What is ERP?

ERP stands for “enterprise resource planning.” The definition of enterprise resource planning is, essentially, an integrated software solution used to manage a company’s resources. Business planning systems have been evolving for decades, and ERP, enterprise resource planning, is the current generation.

ERP’s immediate predecessors, MRP (material requirements planning) and MRP II (manufacturing resources planning), focused mainly on managing the manufacturing and accounting resources of a company. Today’s ERP systems now integrate all business management functions, including planning, inventory/materials management, engineering, order processing, manufacturing, purchasing, accounting and finance, human resources, and more.

What is CRM?

CRM stands for “customer relationship management.” This acronym is used to describe a computerized system for maintaining and tracking all facets of relationships with business partners, from marketing to sales to support.

Why should discrete manufacturers implement an ERP system?

The benefits derived from ERP can far outweigh the costs of the system, assuming that the system is selected carefully and is appropriate for your company from a feature, cost, and technology standpoint.

A good ERP system should be able to provide you with solid, measurable financial benefit, even in the first year. Customer satisfaction should measurably increase based on improved on-time delivery, increased quality, shortened delivery times, etc. Inventory carrying costs generally decrease substantially due to better planning, tracking and forecasting of requirements. Shop Floor down time should be minimized based on visibility into how to best schedule the floor. Vendor pricing should decrease by taking better advantage of quantity breaks and tracking vendor performance. Collections should be turned faster based on better visibility into accounts and fewer billing and/or delivery errors. In addition, there are many less tangible benefits, including a reduced time to close a fiscal period, more expedient data entry across the board, immediate management visibility into critical data elements, etc.

An ERP system provides the solid operational backbone manufacturers need to improve the volume of production and fulfillment of orders while reducing costs. By optimizing your manufacturing operations with ERP, you'll also be able to focus on new business opportunities.

Please note that it is important to select and use the right system for your business in order to achieve the full benefits of ERP. This is no small task; be prepared to spend time determining your business needs and researching the appropriate solution, both from a feature/function and a technology standpoint. There are many ERP systems available that can and should provide you with a complete return on your investment within a year of licensing the software. This means that, in effect, the software is free even in that first year. The benefits, beyond that, are "money in the bank."