Enterprise resource planning (ERP)

Definition

Enterprise Resource Planning (ERP) is a type of software that integrates various functions and processes within an organization into one comprehensive system. It helps in the efficient management of resources by providing real-time data and analytics.

5 Must Know Facts For Your Next Test

1. ERPs streamline business processes by consolidating multiple systems into one unified platform.
2. They provide real-time data, which aids in better decision-making and strategic planning.
3. ERPs can significantly reduce operational costs by automating routine tasks and improving efficiency.
4. Implementation of ERP systems requires significant investment but can offer long-term benefits through improved productivity and data accuracy.
5. Accounting modules within ERPs help managers track financial performance, manage budgets, and ensure compliance with regulatory standards.

Review Questions

• What are the primary benefits of implementing an ERP system in an organization?
• How does an ERP system improve decision-making for managers?
• Why might a company choose to invest in an ERP system despite its high initial cost?

Related terms

Business Process Reengineering: The redesigning of business processes to achieve improvements in critical aspects like quality, output, cost, service, and speed.

Supply Chain Management (SCM): The management of the flow of goods and services from production to consumption.

Customer Relationship Management (CRM): A strategy or software for managing a company's interactions with current and potential customers.