Do I have to Purchase All the ERP Components?

No, you do need not to purchase all the components of ERP. While negotiating with your vendor, you will have the option to choose your desired modules. It's best to invest in modules that are specific to your industry, business needs, strategic objectives, and budget. Choosing the right ERP modules is key to making your investment worthwhile, saving costs, and getting the maximum Return on Investment (ROI).

What are the 5 Widely Used ERP Components?

Companies across different industries and sizes use numerous ERP components. Here are the 5 widely used main components of ERP: 1. Business Intelligence: This component navigates through the complexities of the business environment and provides actionable insights to make data-driven decisions. 2. Customer Relationship Management: This component helps businesses manage customer data, identify trends, and derive meaningful insights. 3. Inventory Management: This is a crucial component that allows real-time inventory tracking, and ensures your business never runs out of inventory or faces excess stock. 4. Human Resource Management: The HRM component assists businesses with employee record management, payroll management, performance evaluation, and various other HR tasks. 5. Financial Management: The Finance module in ERP automates the company’s financial operations, sales order management, invoice generation, payables & receivables management.

Which ERP Components are Mostly Used by Business Executives?

Business executives may use different Enterprise Resource Planning (ERP) components based on the nature and scope of their business and their specific requirements. Here are the most commonly used ones: 1. Business Intelligence: Decision-makers can sift through multiple data sources, and leverage robust data intelligence networks to increase profitability and achieve sustainable revenue growth. 2. Risk Management: Executives can use the end-to-end risk management tools to reduce operational and compliance risks, and ensure adherence to the best industry standards. 3. Financial Management: It provides insights into the company’s financial health, and allows decision-makers to track business performance and analyze profitability. 4. Sales Management: The Sales Management System aids in analyzing market trends & patterns, and forecasting demand for the company’s products. 5. Customer Relationship Management: It helps you maintain healthy relationships with your customers and contribute to the growth and success of your company.

What is the Role of the Supply Chain Component of ERP?

Supply Chain component plays a critical role in the growth and success of your organization. It lets you: 1. Analyze demand for the company’s products 2. Manage the flow of goods and services 3. Streamline supply chain activities and timely fulfill customer orders 4. Increase the company’s responsiveness 5. Deal with ever-changing market circumstances 6. Reduce operational costs and increase profit margins

What Factors Should I Take into Consideration while Selecting ERP Components?

Selecting the right components of ERP is key to remaining competitive and profitable, and making the best out of your ERP investment. Here are the factors that you should take into consideration: 1. Problem Analysis: Perform an intricate analysis of the internal and external problems faced by your company, and how ERP will tackle them. 2. Functional Fit: Make sure that your ERP components align with your strategic business needs and long-term objectives. 3. Industry Experience: Make sure that your vendor has extensive knowledge and experience to keep up with the industry requirements and latest technological changes. 4. Return on Investment (ROI): Measure the financial return you can expect from your investment in the ERP and make it a more profitable one. 5. Scalability: Can your Enterprise Resource Planning adapt to changing business needs and accommodate new changes? Be sure to check that out.

Evolution of ERP

ERP Through the Ages: The ERP Journey Unfolded

What is an ERP?

An Enterprise Resource Planning (ERP) is an end-to-end system and a fluid framework that integrates different business processes and provides complete oversight & control over your business operations.

ERP Software revamps traditional business practices such as juggling between different spreadsheets and legacy tools. It acts as a Single Source of Truth that provides 360-degree visibility across all departmental operations. It enables decision-makers to make smart & quick decisions, effectively use the organizational resources, minimize costs, and capitalize on new business opportunities.

The Evolution of ERP

The history of ERP dates back to the early 1960s when the first Material Requirements Planning was introduced. Here’s a glimpse into how the ERPs evolved over time:

1. Material Requirements Planning (MRP)

Material Requirements Planning (MRP) was originally invented in the early 1950s by an IBM engineer, Joseph Orlicky. However, it was never commercialized until 1964 when it was “reinvented” to cater to the needs of the manufacturing companies. Black & Decker was the first company to implement it. The MRP only supported monitoring production resources, in addition to demand forecasting and purchase management.

