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There are five major reasons why companies undertake ERP.

There are five major reasons why companies undertake ERP.

i) Integrate financial information—As the CEO tries to understand the company's
overall performance; he may find many different versions of the truth. Finance has its
own set of revenue numbers, sales have another version, and the different business
units may each have their own version of how much they contributed to revenues.
ERP creates a single version of the truth that cannot be questioned because everyone
is using the same system.

ii) Integrate customer order information—ERP systems can become the place
where the customer order lives from the time a customer service representative
receives it until the loading dock ships the merchandise and finance sends an invoice.
By having this information in one software system, rather than scattered among many
different systems that can't communicate with one another, companies can keep track
of orders more easily, and coordinate manufacturing, inventory and shipping among
many different locations at the same time.

iii) Standardize and speed up manufacturing processes—Manufacturing
companies—especially those with an appetite for mergers and acquisitions—often
find that multiple business units across the company make the same widget using
different methods and computer systems. ERP systems come with standard methods
for automating some of the steps of a manufacturing process. Standardizing those
processes and using a single, integrated computer system can save time, increase
productivity and reduce head count.

iv) Reduce inventory—ERP helps the manufacturing process flow more smoothly,
and it improves visibility of the order fulfillment process inside the company. That
can lead to reduced inventories of the stuff used to make products (work-in-progress
inventory), and it can help users better plan deliveries to customers, reducing the
finished good inventory at the warehouses and shipping docks. To really improve the
flow of your supply chain, you need supply chain software, but ERP helps too.

v) Standardize HR information—Especially in companies with multiple business
units, HR may not have a unified, simple method for tracking employees' time and
communicating with them about benefits and services. ERP can fix that. In the race to
fix these problems, companies often lose sight of the fact that ERP packages are
nothing more than generic representations of the ways a typical company does
business. While most packages are exhaustively comprehensive, each industry has its
quirks that make it unique. Most ERP systems were designed to be used by discrete
manufacturing companies (that make physical things that can be counted), which
immediately left all the process manufacturers (oil, chemical and utility companies
that measure their products by flow rather than individual units) out in the cold. Each
of these industries has struggled with the different ERP vendors to modify core ERP
programs to their needs.


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