What is ERP?
ERP is software used by companies to improve business management.
It does this by automating a good part of the processes and integrating various activities inherent to the business.
These include the sales process, adjusting finances, accounting, tax control, inventory control, production planning and logistics aspects .
The way in which the ERP will operate in each company varies according to the size of the company and its area of operation. But it is possible to say, without fear of making mistakes, that it brings benefits to any business.
In a simplified way, the main objective of ERP is to organize the company’s work routine.
Therefore, the system records information regarding employees, customers, suppliers, products, purchases, sales, taxes, among others.
It seems complex, but the ERP connects this information to streamline and optimize the work of the manager in front of the company.
If, before, inventory control and cash flow, for example, had to be done through manually filled spreadsheets, even on the computer, with the ERP, everything is simplified.
With this system, there is no longer any need for human intervention in bureaucratic processes.
This allows the administrator to prioritize tasks that are more strategic for the future of their company.
How did ERP come about?
In a historical overview, the concepts of technological control and corporate management began to be developed in the 50’s in the United States.
At that time, automation was still very expensive and slow. That way, accessible only to the fortunate few.
With the beginning of the 70’s, the tables turned.
At the time, economic expansion led to a dissemination of systems, and this contributed to the creation of Material Requirement Planning (MRP) , the predecessor of ERP.
It was in the 90s, however, that ERP gained strength and became popular, mainly due to the evolution of communication networks between computers.
Today, its presence is almost mandatory in businesses of all sizes. There are even more basic (and cheaper) versions that can be applied to small businesses.
What is an ERP for?
As we have seen so far, an ERP helps to qualify the management of a company .
But to better explain what it is for, the best way is to use examples.
Imagine that you own a children’s clothing store, and inventory control is done manually.
With each shipment of products that arrives from the supplier, you fill in a spreadsheet with the type of clothing, the amount of materials and their respective sizes.
This information is added to the information already in the spreadsheet, and forms the stock available in the store.
When a customer arrives and chooses certain pieces, it is necessary to go back to the spreadsheet and mark there that those clothes were sold.
All manual, at the base of the pen. Or, at best, in a program like Excel , on the computer, but still requiring your intervention.
This repeats countless times in a day, hundreds of times a week, thousands in a month.
Tired of just thinking. But the problem goes beyond the tedious nature of the task.
Can you see the risk of failure in this system , and the problem of lack of confidence in this information?
Can you notice how hard and tiring it is to keep a spreadsheet constantly updated?
If a customer bought two pieces, and you ended up writing down just one, how are you going to find out exactly which item in stock is in surplus at the end of the month?
It will give you a hell of a headache and, in the end, you may not even find the answer.
These are just some of the issues that can occur when you manually update a spreadsheet.
ERP emerges exactly to solve this problem.
It not only automates the process , it makes everything automatic, simple and fast.
It also offers reliability to the system, because you don’t have to doubt the information, which was entered there without your intervention.
When a part arrives, just add it to the system and the stock is already updated.
When a part is sold, the value is automatically forwarded to revenue, and the part is no longer part of the stock.
You know exactly how many products are in stock at any given time, and you have access to the cash flow for the day, month and year .
Can you understand how an entrepreneur’s life gets easier?
In this way, can he dedicate his time to attract and retaining customers, to find new ways of selling, in addition to improving the company’s performance and exploring its potential?
The manager stops wasting time with bureaucracy and repetitive administrative services, and starts to dedicate himself to what really matters in his business.
How does an ERP work?
Simply put, ERP is a large database of information that interacts with each other and feeds back .
For example, the sales order generates a revenue, which modifies the cash flow and, at the same time, reduces the volume of inventory.
Everything happens simultaneously and integrated , so that manual intervention is reduced to a minimum.
As for the more technical details of the ERP, it is worth mentioning that it is subdivided into three layers.
In the first layer of the system, there is the ERP software with its functionalities, processes and records.
It is to this layer that the user has access, through the filling of forms .
The second layer is the application itself.
There are the database logics, which allow the system to work.
In this layer, the information is integrated with each other , according to what was entered in the first layer.
Who work now are professionals specialized in the subject, responsible for making adaptations and making the logic of the system compatible with the needs of the entrepreneur and his company.