/Insights/What are the main ERP system components?

WhatarethemainERPsystemcomponents?

Sep 22, 2022

In a recent survey, 95% of organizations that implemented ERP technology reported significant improvements to internal processes—with the key benefits being centralized data, increased collaboration, and streamlined workflows.

Modern ERP systems connect various business applications together, so that information can flow quickly and securely between each source—with little to no manual work necessary. For instance, when a customer purchases a product on an online store, multiple pieces of data—including that customer’s shipping address and payment credentials, as well as the product’s SKU number and price—are sent to multiple systems, such as the business’ CRM and eCommerce platform.

Rather than a human employee having to manually collect the data from one application and enter it into another, an ERP system can send the information wherever it needs to go in a matter of seconds, resulting in greater efficiency for accounting, order fulfillment, inventory management, and other key business components.

ERP systems also help establish a single source of truth for all of an organization’s data, from website traffic metrics, to customer contact details, to supply chain figures. With a centralized location for data from dozens, sometimes hundreds of disparate sources, businesses can achieve a more holistic view of their internal operations and customer experience—and ultimately make more informed decisions moving forward.

As your company grows, bringing on more customers, employees, products, and technologies, data synchronization across all business functions becomes increasingly important. And without a modern ERP system, you’ll likely develop cumbersome workflows, excessive operational costs, inaccurate data, and other scalability issues that will prevent your business from reaching its full potential.

To see the full value of ERP, it helps to understand the most common business applications involved, and how data is managed and communicated among them. Let’s take a look at the five main components of a modern ERP system.

Accounting and finance

Powered by artificial intelligence (AI) and machine learning (ML), this ERP module can automate mundane bookkeeping tasks, generates reports, and provides a bird’s eye view of your company’s finances—resulting in smarter planning, budgeting, and forecasting. The key features of a financial ERP application include:

Profit tracking

Accounts payable and receivable

Risk management

Tax audit and reporting

Multi-currency management

With cloud-based ERP software like Quickbooks and Zoho, you can access your business’ financial data from anywhere with an internet connection. By sending and receiving data from your eCommerce platform and other integrations, these platforms make it easy to effectively track and execute invoices, ledgers, and other financial documents—ensuring that payments to third-party vendors get processed automatically, notifications get sent to clients when payments are due, and so on.

Ecommerce

Some ERP solutions, like Acumatica, provide native eCommerce solutions, while others, like Netsuite, offer pre-built integrations—managed through an “out-of-the-box” API—which allows you to connect your ERP to eCommerce platforms like Shopify and BigCommerce.

Your ERP’s eCommerce module will provide access to valuable user data from online storefronts, whether it be your brand’s website, or an online marketplace like Amazon. It can also generate intuitive reports around eCommerce conversions, sales, returns, cart abandonment, inventory, and so on.

ERP-eCommerce integrations play a crucial role in the customer experience, especially when it comes to order fulfillment. When a customer purchases a product on your business’ site, that transaction's data is sent to the ERP, which sends notifications and event triggers to all systems involved in fulfilling the order—namely manufacturing, shipping, and inventory. A modern ERP system will also trigger real-time updates—usually via email or SMS—to customers at each stage of this process, from when their order is confirmed, to when the item is being packaged, to when it gets delivered.

Customer relationship management (CRM)

Integrating ERP and CRM leads to a better understanding of your business’ past, present, and future customers. General customer data, such as age, gender, and occupation, as well as more granular information, can be automatically aggregated in a centralized location, giving you a clear picture of who your customers are, where they’re at in the sales process, what their lifetime value is, and so on.

This enables you and your team to develop smarter, data-driven sales and marketing initiatives—without requiring heavy data entry and other time-consuming, error-prone tasks. Also, with access to real-time CRM data, you can move through the sales process faster and ultimately close more deals.

Manufacturing and logistics

An ERP manufacturing and logistics module will streamline processes within inventory, shipping, warehouse, and supply chain management. All of the data surrounding your business’ products—such as material costs, size, weight, color, and so on—can be managed and updated in real time within your ERP system. This helps ensure that you avoid overstocking and always have enough inventory to meet demand.

By automatically collecting data from IoT-enabled solutions, your ERP can show the progress of shipped items—from when they leave the warehouse, to when they’re in transit, to when they arrive on the customer’s doorstep. This means—at any given time—your team can check the status of an order, make updates to that order, and put in special requests. Also, with a more transparent view of your business’ manufacturing and logistics, you can better identify opportunities to streamline workflows and cut costs over time.

Human resources (HR)

Connecting your ERP to your human resources management system (HRMS) will make life much easier for those in the HR department. Through automation, you can eliminate repetitive, time-consuming data-entry tasks, such as recording personal employee information and adjusting payroll numbers. In addition, an ERP HR module can automate the following tasks:

Sending payments to employees

Scheduling performance reviews

Generating employee performance reports

Tracking individual employee time and attendance

Managing recruitment and onboarding documentation for new hires

By collecting more data around the activity of new and existing employees, you can make wiser decisions when it comes to updating company policies, giving out raises, choosing new benefits packages, and so on.

Get started with cutting-edge ERP integrations

A modern ERP system will help drive efficiency and scalability for your growing business. By automating workloads and the flow of data between separate components, whether it be your CRM, inventory management, or eCommerce platform, you and your team can eliminate manual errors, reduce operational costs, and put more time and resources toward bigger-picture objectives. You can also learn more about your customers through data analytics, and therefore deliver superior, personalized customer experiences.

The process of implementing ERP software into your business’ existing technologies and workflows can be daunting, as it requires significant time and technical expertise. By partnering with Codal, you’ll have an award-winning digital transformation team —with over ten years of experience optimizing ERP systems for organizations across all industries—guiding you through the process.

We’ll evaluate your business’ current technological infrastructure, identify the best ERP solutions, implement new third-party applications, develop essential middleware, and provide ongoing maintenance to ensure that everything runs as smoothly and efficiently as possible.