Pros and Cons of Enterprise Resource Planning

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ERP softwareEnterprise resource planning soft wares are designed mainly to eliminate the complexity involved in managing the resources pertaining to the company. Though the main motive of ERP software is to increase the productivity it also has some disadvantages in it. Let’s discuss some of the advantages and disadvantages involved in the ERP systems.

Advantages:
A company which doesn’t use ERP really finds it difficult to have proper communication with each other business units. Even though many software applications are available to share the resources efficiently, ERP overtakes every other software with the fact that ERP are centralized service for any kind of information available related to the company.

Some of the major advantages in using ERP are discussed below:
ERP in Production

  1. ERP systems have many software components included within it which helps in forecasting data. Forecasting can’t be done more efficiently with other software. Since ERP includes many software which tracks past history of information, forecasting is done in simple way. This also helps in efficiently managing the inventory and thus the productivity of the company increases automatically.
  2. Different business units should have proper communication. Proper communication ensures good productivity and efficiency. ERP software acts as a medium through which proper communication is made between the business units.
  3. Using ERP helps in making design engineering better. It helps in shaping the product better.
  4. Tracking the order and fulfilling the customer needs is also a main task of the company. ERP provides this service with simple user interfaces. Orders are tracked efficiently and delivery is also monitored for the fulfillment of the customer.
  5. ERP tracks every financial data starting from the invoice to the cash receipts. So, using ERP software makes it easier to track the revenue cycle.
  6. The inter dependencies between the different materials in the process of making the product can be best managed by ERP.
  7. Matching of costs of the product, inventory and order purchasing can be easily managed by ERP.

Above mentioned advantages are generic advantages of ERP systems. Benefits of system centralized ERP are discussed below. System centralized ERP have data in one place. Some of the advantages of this kind of ERP are:

  1. The problem of synchronizing complex systems like human resource, finance, sales and marketing are handled and eliminated by these ERP systems.
  2. Cross functional services which need communication between different business units are permitted by this system.
  3. A top down view of the organization can be easily figured out.
  4. A considerable amount of risk in losing important data is eliminated.
  5. Production time and delivery time can be reduced to a high level.

Disadvantages:
One of the common problems which ERP implemented companies now face are the inadequate funding required in providing training for using the ERP. Other than these, some of its disadvantages are discussed here:

  1. The customizations options available in the ERP software are limited.
  2. ERP systems are expensive.
  3. After implementation, migration of the system might become expensive.
  4. Sensitive information regarding a company can’t be shared efficiently with ERP.

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