enterprise-resource-planning-erp

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Features of an enterprise resource plan

Enterprise Resource Planning (ERP) is a type of integrated software system that helps a business manage and coordinate its core activities — such as finance, production, supply chain, human resources, and customer relations — all in one place.
- ERP solutions have evolved over the years, and many are now web-based applications that users can access remotely
ERP can help a business plan resources by integrating:
- planning
- the purchasing of inventory
- sales, marketing and finance
- design and production and human resources
It collects information about the activity and state of different production stages, allowing the different functional areas to communicate and share information easily

Feature	Explanation
Integrated data management	All departments share the same database, ensuring accurate and consistent data across the business
Modular design	ERP systems have separate modules (e.g. finance, HR, inventory) that can be added or removed as needed
Real-time processing	Data is updated instantly, helping managers make faster and more informed decisions
Automation of tasks	Routine activities like invoicing or stock reordering are handled automatically, saving time and reducing errors
Customisation and scalability	ERP systems can be tailored to business needs and scaled up as the business grows
Improved communication and collaboration	All departments are connected, improving coordination and reducing misunderstandings or delays

IKEA’s ERP system

IKEA is a multinational furniture and homeware company based in Sweden, known for its flat-pack products and large warehouse-style stores

With hundreds of stores in over 50 countries, managing operations efficiently is crucial
Its ERP system has allowed IKEA to manage its complex, global operations efficiently, reducing costs and improving customer satisfaction

Why IKEA adopted ERP

To improve supply chain visibility across its global operations
To better manage inventory levels and avoid stock shortages or over-ordering
To integrate various departments (finance, logistics, inventory) into one unified system
To support rapid international expansion with consistent systems

The impact of ERP at IKEA

Area	Impact
Inventory management	IKEA gained real-time insight into stock levels across stores and warehouses worldwide This helped reduce waste and improve product availability
Supply chain efficiency	The ERP system helped coordinate deliveries from suppliers to stores more smoothly and cost-effectively
Financial control	Improved accuracy in tracking costs, sales and profitability across its international markets
Customer satisfaction	More reliable stock availability and smoother logistics improved the overall shopping experience, increasing customer satisfaction

Enterprise Resource Planning (ERP) systems improve efficiency by connecting all key business functions, such as finance, operations, and HR, into one integrated system
This allows for real-time data sharing, quicker decision-making and the more effective use of resources

ERP systems monitor inventory levels in real time, across all warehouses and stores
- This prevents overstocking and stock shortages, as stock levels are always accurate
- It helps reduce waste and storage costs by only reordering when necessary

ERP brings together data on purchasing, production and sales to give accurate cost information
- This allows businesses to set realistic and competitive prices based on true costs
- It also helps managers identify where costs are increasing and make changes to protect profit margins

ERP systems track machine use, labour hours, and output across departments or locations
- This ensures that production facilities are neither underused nor overloaded
- It helps businesses plan production more efficiently and make the most of their resources

Because ERP updates data instantly, businesses can react quickly to unexpected changes, such as supplier delays or a sudden rise in demand
- This improves communication across departments and avoids disruption
- It allows for faster and more confident decision-making

ERP systems store information on staff availability, qualifications and current roles
- This makes it easier to move staff to different tasks or locations when needed
- It also improves shift planning during busy or quiet periods

ERP systems provide managers with accurate, real-time reports
- This helps leaders monitor sales, costs, cash flow, and productivity without delay
- It reduces time spent on manual reporting and improves the quality of decision-making

Bespoke ERP systems are expensive to install and maintain and involve short-term upheaval to a business’s operations.
ERP systems do not always eliminate inefficiencies within a business and rarely improve every aspect of production
A company’s reluctance to abandon old working processes limits the effectiveness of ERP systems
ERP systems cannot be successfully implemented during a period of significant business change