Benefits and Advantages of ERP & Reasons for Growth

Coursera 7-Day Trail offer

Benefits of ERP

ERP is a class of business organization programming routinely a suite of facilitated applications that affiliation can use to assemble, store, direct and interpret data from various business works out. ERP shows the core business processes as an integrated view with a common database managed by a computer program called Database Management System (DBMS).

The main objective of ERP is to maintain the stream of real-time data to help in decision making. ERP helps and supports the analysts to manage and monitor Inventory, supply chain, Human Resources, finance, procurement, and project and product life cycle.

These are Benefits of ERP ( Enterprise Resource Planning):

  1. Business Integration
  2. Flexibility
  3. Better Analysis and Planning Capabilities
  4. Use of Latest Technology
  5. Reduced Inventory and Inventory Carrying Cost
  6. Reduced Manpower Cost
  7. Reduced Material Costs
  8. Improves Sales and Customer Service
  9. Efficient Financial Management
Benefits of ERP
Benefits of ERP

Business Integration

  • The first and the main fundamental favored stance lie in the headway of blend. The reason ERP bundles are called facilitated is the modified data up degree between related business sections since standard association information systems were away for the headway of free business works in the claim to fame units.

    All were weak with respect to the correspondence and blend of information that tranced the unmistakable business deals with record of generous associations particularly, the arranging of structure and orders contrasts from each thing and division/limits and now and again they are confined.

  • Hence, it has turned into an impediment in the move to the new items and business grouping. On account of ERP packages the information of related business capacities is likewise naturally refreshed at the time an exchange happens.

    Thus, one can get a handle on business points of interest progressively, and completely different sorts of administration choices in an auspicious way in light of that data.


  • The second favored stance of ERP bundles is their adaptability. Diverse multi-valuable circumstances, for example, vernacular, bookkeeping gages, cash and so on are campaigned in one system and limits that thoroughly managed various territories that navigate an association are packaged and can be executed thus.

  • To adjust to association globalization and structure alliance, this adaptability is fundamental, and one could express that it has genuine good conditions, not only for growth and support but instead in like manner to the extent organization.

Better Analysis and Planning Capabilities

  • The most key great position is the higher advantage of orchestrating sort limits. By engaging the extensive and united organization of related business and its data.

  • Systems and incitement structures. Also, since it winds up doubtlessly possible to finish adaptability and dynamically the slant and examination of data from a combination of estimations, one can give pioneers the information they require, henceforth engaging them to settle on better and instructed decisions.

Use of Latest Technology

  • The fourth favored point of view is the utilization of the latest upgrades in data innovation IT. The ERP dealers hurried to comprehend that remembering the true objective to create and to deal with that advancement: they have to get a handle on the latest changes in the field of data innovation.

    So they promptly got their structures to take purposes of enthusiasm of the latest developments like open systems, client-server innovation, web/intranet, PC helped to secure and collaborations support, electronic business et cetera.

    It is this smart acclimation to the latest changes in data innovation that reveals the versatile acclimation to upgrades to future business circumstances possible. It is this elasticity that makes the joining of the latest improvement possible in the midst of the system customization, upkeep and expansion stages.

Reduced Inventory and Inventory Carrying Cost

  • The get-together thought of various ERP customers makes the issue of process and material costs speculation stores imperative. The essential factor behind these assets is that utilization of the ERP system empowers customers to get data on cost, livelihoods and edges, which empowers it to better, manage its general material cost structure.

    This ability to direct expenses is best found available for later supports that affiliations can get in their stock structures. Customers can play out a more aggregate stock orchestrating and status checking with the ERP system.

  • These checks and plans reveal existing surpluses or inadequacies in arrangements. Improved masterminding and arranging sharpens usually incite stock abatements to the demand of 20 for every penny or better. This gives not only a one time diminish in resources (cost of the material stacked), yet also gives ceaseless hold assets of the stock passing on costs.

    The cost of passing on stock consolidates excitement and additionally the costs of warehousing, taking care of, obsolence, protection, duties, harm and shrinkage.

Reduced Manpower Cost

  • • Enhanced generation strategies come about into fever lacks and obstructions and to less enhance and extra time. Sparing of work stores from a gainful ERP structure is a 10 for every penny diminish in quick and indirect work costs. By restricting surge occupations and parts lacks, less time is required for encouraging, material taking care of, extra setups, interferences and following parts bundles odd vocations that have been set aside.

  • Assembling administrators have a better detectable quality of required work and can adjust breaking point or loads to meet timetables. Heads have greater open door for managing, organizing and getting ready people. The creation of staff has a greater chance to develop better systems and improve quality.

Reduced Material Costs

  • Negotiations for prices with vendors can be effective if procurement practices are improved, regularly bringing about cost diminishments of 5 for every penny or better. Legitimate calendars allow acquiring individuals to concentrate on merchant transactions and quality upgrades instead of investing their energy in deficiencies and getting material at premium costs.

