ERP Components

11/01/2021 2 By indiafreenotes

ERP more or less you are probably known for what this acronym stands. Enterprise Resource Planning is a reliable support for almost every business nowadays. In the previous article we’ve already discussed what is ERP system about and touched it structure a little bit.

Enterprise Resource Planning system usually has the following characteristics:

  • Common database
  • Reporting and analysis system
  • Some tasks are automated
  • Modular design
  • Integrated system

Reasons to use ERP

  1. Forecasting reduces errors

ERP provides users with opportunity to create accurate forecasts. As the data is always stored in the common database, it is much easier and faster to forecast with realistic estimates.

  1. Team collaboration

The whole company’s information is stored in the common database and divided into different areas and departments. Thus, it is much easier to access the required data and operate it. The work inside and outside department becomes more efficient. Data centralization in this way promotes staff collaboration.

  1. Money saving

ERP system implementation is not simple and cheap process but it helps to save company’s budget. There are two reasons for that:

  • The system work doesn’t require IT staff involvement, managers can easily regulate the system themselves;
  • As the efficiency improved by the system the possibility of errors, delays and additional costs for problems fixing is reduced.

Thus, ERP solution is not money waste but investment in the future.

  1. Productivity boost

Some redundant task is automated. So, users now can focus more on the relevant primary tasks. Thus, staff productivity grows.

  1. Mobility

Some ERP system provide constant access anywhere you are with the internet connection. So, users can work with ERP anytime and anywhere.

  1. Data security

ERP provides opportunity to restrict particular data access. Managers can control information confidentiality.

  1. Easy-to-use reporting system

Create reports of any complexity, save templates, share them without additional IT help. Enterprise Resource Planning really eases working processes.

Core Components of ERP

Human Resource (HR)

What is the base of every company? Of course, it’s staff. Company’s employee is what the company starts from. Exactly this resource makes its best for organization’s operation and development. That is why HR team needs a tool for efficient staff management.

HR ERP module includes employee records and helps to manage such actions like:

  • Salary and payment reports;
  • Attendance tracking;
  • Performance reviews;
  • Promotion;
  • Planning of working and holidays hours and others.

Financial Management

The financial management component within your ERP system stores, monitors and analyses all of your financial data, including accounts payable, accounts receivable, costs, budgets and forecasts. It helps reveal insights into your spending, so you can discover profit trends and times of unusually high spending. You can then put that data to good use by changing whatever processes are causing lower profits or high spend, so you can maximize your profits while reducing costs.

The financial management component can help improve cash flow, lower costs, and increase profitability while maintaining accurate reporting. ERP software with a strong financial feature should ensure companies meet financial reporting and tax requirements with a single accounting, banking and payment system. Keep in mind: it needs to allow for enhancements in financial performance with real-time information on expenses and revenue contribution.

Customer Relationship Management (CRM)

After HR module this one on the second place for its importance as the main aim is, of course, to meet the customer’s needs. CRM component stores all the customer’s data and helps to analyze it in order to perform the above goal. It provides opportunity to track buying history, calls, communication. CRM in this way boosts organization performance, as on the base of the stored info, it is much easier to consider customer’s preferences and provide quality service.

Supply Chain Management

As ERP solutions mainly cater to manufacturing and distribution companies, your ERP system should absolutely be able to monitor demand, supply, manufacturing status, logistics and distribution in record time. The SCM component of an ERP system is one of the most crucial for this reason. You need the best SCM features to be able to optimize your supply chain, and that starts by collecting real-time data. Real-time data allows you to keep tabs on your supply chain, so you can find and fix issues as they happen, rather than waiting until you receive the data a day or more after the fact.

Failing to find information, such as the location of a product’s key components, and promptly share this information with supply partners, can have a significant impact on a company’s supply chain. The SCM component, with the aid of real-time data, can help with demand planning, so you can create an up-to-the-minute accurate production plan that meets demand, but doesn’t exceed it.

Sales and Marketing

These two components can be presented both together and separately. But usually they have a similar function. Sales and marketing module is one of the core ERP components as it is the basis for the company revenue. Thus, it is very important to take care of marketing strategy in order to have sufficient funds for business management.

This module usually includes:

  • Sales order;
  • Customer management;
  • Marketing methods;
  • Quotation management;
  • Sales invoices drafting.

Business Intelligence (BI)

Considering how many businesses today are attempting to create data-driven decision-making processes, BI has quickly become one of the standard ERP components. The BI component of your ERP software collects and analyzes data, providing you with actionable insights related to your business processes. BI in ERP systems can be your organization’s eyes and ears, allowing you to monitor your chosen key performance indicators (KPIs) and make changes when those KPIs aren’t where they should be.


Not every company has manufacturing but in case organization has it, this module is a must. It provides all the necessary information for manufacturing run. Manufacturing ERP module can include:

  • Bill of materials;
  • Records of working orders;
  • Manufacturing methods and others.

This list of core ERP components can be supplemented according to organization’s needs.

But let’s move even further and try to summarize everything up. Follow the next part and overview the top asked questions about ERP Components.