Enterprise Resource Planning is the practice of consolidating an enterprises planning, manufacturing, logistics, supply chain, sales and marketing efforts into one management system.
To integrate systems across an organization is a tall order. Each department has its own system designed to meet its particular needs (known as legacy systems). ERP combines them together to form a single integrated software program that operates off a single database enabling the sharing of information and enhanced communication.
ERP systems are increasingly being used, at this stage primarily by multinational organizations, to integrate all aspects of the business into one unified database that interfaces across the entire organization. ERP helps the communication between all aspects of a business including human resources, financial accounting, manufacturing, supply chain management, logistics and sales.
ERP systems are a development of the MRP approach that enables an examination of the consequences that changes will bring. The same principle forms the basis of ERP systems but on a wider scale.
ERP (despite the name) is not a planning system but is more about resources and enterprise. It can have a defined purpose (particularly with supply chain management and financial accounting where resources can be better monitored and discrepancies become more apparent), but its main purpose is about gaining competitive advantage for the enterprise as a whole.
