More and more companies are adopting enterprise resource planning (ERP) systems since effective management is one of the fundamental steps to growing business competitiveness. In the world where surviving on the market can be a real challenge, an ERP system can become your best armor.
ERP System Concept
An ERP system can be viewed as a unified digital platform streamlining business processes while enabling a seamless flow of data coming from multiple sources.
Depending on its design, an ERP system focuses on procurement, accounting, supply chain, risk management and project management. There are also such systems as Microsoft Dynamics 365 that also cover CRM or customer relationship management solutions.
Although a modern state-of-the-art ERP system might seem to be a relatively new management tool, the very first ERP model was invented over 100 years ago. This one was known as the Economic Order Quantity model or EOQ introduced by Ford Whitman Harris in 1913 for efficient production planning. The next step was extending EOQ with MRP known as material requirement planning in 1964. Further advancement of ERP systems happened in 1983 with a digitalized MRP II model, however, its real evolution took place in the 1990s.
Advantages of Using ERP System
While even small business can leverage effective management supported by an ERP system, this solution is of immeasurable value for large companies with complex hierarchies and numerous departments located around the globe.
An ERP system increases data transparency and provides business insights through reports and analytical tools based on AI. This helps companies to find new opportunities and avoid risks more effectively while supporting collaboration between employees, managers, clients and vendors.
ERP systems are also highly useful for automation of some of the business processes assisting the work of staff and taking care of their repetitive tasks.
As a result, enterprises are able to reduce their operational and management costs and actually increase their profit by boosting the quality of their products or services and building better relationships with customers.
Cloud Technology to Enhance ERP Systems
The previous generation of ERP systems was available to companies in the form of locally installed software. For instance, this was the form of distribution of Microsoft Dynamics AX, the predecessor of Microsoft Dynamics 365. This latter version of the ERP systems offered by Microsoft is a classic illustration of cloud-based platforms that have brought enterprise resource planning to a new level.
Cloud ERP systems maintain the integrity of their apps throughout all of the devices and are easier to update. They are more adjustable to constantly improve technologies of machine learning, IoT or blockchain and allow companies to leverage these tools on the SaaS basis.
Cloud technology reduces dependency on hardware and related costs while bringing more efficient security and backup protection.
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