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An Enterprise System is like a vast highway that allows information in a company to flow freely between all parts of the company. The objective of a company to provide goods or services creates three different flowsŁ along the highway of the ERP.
As a product is created, sold, shipped, or ordered, a physical flow is created. Raw materials must be purchased, stored, and eventually moved to the manufacturing floor. Goods must be moved through manufacturing, packaged, stored, and prepared for shipping. Scrap has to be moved, sold, or discarded. These are physical aspects of a business.
ERP keeps track of the different flows of the firm.
You Need Business Processes
At every step in the physical process, a data flow is also created. The exact amount of a raw material purchased is recorded, supplier names and prices are documented, daily production rates are assessed, and a number of products are sold.
This data also feeds into a document flow; for example, purchasing raw material creates a purchased order form, and sales create invoices. The enterprise system gathers and holds all of this data, and assists in arranging it into useful information. Only when the data is organized into information can managers and employees use it to make decisions.
ERP assists with the physical execution of the organization's business.
An Enterprise system has a huge part in the everyday operations of a business. It assists in the physical of the process. It can tell managers when to purchase raw goods, create requisition forms, how much they are supposed to be producing according to budgets, and tell them where the product is located in the warehouse. Whenever a purchase is completed or an order filled, the accounting department knows instantaneously.
ERP captures and stores data.
You Need Better Data Insight
Enterprise systems capture data either through manual entry (customer names and order requisites) or generate it by through system itself (such as location, date, and time). This type of information used to be tangibly stored and manually retrieved. ERP allows for instantaneous access by many users. The data also only needs to be entered once, and can be retrieved and added to any forms pertinent to the order in a moment.
ERP can assist with monitoring and evaluation.
With all the data in the system, the ERP can arrange various reports, statements, and summaries. This is very important for firms, so that they can assess the effectiveness of their production and order filling. The ERP allows for reports on the instance level (how efficient is the production of product part C?) as well as aggregate level (How well is manufacturing as a whole controlling costs?). The ERP can gather relevant data to these queries and help arrange it into reports. The ERP system is also instrumental in helping to detect problems in the process. Are orders not being fulfilled quickly enough?
The system can automatically tell if the order was larger than the standard that was used to set the filling date? It can also gather data that a manager can review and use to make decisions. Perhaps there has been an influx of inexperienced workers that is throwing of the filling date, or perhaps the machinery is past its service date.
You Need Better Financial Statements
Financial Statements show the financial impact an action has on a company.
An income statement shows the revenue of a company and the expenses that it has incurred. Revenue minus expenses is equal to the net income of a company. A balance sheet is a more in-depth report that includes the assets of the company, who it owes money to, and the equity involved in the company.