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Enterprise Resource Planning (ERP)

Definition - What does Enterprise Resource Planning (ERP) mean?

Enterprise resource planning (ERP) is a method of efficiently utilizing people, hardware and software to increase productivity and profit, thus simplifying a company’s business processes. ERP may include many software applications or a single (but more complex) software package that smoothly disseminates data required by two or more unique business departments.

Techopedia explains Enterprise Resource Planning (ERP)

The need for enterprise resource planning (ERP) software grew with big business’ mandate for a centralized solution to manage all information system requirements. An ERP may consist of many different business modules, including:

  • Manufacturing
  • Human Resources/Payroll
  • Sales
  • Inventory
  • Supply Chain/Partners
  • Finance and Accounting
  • CRM

In short, an ERP solution allows each department or business domain to be managed centrally while operating independently. Advantages include interoperability of data, increased communication and increased data reliability through the use of a single database.

ERP also enhances the quality of enterprise-wide decision making. For example, a customized order may move from the sales department to inventory control, then on to invoicing to finance and manufacturing. By using an ERP, this type of process is an efficient and continuous series of events that allows for easy individual order tracking.

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