What are the basic components of an ERP

September 21, 2022

Tags: Technologies, IT Staff Augmentation



Companies around the world are moving their processes to the digital plane, and to do so they use an ERP solution.


To learn a little more about what an ERP system is, let's see what the experts at Investopedia have to say “Enterprise resource planning (ERP) is a platform used by companies to manage and integrate the essential parts of their business. Many ERP software applications are critical to businesses because they help them implement resource planning by integrating all the processes needed to run their business with a single system."


This system has several components for the different functions it fulfills within companies and in this blog, we are going to review each one of them.


Basic components of an ERP system


Human Resources


Managing your collaborators in the right way, and always keeping them happy, is essential for every company. A module that every ERP system offers is the administration and management of human resources. It offers the ability to handle tasks such as onboarding, offboarding, timekeeping, and benefits administration.


Payroll management software is also available, allowing users to automate payments, including tax deductions, so workers will always receive their payments on time and without errors. It also automates workflows such as data entry, general ledger balance, and others.






By having a CRM tool at hand, you can store and track the data generated from customers and even potential customers, helping to develop information to improve sales and useful for the marketing department.


It is the best alternative to analyze all customer interactions, anticipate needs, boost sales, and personalize campaigns. They work like a good old phone or an address book, but with a modern twist in managing and collecting all this data.


Today, there are many ways to contact and reach people, with social media growing and becoming more ubiquitous. Now, CRMs are designed to focus on being more private and targeted, collecting all the business information needed to deliver the best customer experience they can imagine.


Business intelligence


In SelectHub they explain “Business intelligence, or BI, collects data and performs analysis to provide actionable information about business processes. As companies rely more on data-driven decisions, standalone BI software becomes indispensable."


One of the benefits of the Business Intelligence component is the personalized reports, they can be in the form of numbers and tables or more visual, in order to detect trends at a glance. Having a complete view of the business aspects will help the company to see which ones affect profitability and customer retention.


Supply chain


Managing the supply chain of a company is not an easy task. A company can handle the entry and exit of thousands of products per day, so multiple errors in calculations can occur. When you decide to install an ERP system, you have to make sure that it has the ability to manage the supply chain or CSM. Your SCM applications should streamline manufacturing and distribution processes to create a more efficient supply chain by collecting real-time data.


Having real-time supply chain data allows you to pinpoint and fix problems as they occur and prevent them from escalating. It also helps the company to create a production plan to be able to meet the daily demand and even exceed it.




Inventory management


On this particular component, SelectHub explained “Inventory monitoring is vital among the components of ERP solutions because it is highly collaborative. It works with the SCM component while dipping into other processes such as warehouse management and sales. The main features of inventory management systems include managing order fulfillment and maintaining the storage functions of a warehouse.


The inventory component is of great benefit to companies that manage distribution centers or manufacturers since it helps to speed up processes.


Financial management


This component is of great help to streamline and automate many of the procedures related to billing. "Invoice automatically based on sales orders, delivery orders, contracts, or time and material," says Odoo ERP on his website. Accounting is one of the most time-consuming tasks in a business, but it doesn't have to be a sacrifice. With this component, companies can do more in less time. Allows you to automatically sync bank statements with your bank; create invoices, manage recurring invoices, and track payments. As if that were not enough, it allows you to manage supplier invoices and shows a balance of the invoices that remain to be paid.


Rootstack has worked with hundreds of clients internationally to offer them an ERP solution tailored to their business needs. Take your processes to the modern era of technology and enjoy its benefits.


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