What is the Need of ERP System

The opening up of the global economy has led to a significant development of the small and mid market segment. This growth has been across industry verticals in the manufacturing, retail, services, pharma, telecommunication and information technology sectors. This growth and along with that the new competition and quest for enhancing total market share has led the companies to re-look at its processes and procedures. Now, companies are trying to utilize their all resources effectively to make business more efficient and effective.

In this case, companies are looking for enterprise software and other quality techniques. Companies are implementing different practices to utilize their resource effectively viz. business process re-engineering (BPR), six sigma, enterprise resource planning (ERP), just in time (JIT), Kanban and other quality improvement systems. All these techniques are good and helping companies to provide better quality and lower cost, which is the key factor to sustain a business in this competitive environment.

The implementation of ERP systems has helped small and mid sized companies, significantly improve their business metrics by process optimization, improving the entire supply chain process, better inventory control, better reporting to take decisions, integration across functionalities and increasing transparency across the company. Purchase department can see the sales department data, Sales department can see inventory data, and top management can see any data on a click of single button.

The introduction of ERP in any company has also helped it move up the value chain in term of market credibility and building the confidence of its customer, stakeholders and vendors. Most of the small and mid sized companies were living with in-house developed applications which are non-integrated and on disparate technology architectures. This has resulted in running with redundant technology, loss of support, non availability or less availability of critical information at the right time resulting in overall business loss.

The key drivers of introducing an ERP system in a small and midsized company are introduction of industry standard processes which are already embedded in the application, adopting integration across business functions leading to better transparency, access to real time information, analytical reporting for business decisions and adopting state of the art technology. Another key reason for implementing an ERP vis-à-vis a tailor-made development is the speed of implementation resulting in achieving a quicker return on investment (ROI).

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Read Benefits of ERP and Definition of ERP – Enterprise Resource Planning system. Also know How to Select ERP Software for your organization for successful implementation.