Every business is unique. But there are some universal challenges that plague all organizations like yours. You’re juggling growing customer demands, stringent regulatory requirements, rising operating costs and supply chain disruptions, while trying to keep production at pace, your staff happy and the bottom line healthy. That’s a tall order.

In a world of just-in-time delivery and agile manufacturing, implementing the right technology can help you dot every "I", cross every "T" and propel your business to the next level of success.

But what exactly is the right technology? There are countless different types of software on the market for manufacturers and, in time, you may require many of these solutions as you navigate your digital transformation, but first you need a foundation. A linchpin that anchors your entire strategy and aligns the various departments across your organization. That’s where enterprise resource planning (ERP) software comes in.

Whether you’ve heard the term before, but aren’t sure what it means, or know the definition, but need more real-world context, don’t worry. We’ll unpack everything you need to know in this introduction to ERP. And, at the end, we’ll provide all the necessary links for you to continue exploring.

ERP Definition
ERP stands for "enterprise resource planning" and refers to a type of software that integrates and centralizes an organizations resources, data and operations across many departments—eliminating siloed work environments.

ERP software standardizes and streamlines all business processes including finance, human resources, quality, procurement, manufacturing, inventory, sales and reporting. With a shared common database, real-time data visibility provides a single source of information about your business’s performance available at your fingertips—for all company stakeholders—day or night in one software system.

Need to know how many sales orders your Berlin office received last week? Or, financials for your next audit? With an ERP, you’ll have detailed, up-to-the-minute answers to these questions in a few clicks improving productivity, agility and performance.

How Do ERP Systems Work?
Now that we've covered the broad definition of an ERP system, we can get into the nitty gritty and address how an ERP would work on a day-to-day basis for your business.

Data Standardization and Visibility
Departments across your business all have their own ways of storing important data like accounting documents, batch notes or sales orders. Maybe some teams are still working manually in paper or spreadsheets while others have basic systems. This siloed and disjointed approach means staff may be wasting time searching for missing data, duplicating work or analyzing why figures are different across departments—all of which hinders efficiency and collaboration. An ERP system helps change all of that.

ERP software was developed as a complete business management system that integrates your core business functions and unifies your teams. So, instead of squirreling away data on separate systems, your company’s various departments—including finance, inventory management, accounting and procurement—log all of their data into a centralized system using standardized data fields and units. This means other authorized business teams that require visibility of this data have access to it in real time and comprehensive reporting and analytics is immediately on hand for managers and executives.

For example, the production department of a manufacturer needs to ensure product formulas are exactly right every time. But the production department isn’t responsible for ordering all of the raw materials needed to turn a sales order into a finished product. How can a factory manager know for sure that the procurement department has bought enough raw materials to fulfill demand?

With an ERP system, that manager can use their mobile device to see exactly how much material they have on hand, allowing procurement to instantly know whether they’ve ordered enough to satisfy production’s needs.

By combining all sources of information into one convenient system, an ERP creates a single source of truth—a central repository of your business’s operations. Every department takes its marching orders from the ERP’s dataset, which cuts down on miscommunication or duplication.

Process Streamlining and Automation
As we’ve outlined above, one of the biggest benefits of ERP software is its ability to house all of your business data in one single place, but it should not be viewed simply as an idle repository. The best ERP software also actively streamlines workflows, optimizes processes and even automates key tasks. Whether it’s financial reconciliation, production scheduling, picking and packing in the warehouse or order management, an ERP solution helps you take care of many business functions. This improves productivity, frees up staff for higher value tasks and reduces the risk of errors—ultimately