This article provides an insight on what an ERP system is - and it has nothing to do with smoother traffic flow!
Information that is unified, easily accessible and in real time adds to the efficiency and competitiveness of the business.
This applies equally to both small and big enterprises.
Achieving this is the goal of an Enterprise Resource Planning (ERP) system. Such an integrated information system pulls together the company's data from all its departments and business processes.
The concept started in MRP or Manufacturing Resource Planning that, in turn, originates from material requirements planning.
An ERP system would handle real-time information from the manufacturing, logistics, distribution, inventory, shipping, invoicing and accounting.
Ideally, ERP should also be extended to include all other business activities such as sales, marketing, delivery, billing, production, inventory management, quality management and human resource management.
Key to the successful deployment of an effective ERP system is the common database and a modular software design.
The common database allows all aspects of business operation (not just manufacturing) to store and retrieve information in real time. Information thus becomes more reliable, accessible and easily shared.
As the name suggests, an ERP system deploys a single database to cover all data across the enterprise. The sources of data include:
- Manufacturing: Engineering, bills of material, scheduling, capacity, workflow management, quality control, cost management, manufacturing process, manufacturing projects and manufacturing flow.
- Supply chain management: Inventory, order entry, purchasing, product configurator, supply chain planning, supplier scheduling, inspection of goods, claim processing and commission calculation.
- Financial: General ledger, cash management, accounts payable, accounts receivable and fixed assets.
- Project management: Costing, billing, time and expense and activity management.
- Human resources: Human resources, payroll, training, time & attendance, rostering and benefits.
- Customer relationship management: Sales and marketing, commissions, service, customer contact and call-centre support.
- Data warehouse and various self-service interfaces for customers, suppliers and employees.
The modular software design allows for many different packaged applications from different vendors to be added or mixed on an individual basis to improve business process efficiency.
For example, one may choose to use a human resource management system from one vendor and the financial systems from another, and perform the integration between the systems themselves.
This approach is useful for the small retailer who may have a discrete point-of-sale product and financial application, and a disparate series of applications to handle warehousing, staff rostering, merchandising and transport and delivery.
Data migration is one of the most important activities in determining the success of an ERP implementation.
Unfortunately, data migration is often the last consideration before the production phase of an ERP implementation, and therefore receives minimal attention due to time constraints.
The following are steps of a data migration strategy that can help with the success of an ERP implementation.
- Identifying the data to be migrated;
- Determining the timing of data migration;
- Generating the data templates;
- Freezing the tools for data migration;
- Deciding on migration-related set-ups; and
- Deciding on data archiving.
Did you know that the top three sources of information and updates on infocomm for SMEs are Newspaper (39%), Internet (36%) and Friends or business associates' recommendations (34%).
- This article is contributed by NCS Pte Ltd, a member of the Singapore infocomm Technology Federation (SiTF).
- This article first appeared in The Business Times on 13 May 2008 and information is correct at the time of publication.
Back to SMEs' Spotlight