    ERP systems give exchange information, for instance, expected material requirements by thing social occasion and trader execution bits of knowledge. Giving suppliers better deceivability of future requirements enables them to fulfill bring down material costs.

Improves Sales and Customer Service

Upgraded management of offers and age prompts improved consumer advantage and extended arrangements. Overhauls in directing customer contacts, creation and gathering transport ensure, and shorter demand to deliver lead times, incite higher buyer steadfastness, goodwill and rehash orders. Sales representatives can concentrate on offering as opposed to confirming or apologizing for late conveyances.

In custom item condition, designs can be immediately recognized and costs, frequently by deals work force or even the client as opposed to the specialized staff.

Efficient Financial Management

  • Improves accumulation techniques can decrease the number of days of extraordinary receivables, in this manner giving extra accessible money. Basic these upgrades are quick, precise receipt creation straightforwardly from shipment exchanges, convenient client articulations and complete on reprobate records.

    Credit checking amid request passage and enhanced treatment of client asks additionally diminishes the number of issue records. Enhanced credit administration and receivable practices commonly lessen the times of exceptional receivables by 18 for each penny or better.

    Exchange credit can likewise be boosted by exploiting by provider rebates and money arranging and paying just those solicitations with coordinating beneficiaries. This can prompt lower prerequisites for money close by.

  • The advantages from ERP come in three distinct structures i.e. for the time being, medium-term and long haul. At the point when at first actualized, in a time of the association running live with ERP, it helps in streamlining the operational zones, for example, buy, generation, stock control, back and accounts, support, quality control, deals and dispersion, and so forth.

    This advantage is in the type of “robotizing” the exchanges which guarantee the exactness, unwavering quality, accessibility and consistency of information.

Advantages of ERP

From the discussion so far, it can be said that an ERP system has made a tremendous contribution to the success of businesses. The following are the advantages of ERP in an organisation:

Reduced lead time

Lead time refers to the time taken between the starting and end of a process. For example, when you place a food order at your nearest restaurant and receive the order in 20 minutes, those 20 minutes are considered to be lead time. An ERP system brings down lead time by providing accurate information related to order placement, delivery status, etc.

Reduced overall costs

As discussed earlier, an ERP system prevents the duplication of work and reduces inventory levels, which ultimately lowers the overall operating costs of an organisation.

Increased transparency

Information stored in an ERP system can be easily accessed by different departments of an organisation. For example, the production department of an organisation can access marketing-related information, such demand for products in the market. Such information helps the production department to decide the level of production. This facilitates visibility in an organisation and informed decision making.

Reduced cycle time

Cycle time refers to the time taken to complete a particular task from start to finish. Sometimes, lead time is confused with cycle time, but both the terms are different. Lead time is important from the perspective of customers as they want the delivery of their product on time. On the other hand, cycle time is important from the viewpoint of an organisation as it needs to complete production on time. However, lead time is dependent on cycle time. This is because a product can be delivered as soon as it is manufactured. Thus, reduced cycle time may lead to reduced lead time.

An ERP system helps in maintaining a free flow of information related to the procurement of raw materials, production activities, supply chain, etc. Such information provides a fair idea to an organisation about lead time and cycle time.

Improved supplier performance

A timely supply of raw materials plays a significant role in the success of an organisation in terms of on-time production and fast delivery of products. An ERP system is able to provide information on raw material requirements, criteria for supplier selection and receipt and verification.

Reasons for Growth of ERP

An ERP system not only helps an organisation in managing its resources well but also increases its productivity. As per an ERP history report, the growth rate of ERP has been recorded 30% every year since 1970.

As per a report presented by Forrester Research, the overall ERP market is expected to grow $50.3 billion by 2015. The main reason for such growth is that ERP systems have provided organisations with accurate and real-time information for business decision-making.

Apart from this, the following are some other reasons for the growth of ERP:


This is one of the major reasons for the growth of ERP. Earlier, organisations were restricted to their national boundaries, and the size of businesses was comparatively small. However, with the advent of globalisation, organisations are attracted to operate across borders.

Managing and operating businesses at multiple locations with uniformity in processes is not possible without real-time information on market trends, changes in business environment, etc. An ERP system provides integrated information that can be accessed from any location across the world.

Advancement in technology

As discussed earlier, organisations were using traditional methods for managing their resources. However, advancement in technology led to the evolution of many automated systems like ERP, which could integrate the different business processes of organisations.

Increased focus on high efficiency

With the advent of globalisation and increased competition, it became difficult for organisations to remain efficient and sustain their businesses. To overcome such challenges, many organisations have implemented ERP systems, which help in reducing lead times, cycle times, inventory levels, etc. This in turn improves organisations’ efficiency and decision-making.

Enterprise Resource Planning (ERP) Tutorials

(Click on Topic to Read)

Leave a Reply