2. Manufacturing Resource Planning (MRP-II)

Manufacturing Resource Planning (MRP-II) came into existence in the 1980s. It empowered manufacturing companies with resource optimization tools to allocate labor & machinery to reduce cost and maximize production efficiency. It enabled them to manage their inventory, visualize & develop precise production schedules, and deal with manufacturing-specific challenges.

3. Enterprise Resource Planning (ERP)

The first true ERP came into existence in the 1990s with the introduction of a first-ever multi-functional system that went beyond basic manufacturing & inventory management capabilities and supported broader business functions. However, it was only limited to internal business processes.

4. Enterprise Resource Planning (ERP-II)

ERP-II is considered a significant upgrade to the ERP throughout the evolution of ERP. It covered external business processes and came with powerful collaboration capabilities, integration between different business departments, and several other add-on features such as Customer Relationship Management (CRM System), Supply Chain Management (SCM), and financial management module.

How has the Evolution of ERP Benefited Businesses?

The evolution of Enterprise Resource Planning (ERP) over decades has benefited businesses across the world in various ways. Here’s how:

1. Demand Forecasting

Forecast demand for your products & analyze consumer buying patterns. For example, ERP for furniture manufacturing allows furniture MSMEs to predict future demands for their products.

2. Ingredients Management

Other benefits of ERP include its ability to create & manage production formulas/ recipes. For example, pharmaceutical companies use Pharma ERP Software to track and combine the ratio of ingredients to produce safe and effective tablets and capsules.

3. Quality Control

The quality assurance process is conducted at all levels of the production process to produce high-quality, safe, and reliable products and maximize consumer satisfaction. Consistently producing quality goods translates into better goodwill and higher market share.

4. Production Scheduling

Align your production management process to meet changing business needs and market scenarios. ERP Application helps you minimize production waste, minimize costs, and ensure responsiveness to changing market conditions.

5. Minimize Supply Chain Disruptions

Supply Chain Management tools optimize the shipping process, prevent bottlenecks in the supply chain, and ensure a smoother order fulfillment process. This results in lower overhead costs and higher efficiency rates.

6. Maximize Sales Performance

Sales Management System optimizes sales-specific activities by streamlining order placement, lead management, analysis of past sales, and trend identification.

What is the Difference Between MRP-II and ERP?

Enterprise Resource Planning (ERP) is considered the successor of the Manufacturing Resource Planning (MRP-II) in the ERP evolution. Today, ERP has become an everyday part of business life.

Here’s how both of them differ in concepts:

Usage of ERP Across Different Industries

ERP helps businesses across all industries move beyond traditional spreadsheets and legacy tools, and benefit from streamlined growth across all departments.

1. Manufacturing Companies

Manufacturing ERP Software enables manufacturers to schedule their manufacturing activities, manage resources, meet quality & industry standards, and avoid poor inventory management.

2. Retail Outlets

Enterprise Resource Planning enables retailers to monitor stock levels in real time, deliver personalized services to their customers, and improve store operations.

3. Alcohol Industry

ERP for alcohol industry allows alcohol manufacturers to monitor the manufacturing process at all stages, reduce wastage, create & manage formulas, and forecast demand for their products.

4. Food & Beverage Industry

ERP for food industry gives businesses a complete view of the food production process, streamlines the procurement of raw materials, and optimizes key business processes.

5. Chemical Industry

ERP for chemical industry enables chemical manufacturers to monitor batch production at a large scale, ensure strict quality compliance & regulatory adherence, and leverage modern technology & innovation to gain a competitive advantage.

6. Medical Device Manufacturers

ERP for Medical Device Manufacturers helps reduce complexities in the production & distribution of medical devices, enhance compliance with Govt regulations, and produce safe & reliable equipment.

What are the Emerging Trends in the ERP Industry?

New trends in the industry are transforming the ERP market at a greater pace and benefiting businesses of all types & sizes. Let’s discuss the future of ERP systems.

