What is a ERP system?
AlfaPeople |
Sep 12, 2016

What is a ERP system?

What is ERP System – Enterprise Resource Planning – is a platform, in which the company-relevant processes are planned and monitored. While executing these company processes, an ERP solution is absolutely necessary today.

The origin of the present ERP system lies in the old solution MRP (English Material Requirements Planning), also called MRP I. In the first phase of MRP I, the main aim was to get an overview over the material reserves or products and raw materials for production. Depending upon the product and the production type, mainly in the food industry, the expiry dates of the products or the raw materials must be adhered to. Otherwise, the goods inventory must be depreciated and disposed of, which can lead to very high costs and losses. Thanks to MRP I, the costs could be kept low and more profit could be obtained.

In the second phase, the MRP II (English Manufacturing Resource Planning) system was developed. This solution is based on the MRP I (Material Requirements Planning) and is also expanded with finance, sales and personnel management (HRM). This, one had the option of maintaining and managing many resources in a central system.Modern ERP systems are a further development from the MRP II concept. The company processes are depicted in the ERP systems. Moreover, diverse out-of-the-box industry solutions are also offered to depict the requirements of the companies in great detail.

Many criteria need to be considered for selecting the correct ERP solution; but the most important are: Size of the company, budget, requirement, geographic alignment of the company (national/international) as well as the number of future users. Many small companies have a very small organisation structure and this makes it clear from the beginning that no ERP solution is required to control and monitor the processes.

KMUs and large companies in turn have complex processes and a variety of data, which must be planned and monitored centrally. All these companies comprise standardised processes and monitor these constantly to be able to react to market changes a soon as possible. Market-driven and market-related adjustments of the companies bring them forth and secure the growth. The interaction is reflected in the companies through the better quality of products and the services offered, and also in the finances or by the optimisation of relevant indices.

The following modules are offered in the available ERP solution:[/fusion_text][fusion_text]

Finance managementManagement of all accounts and the cash flow
Personnel managementDetailed management of HR
Business Intelligence (BI)Tool of the analysis of business processes
ProductionPlanning and control of production including resource management
Supply Chain ManagementQM, cross-location warehouse management and the overall commissionings including dispatch
Procurement and purchaseProcurement processes including Supplier Relationship Management
Project managementProject-related application including factoring, planning and controlling
Sales and MarketingAutomation of marketing and sales including tender preparation
Service managementManagement of the service department including sales and repairs management

To implement an ERP solution, roughly the following steps/phases must be adhered to:

  • Selection of technology
  • Selection of the implementation partner
  • Determining the company’s processes
  • Selection of the modules
  • Installation
  • Adaptations & calibration
  • Data migration
  • Testing
  • Go-Live
  • Support

What does an ERP introduction cost? A legitimate question, which cannot be answered easily. A detailed price quotation can only be estimated after an analysis workshop. But one can always get a target price from an implementation partner like AlfaPeople. The costs for an ERP solution are made up of the following:

  • License costs for the user
  • Service costs for implementation
  • Maintenance & Support costs

The extent of the implementation costs is obviously different depending upon the solution. Complex gross systems can, however, differ greatly depending upon the industry, the modules used, the number of users, the number of interfaces to other systems and the degree of adaptation to the solution. The principle that we always recommend to our customer is and remains: Adapt as little as possible – remain at the standard.

Read more about Microsoft Dynamics 365 here.

If you want to hear more about how AlfaPeople can help with the implementation of new Microsoft business technology, contact us here.