Before getting into the topic why you should implement ERP, you need to know what is ERP. Well, let me brief about that. In simple terms ERP means a software application which can be used by organisations for managing their operations.
If I explain ERP in detail, ERP means a single application where all the business functions of an organisation can be handled and all the operations are seamlessly integrated each other. The business functions for each industry varies. If we take the example of a Manufacturing Company the different business functions involved will be Sales & Receivables, Purchase & Payable, Inventory,Manufacturing, Maintenance, HR & Payroll, Finance and additional modules such as Quality, Fixed Assets, Budgeting, CRM, MRP, MPS and so on. If all the mentioned modules can be handled using a single application which is centralized then we can call this as an ERP. Also there should not be any duplication in data entry when ERP comes into place. A Classical example is when a purchase order for raw material is created by purchase department, after getting automatically checked for budgets, based on the purchase requisition generated from Sales Order created for Products where manufacturing is involved, Stores can receive the raw materials from Supplier using same PO and accounts department can do the product costing and can make the supplier payment using the same PO. Similarly for other operations also if the actions of different modules can be integrated each other and data of one module is available for other module automatically, we can say that the application fulfills the criteria of becoming and ERP. Also all the transactions which is having financial implications data will be flown automatically to the general ledger.
Now coming back to the topic, why you should implement ERP. In a single word I can say for better control. ERP decide what a user should access and what shouldn’t. ERP decide whom to enter a transaction and who can approve. ERP decides what kind of reports each user can generate. You will have the all the data online and up to date. When a customer asks for a statement you can get the same in a single click. When a customer complaints arises saying a product is damaged, you can find the details in a single click such as when this product was purchased by customer, its invoice and sales order details, which are the other customers who also purchased these goods and whether any other customer has raised similar complaints, when this product was manufactured, who was there in the plant while this was produced, whether this goods has passed the quality checks, what was the quality check parameters and readings, which is the batch of raw material used for this production, what quantity used for production, when this material was purchased, in which stores this item was stocked, which supplier supplied this, what was the batch code for the raw materials, whether supplier quality check has passed this raw materials and like that hundreds of questions will be able to answered and information can be retrieved in single clicks. Having the ERP data in the server and using the historical data different kinds of analysis can be done such as sales analysis, lead analysis, conversion analysis, production analysis, purchase analysis, expense analysis, comparison between last year and current year, last quarter vs current quarter and so on.
In short every organisation which has a perfect ERP implemented will have better control, requires less manpower, data access will be easier, user security will be in place, reports are available online and any kinds of data analysis can be done then and there. Only thing is make sure, the implementation should be perfect and should be done by experienced hands.