by ERP technical architecture basically defines layout of layers of application deployment between servers and desktops, interfaces and software objects. ERP architecture is no more meant to just provide technical functionality, user interface and platform support but should be able to absorb emerging technologies. It should be expandable and maintainable to meet future business needs such as business process changes, merger and acquisitions, compatibility with future regulations etc.
Design of an integrated enterprise model is a complicated task as it involves mapping of all the functions, information flow, decision process, material flow, and several other aspects, that govern the dynamic process of the enterprise. Several approaches exist to do this. A generic model may comprise two building blocks: hierarchical IDEF model and object oriental model. Some of other models adopt structural modelling or system approach with support from object-oriented approach to analyse and design the software (Ng. et al. 1999). A general understanding of ERP is as follows:
Enterprise Resource Planning (ERP) is a game plan for planning and monitoring all of the resources of a manufacturing company, involving the functions of manufacturing, finance marketing & engineering. ERP is recognized as being an effectual management system that contains an outstanding planning and scheduling capability offering significant achievement in productivity, dramatic enhance in customer service, much higher inventory turns, and larger reduction in material costs. These technology innovations involved the move to relational database management systems (RDBMS), the utilization of a graphical user interface (GUI), open systems and a client/server architecture.
The generic design of ERP involves development of a tree structure, depicting different functional nodes of enterprise. A simplified generic model of ERP system is depicted in Figure. All of the generic representations of this figure might further be exploded to develop the exploded generic representation.
The successful implementation of an ERP system will have many advantages, as indicated below:
Business integration and Improved Data Accuracy: ERP system is composed of various modules/ sub modules where a module represents a particular business component. If data is entered in one module such as receiving, it automatically updates other related modules such as accounts payable and inventory. This updating occurs at real time i.e. at the time a transaction occurs. Since, data needs to be entered only once at the origin of transaction, the need of multiple entries of the same data is eliminated. Likelihood of duplicate/ erroneous data is, therefore, minimized. The centralized structure of the data base also enable better administration and security provisions, which minimizes loss of sensitive data.
Real-time information with Decision Support Tools: The various decision support tools like planning engines and simulations functions, form integral part of an ERP system which helps in proper utilization of resources like materials, human resources and tools. Without an ERP system, your team is flying blind. They make decisions based on guesswork and rules of thumb because they don’t have the data they need. Sometimes they are the right decisions, but more often, they are sub-optimum decisions that can cost you money and customer goodwill. Constrained based planning help in drawing appropriate production schedules, thereby improving operation of plant and equipment. As a part of MIS, an ERP system, contains many inbuilt standard reports and also a report writer which produce ad hoc reports, as and when needed.
Improved visibility, Boost Efficiency and Productivity: In addition to provision of improved planning, ERP system provides a tremendous boost to the efficiency of day to day and routine transactions such as order fulfilment, on time shipment, vendor performance, quality management, invoice reconciliation, sales realization, and cash management. Cycle time is reduced for sales to cash and procurement to pay sequences. If customers want to know when their order will ship or if you need to know whether you have enough of a critical component to accept a rush order, an ERP system gives you instant visibility into your operations and your supply chain.
Establishment of Standardized Procedures: ERP system is based on processes of international best practices, which are adopted by the organizations during implementation. The uniformity of record data that an ERP system instance will help ensure that your records are more accurate, which will increase process accuracy across the board.
Flexibility and technology: Due to global environment, where production units, distribution centres and corporate offices reside in different countries, organizations need multi company, multi-currency, multi-language and multi accounting modes, in an integrated manner. These provisions are available in the Odoo ERP systems.
Faster periods end close and cost control: ERP systems automatically process transactions and generate audit trails and financial reports that can simplify period-end closings. They flag anomalies so you can investigate quickly, and they simplify repetitive journal entries and other activities that make closing so complex and time consuming. Faster closes mean you know the health of your business sooner. ERP systems calculate and collect costs so you always have an accurate picture of your product cost and margins.
Make Customer Happy with Balance of Supply and Demand: Customers like accurate delivery dates, and ERP can help you provide them with improved inventory and shop floor visibility. In addition, the increased visibility and accuracy will help you improve your delivery in full on time, MRP, a component of ERP systems, will help you balance supply and demand so you can reduce inventory while keeping customers happy.
Reduced lead times and increased operational efficiency: Better scheduling and accurate records ensure that your schedules focus on priorities, leading to shorter lead times. Since you won’t have as many orders waiting for tooling or parts, your throughput will increase. By helping you to plan production more effectively, your operational efficiency will improve as you reduce set-ups and tear downs or unnecessary downtime.
ERP Modules: Traditional Types
An ERP system is a modular application that contains various tools for different business processes. Let’s see the most important ERP system modules:
- Supply chain management (SCM). It helps employees to control all the processes related to chain supply. For example, there is always a need to plan the amount of material and calculate the commission;
- Product lifecycle management (PLM). This module may be helpful for companies that have their own production. Starting with the control of the project’s design and its quality, ending with the costs and spends, it optimizes the consumption of the components and materials;
- Supplier relationship management (SRM). The unfortunate reality is that suppliers can sometimes be unscrupulous or forgetful. The SRM allows scheduling business meetings, calculating the budget, and billing the suppliers;
- Customer relationship management (CRM). This module is one of the most important functions, since it establishes the connection between your marketing specialists and the customers;
- Human resources. If you have a medium-size company, a huge enterprise, or one that you plan to grow, this module will help your HR department. In such companies, it is difficult to keep every staff member in mind. The module contains a database with all the contact and salary information, employee’s attendance and engagement;
- Finance module. A machine is much more accurate than a person, which makes it the best tool for assets management, including any types of arrears. It also gathers all the financial data from the other modules and departments, analyses the information, and creates reports.
As you can see, the ERP system is a vital tool for your company’s growth. It processes many operations such as supply, delivery, finance, and much more. You may find the platform helpful at each step of the product’s lifecycle, from its production to its sale.
Now let’s take a closer look at ERP architectures.
Types of ERP Architecture
The two main ERP software architecture categories are the monolithic system and the postmodern system. It is already clear from the name which of the types is the newer one. But newer does not necessarily mean better. What are the differences between the systems?
Monolithic architecture of ERP system
- The monolithic type of ERP systems has a single technology stack and supplier design;
- To improve the system, you will have to update it;
- It is not flexible and cannot be scaled with business growth.
Postmodern architecture of ERP system
- The system is oriented on customers since it is convenient to use;
- The set of products also includes social media and a cloud;
- The postmodern type is flexible and simplified. It does not have tables or other complex things that were used for scaling in previous ERP products.
The postmodern option is easier to use and is much more customer-oriented.
