“ERP System” is a way of describing Enterprise Resource Planning. An ERP System is a set of people, process and technology that enable an business to optimize and fully utilize all of their resources. So often people think of an ERP System as simply a software package. But it is much more. Let’s look at some of the aspects of a true ERP System.

ERP System Explained

If you consider all of the aspects of an ERP System, you must look at the parts of the business from a process perspective. Take for example a process of “Order-to-Cash”. This process follows the concept of taking an order for a product, checking and requisitioning inventory, preparing it for shipment, and shipping it out. Then it is invoiced, and ultimately the invoice is paid.

If you map out the Order-to-Cash process in your organization, you will likely find a lot of inefficiencies. You don’t want to automate these inefficiencies. That would only make the inefficiencies faster. So you should first look at the system of people, processes and then ultimately automate it with technology.

So your ERP System is all of the inputs and outputs to the process of taking an order and processing it through until your receive payment for that order. Take for example the Order process. The input is the order itself. The output may be the printed order or the picklist for pulling the inventory. This order is input and processed by an order entry clerk. You can see in this simple example the process of taking the order (input) and generating a picklist (output) as the first step in your order-to-cash processs.

Where possible an ERP System drives data inputs to their source. That is why Internet-based shopping carts and order systems are becoming essential. The customer is the source of the data, so they should be the source of the input into the system. You can see the beginning of a supply chain where the customer pulls inventory from the company, who then pulls inventory from a supplier. This customer, processor, supplier model repeats again and again, in both a micro level and a macro level. The order entry station is the micro level processor in the above example, and the distribution company is the macro level processor in the larger picture. You can take any process and look at the input (or the customer pull) and see what makes up the transaction, and who is the supplier for the process.

The ERP System is a many operational and financial processes that are run by people to fulfill the supply and demand of the process and ultimately streamlined and enabled by technology

Steps to improving your ERP System before automating

There are a number of things you can do, but the obvious first thing is to identify your processes and systems. Tools such as Lean Enterprise (or Lean Manufacturing) can help you reduce and eliminate waste in your processes. Based on the Toyota Production system, Lean is a very effective way to reduce wasted efforts, reduce costs, and improve your throughput.

Another area to look at is improving quality. Quality methods and tools can greatly increase your bottom line when properly applied. ISO9000 and similar certifications are both effective at communicating a message internally and externally, that only high quality products and services will be tolerated.

Scaling these two system improvements upon a well matched business software system will create a world-class organization. Key to finding a software to support your ERP System is matching your processes and key functions to an ERP Software solution.

Resources for Improving your ERP System

The first thing you should check out is ERPandmore.com’s free ERP System Tools that you can download. These can help you better define functions within an ERP system, Vendor Evaluations, and compare competing solutions.

Some other resources you should look to include the American Production and Inventory Control Society and the Quality Management Institute. These two organizations have a lot of publications and information about business process improvement.

With regards to the software for your ERP System, you can find a multitude of vendors in our ERP Software Directory. You can also find ERP Vendor reviews and get price quotes from SoftwareAdvice.com.

ERP System

ERP System is a post from: ERP and More!

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This past week, I was in the Bay Area on Business. Watching the local news, within the same broadcast, they were talking about Virgin Megastores closing in San Francisco, as well as the San Francisco Chronicle newspaper struggling to stay alive. I couldn’t help but think about these are signs of not only a recession, but the final death throes of the old media.

We have reached the end of the Industrial Era and are well into the Information Era. In the Industrial Era, information didn’t happen in real time. In fact, it didn’t need to. There were no computers, email, Twitter, or Youtube. People hand prepared documents, mailed them, spent time reading the newspaper, and did things that were generally done over the period of hours, days, and weeks. Things were much slower then, but the culture did not demand the urgency of information that it does today.

Today, we get our news online, as we want, when we want it. We no longer prepare documents, we send PDFs via email. We instant message our peers for information who happen to be on the other side of the nation or even the world.

I always drive home the point that in Enterprise Software, it is an imperative that you must drive data to the source. In other words, you must put the origination of data right at the source. In a business sense, this means that you must put the key strokes or data collection right at the point in the process where the entry originates, such as at a quality check point on the shop floor, or with the employee for HR information.

In the bigger world, this is already happening with the coined term of “On-Demand”. Virgin is suffering due to iTunes. The consumers are directly sourcing the media. If you look at CNN’s iReport, you will see that news events are being reported by those closest to the news; usually people directly involved. People are Twittering about the airline crash that they are actually in! Talk about driving data to the source! And all of this information is being consumed by people who have a direct interest from anywhere in the world in real-time.

On the newscast, there was a pundit speaking about the death of the newspapers and how this is going to put traditional investigative reporters out of work. This is probably true, but many of these reporters are turning to new media reporting. I’m not in the journalistic world, but I would imagine that blogging, and independent reporting is becoming more the standard.

I work from home and “telecommute” (although this is a inaccurate word). I work with clients directly all over the world via web conferences, setting up systems and training them how to use these new tools. I imagine that the traditional workforce is slowly moving away from a centralized office and instead to independent teams of people who work independently from wherever they happen to be. No longer are we bound to the concepts of an Industrial model, rather we are free to explore our independent contributions to our “companies”, “teams” or other organizational system. We are moving to a world where the data is at the source.

I welcome your comments on this.

A friend sent me this video, my first impulse was think what would be the application here? How could we use such a thing. It is amazing how we question new technology, even if we are involved in technology. Essentially, it is small computer video blocks that talk to one another. You can create and learn things by the order and 3 dimensions of manipulation. In the video, the presenter answers my initial question, what is the application. But I have a feeling that this just scratches the surface. Similar to how main-frames where designed with accounting as the first application. Now we use computers in all aspects of our life. I see these being similar. We would only be limited by our imagination of the applications that these could be used for.

Take a look at the video and let me know your thoughts.