are SAP, Microsoft Dynamics, Kinetic or Oracle. These systems are dedicated to large and medium-sized enterprises. Among the few solutions for small companies, including one-person businesses, there is Comarch ERP system.

The creators of popular ERP systems are also such brands as Unit4 Polska (Teta ERP system), BPSC (Impuls EVO system), Asseco (Softlab ERP system), or Humansoft (HermesSQL system).

ERP systems in logistics

ERP systems are successfully used in logistics because they allow information to be managed in a modular way in the diverse areas of modern logistics. The functional application of ERP systems serves to optimise information management in key logistics subsystems within the company’s logistics system. ERP systems are an important solution for supporting company management in decision-making. They allow forecasting and planning of all organisational resources.

Systems make it possible to integrate the organisation’s activities in each of the logistics subsystems, guaranteeing consistency in the work of all the company’s departments. These systems allow a constant exchange of information between the people employed in each of these departments and between these people and the members of the management team.

Information management through the implementation of an ERP system means concrete benefits in the area of organisational finances. The ERP system makes it possible to improve the company’s financial situation by optimising logistics processes in the long term. This means aligning information management with the strategic logistics management model.