1. Cloud Integration

The cloud has enabled businesses to store their data on the vendor’s servers and gain flexibility and remote accessibility. Cloud ERP eliminates the need for a significant cost at the beginning of the implementation period.

2. Mobile ERP

Mobile-based Enterprise Resource Planning tools provide on-the-go access to business-critical data and allow employees to work remotely. Whether it is checking the status of an activity or approving it, Mobile ERP streamlines both the front-end & back-end activities.

3. Internet of Things (IoT)

Internet of Things (IoT) devices capture data using sensors, and share it in real-time with other devices for better shop floor performance, operational efficiency, and higher accuracy.

4. Blockchain Technology

Blockchain technology builds a secure & transparent network to facilitate real-time tracking of goods, reshape supply chain activities, and combat various modern-day business challenges.

5. Adopting Sustainable Practices

Thanks to growing awareness about the need for environmental preservation & energy saving, the Best ERP Software in India aligns with sustainable & environment-friendly business practices.

Fuel Your Business Success with Sage X3

Over the last few decades, the evolution of ERP has completely transformed the way companies operate. From its invention as a simple inventory management tool to an all-comprehensive tool, ERP has become an indispensable part of the company’s day-to-day operations.

Sage X3 is a strategic tool that goes beyond a traditional ERP tool to support a wide range of legacy tools and offers a comprehensive suite of features, alongside best-in-class collaborative capabilities. It is built keeping in mind the needs of global organizations that require multi-country, multi-lingual, multi-currency & multi-legislative support.

Top Industries Leveraging ERP Software

Frequently Asked Questions

1. Who Developed the First Ever ERP?

Joseph Orlicky, an engineer working at IBM, is known as the original developer and pioneer of Material Requirements Planning which ultimately became Enterprise Resource Planning (ERP) as we know it today. He built the foundation of ERP in 1964 by commercializing the concept of what he called, Material Requirements Planning (MRP).

2. What were the Earliest ERPs be like?

In the history of ERP, the earliest ERPs were limited in scope and functionality. They supported only specific business functionalities such as the production process. Unlike modern cloud-based ERPs, they require a huge upfront investment. Before the ERP evolution, companies incurred a significant cost in setting up and maintaining their own dedicated IT infrastructure & workforce, software license costs, and maintenance & upgrade costs, among others.

3. How is ERP-II Different from ERP?

ERP-II is considered as the successor of the ERP-I which primarily focuses on internal business processes related to specific business functions. The ERP-II goes beyond internal processes to cover various other external aspects such as managing customer relations, suppliers, and e-commerce to build strong & meaningful relations. Moreover, it empowers your business with strong analytical capabilities and demand forecasting for smart decision-making.

4. How is Artificial Intelligence (AI) Transforming the ERP Industry?

Machine Learning (ML) and Artificial Intelligence (AI) are revolutionizing the world, and Business Management Software is no exception. Here’s how:

Demand Forecasting: Gain comprehensive insights into the market dynamics for strategic planning, resource optimization, and making accurate decisions with AI-powered Business Intelligence Tools.
Process Large Dataset: AI’s ability to process vast amounts of information supports quick & accurate decision-making, which improves the company’s agility.
Sustained Market Advantage: AI in supply chain lets you develop proactive strategies to respond to sudden market changes, and mitigate supply chain risks.
Robotic Process Automation: Automate smooth flow of workflows, data extraction, and transmission from inter-connected devices and bots.
Proactive Risk Management: AI-powered Financial Management Software enhances fraud detection algorithms and shifts the focus of the risk management strategy from reactive to proactive.

5. How has the Cloud Revolutionized the ERP Industry?

The introduction of cloud technology has allowed ERP vendors to host business data on their servers. Unlike On-premise ERP implementation, it doesn’t require an upfront investment. You can start using it by paying a monthly or annual subscription fee. Your employees can access business data no matter where they are without needing to be physically present in the office.

Schedule Product Tour

"*" indicates required fields

Sage 300

SAGE X3

SAGE CRM

POCKET HRMS

DISCRETE MANUFACTURING

PROCESS MANUFACTURING

MORE…

RESOURCES

ERP GUIDE

GST INDIA