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The keyword /"Company/" refers to the size of the organization. Whether you are a small, medium or large business, you could benefit from an ERP system. Since our YouTube channel as well as the video is focused on the SME space, we will speak from the SME perspective. Resources can be referred to as the resources that your business manages, ranging from human resources or labor, to machines, assets, and products. The keyword planning refers to the planning of these resources, which is the major objective of an ERP system.
Now let's talk about resources in detail. If you are a small business and you don't have tons of machines on your production floor to produce your products, you will simply need labor to account for the cost of your product. The ERP system will help you manage these labor resources, schedule them for the appropriate tasks, and provide cost estimates for the amount of labor used on a specific product.
Likewise, if you use a combination of labor and machinery in your production processes, you may need to consider both to get an accurate cost of your product.
The ERP system will also help you in the accounting of your assets if they have a financial life and need to be recorded in the books. The ERP system would help in recording and depreciating assets appropriately.
Each industry will have different levels of resources and how they will use an ERP. For example, if you are a service or consulting company, you may not have inventory or production processes. Most industries can benefit from an ERP, whether you are a product or service business.
Now that we understand resources, let's talk about how scheduling these resources works in an ERP system.
There is often a common misunderstanding as to whether or not you would need the accounting module as part of your ERP. The ERP system is meant to be an integrated system. It's not an ERP system if it doesn't come with an accounting module, and perhaps it's cutting-edge software such as CRM or warehouse management software (WMS). In other words, if you purchase an ERP system, you will need to replace your current accounting system. If you're not ready to replace that, you may not be ready for an ERP system, and you may need an add-on to your accounting system, regardless of which one you use today 'today, Sage or QuickBooks.
Now you can argue that if finance is a fundamental part of an ERP system and it seems that ERP systems mainly help with financial planning, maybe we should call it Enterprise Resource Financial Planning or ERFP. Sure, we can do that, but let's look at what other types of planning the ERP system can help with before we conclude.
Most of your departments can benefit from the information provided by ERP, whether it is sales planning, operations planning, inventory planning, warehouse planning, or purchasing planning. They all need access to financial data because their daily operations require financial information to succeed in their role.
When we talk about operations planning. Decisions that ERP can help you with could include how much inventory you would need over the next three months. When it comes to sales planning, the type of decisions you are going to make will include how many sales resources you would need to achieve your goals. The same goes for inventory and warehouse. As you can see, an ERP system is slightly larger than a simple accounting system. And that’s why an ERP is called ERP and not ERFP.
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