What is Enterprise Resource Planning?

Enterprise Resource Planning, commonly referred to as ERP, is a software program that helps companies to organize, standardize and centralize planning processes and controlling functions. ERP software provides business leaders with succinct overviews of models, products, procedures, relationships and information flows. ERP software is an essential forecast demand tool for product manufacturers.

Planning Functions

ERP helps business leaders with strategic, material, resource, supply chain and production planning. Executive master planning sets the operational business plan for sales and operational support. ERP applicants use shipping invoices and inventory information to develop comprehensive manufacturing and purchasing plans for products, materials and components. This activity may be referred to as either detailed material planning or material requirements planning (MRP). The software function that ties the production plan with resource availability and labor capacity is called capacity requirement planning (CRP). Additional software functions provide support for executing manufacturing plans, such as purchasing control, information gathering and data analysis.

Integrated Functions

ERP applications provide technical support traditionally offered through inventory, accounting, supply chain and production information systems. ERP finance functions include payroll, costing, general ledger, financial reporting and accounts payable and receivable. Production functionality includes forecasting, staffing and customer orders. Supply chain functions include bills of material, logistical data and procurement requests. ERP systems heavily rely on solid technology infrastructure, so they must be built on a single database management system. Doing so offers business leaders full data exploitation of information analysis and reporting tools. External eCommerce links ERP systems with vendor and supplier applications through traditional Internet connectivity or cloud-based technology.

Master Forecasting

ERP applications help with short- and long-term labor scheduling, forecasting and management. This is possible because ERP systems offer volume forecasting, accurate budget tracking and monthly variable labor projection. Production managers use ERP systems to complete labor analyses to determine appropriate staffing levels for upcoming orders, process enhancements or potential market surges. ERP applications allow managers to access detailed records of production volume, handle time and quality concerns to improve future forecasting accuracy. ERP reports are used during monthly meetings with supply chain, operations and production managers. ERP reports ensure that forecasting practices and processes are well-documented and executed within policy standards.

Production Scheduling

Production planning in large manufacturing centers is a very challenging task. Master production schedulers must plan, prepare and maintain schedules by coordinating with material resource planners to ensure controlled production flows. This means that the right materials must be delivered to the right location at the right time to meet production requirements. ERP programs help schedulers to provide management with real-time updates of the batch statuses, material availability, scheduled maintenance and any potential problems. ERP helps business staff to coordinate interdepartmental activities related to inventory control, safety inspections, quality assurance and customer service. ERP systems are a key tool to quickly re-schedule and expedite the production and movement of emergency production requests.

The most common job for this technology is an Enterprise Resource Planning manager who oversees cross-functional process improvement initiatives. They are project managers who execute project objectives and methodology in order to produce deliverables, answer requests and maintain efficiency.