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Understanding ERP modules and their business benefits
10Sep

Understanding ERP Modules and Their Business Benefits

Gone are those days when growing companies used to manage their data on spreadsheets. Modern businesses rely on Enterprise Resource Planning (ERP) software to help them collect and organize financial and operational data in a shared database to promote efficiency, as they scale. From providing accurate, real-time information to automating business operations, ERP helps users navigate complex processes. 

According to a report by Market Research Engine, “The ERP market remains in a phase of rapid expansion, with total market size expected to exceed $49.5 billion by 2024.” Businesses are recognizing the need for operational efficiency and intelligibility in business processes that ERP software provides. 

ERP systems are comprised of many modules, built to address specific business requirements. Each module pulls information from specific areas of business and pushes it into the central database. This helps decision-makers compare and evaluate the status of different areas of business. 

If you have decided to invest in ERP software, understanding ERP modules is important to make the right purchase. Let’s explore each module below.

What are ERP modules? How do these modules help business growth?

ERP is ubiquitous in businesses of all sizes. The modular design of ERP provides data and supports the processes that help employees manage their daily tasks. Each module is integrated into the system to ensure a single source of accurate data in the organization.

These are some basic modules that ERP offers:

  1. Finance and Accounting
  2. Human Capital Management
  3. Procurement
  4. Manufacturing
  5. Order Management 
  6. Inventory Management 
  7. Warehouse Management 
  8. Supply Chain Management 
  9. Customer Relationship Management
  10. Ecommerce

ERP Modules Explained

ERP Modules Explained

1. Finance and Accounting

This module allows manufacturers to understand the current financial state and future outlook of the organization. The major features in this module include general ledger, accounts payable, accounts receivable, and taxation.

The Finance and Accounting module in ERP automates billing tasks, account reconciliation, vendor payments, and more. Financial planning and analysis data help to prepare key reports such as Profit and Loss statements.

2. Human Capital Management

This module promotes an approach for managing, recruiting, and developing human resources (employees). The Human Capital Management software module is the repository for employee data. It helps Human Resource departments with the onboarding process and ensures education about the organization is shared with all employees. 

From payroll to taxes, time-off requests, agreements, etc., are all available in ERP. Functions of the Human Capital Management module include talent management, workforce management, compliance management, and maintenance of employee data.

3. Procurement

Also known as Purchasing, this module helps an organization manage and safeguard goods required to manufacture or sell products. The Procurement ERP software module helps you automate, track, and analyze quotes. Once a quote is accepted, this module helps the purchasing department prepare and send a purchase order. As a manufacturer, you can keep a list of approved vendors and associate specific supply items with each vendor. 

4. Manufacturing

The first version of ERP was designed for manufacturers. MRP or Material Requirement Planning was the earliest version of ERP that helped businesses estimate quantities of raw materials to schedule on-time deliveries. 

Modern ERP for manufacturers offers functionality such as Material Requirement Planning (MRP), Advanced Planning and Scheduling (APS), and Manufacturing Execution System (MES). 

Material Requirement Planning synchronizes the flow of materials that are aligned with the production schedule. It focuses on customer retention, cost reduction, and productivity through one view of all demand-driven activities. 

Advanced Planning and Scheduling helps manufacturers map every single resource required to fulfill the order and deliver it on time. It automates the process of converting planning into production orders. It also adjusts schedules in real-time and forecasts the downstream impact in operations.

The Manufacturing Execution System tracks, collects and monitors accurate data about the production cycle. It promotes data collection, product tracking, and management of quality control and resources. 

5. Order Management

Order Management provides a single platform to manage orders from all sales channels, from receipt to delivery. It tracks their status as they are shipped to customers. This ensures on-time delivery of orders and that no orders are lost. 

Order Management provides a single platform for increased efficiency, better customer experience, and management of all sales channels. From tracking orders to managing people and data connected to the orders, the Order Management module delivers visibility and service availability. 

6. Inventory Management

Inventory Management allows manufacturers to gain real-time inventory information and manage all aspects of the business on one platform. This includes finance, planning, logistics, and operations. 

The Inventory Management ERP module provides just-in-time (JIT) inventory, real-time goods receipts, and inventory levels, valuation of inbound and outbound inventory, ABC item analysis, inventory audits, accurate forecasting, direct drop shipment, and more. 

7. Warehouse Management

Warehouse Management software manages high-volume warehouse operations and guides employees throughout the operation, from put away to picking, packing, and shipping. It is a crucial module for manufacturing organizations.

Warehouse Management reduces cycle times and overhead costs while increasing inventory turns. It lets you automatically coordinate and record the movement of inventory. When this module is integrated into an ERP solution, employees can easily locate the right products to ensure timely delivery to customers. 

8. Supply Chain Management 

Supply Chain Management tracks every step in the supply chain process. It ensures the availability of the right inventory, in the right place, and at the right time. This module also manages man, materials, and refunded products or replacement orders. 

9. Customer Relationship Management 

Customer Relationship Management (CRM) helps manufacturers manage the customer lifecycle, from initial contact to sales, production, and post-sale maintenance and support services. You can find information about customers and prospects, their communication history, and purchase history. 

ERP CRM helps you create and manage service and warranty agreements efficiently and provide faster response to service calls. It enables you to automate operations such as generating accounts receivables, sending notifications, filling out purchase orders, and more. 

10. Ecommerce

An Ecommerce module integrated with ERP software provides a feature-rich eCommerce platform for B2B and B2C manufacturers. It ensures a shared database of payment, order, and inventory information. 

The Ecommerce module ensures automation, real-time information, data consistency, and eliminates data redundancy. It saves time and eliminates the possibility of manual data entry errors.   

Choose the right ERP software for your business

Choosing the right ERP software for your business is not a cakewalk. It needs a high degree of dedication, patience, and perseverance to select one ERP system among the many solutions available. ERP software plays a vital role in overcoming business challenges, reducing waste, and ensuring operational efficiency. 

Automation and data centralization are the major advantages of ERP software implementation. For manufacturers, modules such as Supply Chain Management, Human Resource Management, Inventory Management, Order Management, Accounting and Finance, and Procurement are crucial for growth and productivity. 

If you need more suggestions regarding ERP selection and manufacturing ERP modules for your business, feel free to connect with us.

FAQs

What is ERP and how does it work?

Enterprise Resource Planning software is a crucial business management solution that serves as a shared database for financial and operational information across the business.

ERP is made up of multiple modules to support different departmental processes. It helps manage payroll, customer orders, inventory, production capacity, and reporting. ERP provides automation, real-time access to data, and greater efficiency.

What are the basic modules in ERP? 

Basic modules of ERP software are Procurement, Finance and Accounting, Human Capital Management, Manufacturing, Order Management, Supply Chain Management, CRM, Ecommerce, Inventory Management, and Warehouse Management. Each module is designed to meet specific business requirements. ERP modules assure data centralization on one platform to help employees accomplish tasks with ease. 

Do I have to purchase all of the ERP modules?

You do not have to purchase all of the ERP modules, only those that suit your business now. Selecting modules depends on the nature of your business and its challenges. You can choose to use only those modules that make sense for your current needs and add more as you grow. 

How Do ERP Modules Help Businesses?

ERP modules help businesses by unifying data from every department on one centralized platform. They streamline and automate business processes to increase operational efficiency and improve day-to-day activities. ERP modules perform real-time analysis of data for a better insight into expected sales, revenues, and cash flows.