Spreadsheets are no longer used to manage data for developing businesses. Enterprise Resource Planning (ERP) software in modern businesses collects and arranges operational and financial data in a shared database to boost efficiency as they grow. ERP assists users in navigating complex processes by giving accurate, real-time information and automating business operations.
Businesses realize the value of operational efficiency and process clarity that ERP software offers, and the market for ERP software “remains in a phase of rapid expansion, with total market size expected to exceed $49.5 billion by 2024,” according to a report by Market Research Engine.
Numerous modules make up ERP systems; each module is created to meet a particular business need. Each module pushes data into the main database after pulling it from particular business areas. Decision-makers can use this to compare and assess the state of various business sectors.
Understanding ERP modules is crucial if you have decided to invest in ERP software to make the best choice. Let’s discuss some of the modules below.
How Do ERP Modules Benefit Companies?
ERP’s modular structure, which enables it to adapt to changing business needs, is a major factor in its pervasiveness. As the organization develops, it can add ERP modules to handle new requirements or difficulties. Only the modules pertinent to an organization’s business model, operations, and main challenges are available for purchase.
The modular ERP software allows adding this functionality while maintaining the same framework. When requirements change, it does not require implementing a new ERP system, which is time-consuming, as long as the business selects an established ERP provider with a large selection of modules.
ERP Modules and Their Features
The most crucial ERP module is finance and accounting because it allows businesses to comprehend their future financial prospects and the current financial situation. This module’s main features include managing the general ledger and keeping track of accounts payable (AP) and accounts receivable (AR). Additionally, it produces and stores important financial records like tax returns, payment receipts, and balance sheets.
The accounting department can timely close the books and adhere to current revenue recognition standards by using the financial management module to automate billing, vendor payments, cash management, and account reconciliation tasks. Additionally, it contains the information that financial planning and analysis employees need to run scenario plans and prepare important reports like profit and loss (P&L) statements and board reports.
Manufacturing continues to be a key component of ERP. The earliest version of ERP, material requirements planning (MRP) systems, was designed for manufacturers. Nowadays, manufacturing execution or production management systems are commonly found in ERP systems (MES). The manufacturing module aids manufacturers in scheduling production and ensuring they have the capacity and raw materials required for planned production runs. It can be used to update the status of goods-in-progress during the manufacturing process and assist businesses in comparing actual output to anticipated output. Additionally, it offers a real-time view of the factory floor, capturing data on both work-in-progress and finished goods. It can compute the average time to produce an item to plan adequate production and then compare the supply with the anticipated demand.
- Customer Relationship Management (CRM)
All customer and prospect data is kept in the customer relationship management (CRM) module. This includes the person’s purchase history as well as the company’s history of communications with them (such as the time and date of calls and emails). Because staff members can quickly access all the data they require when dealing with a customer, a CRM enhances customer service.
CRM is frequently used by businesses to manage sales leads and opportunities. It can keep track of interactions with prospects and make recommendations about which customers to target for particular promotions or cross-selling opportunities. Advanced contact managers, reporting tools, and customer segmentation may all be supported by more powerful CRM modules.
- Manage Human Resources
An HRM (human resource management) or human capital management (HCM) module mostly includes all the components of a workforce management application and a few extras.
HRM could be thought of as CRM for workers. This well-liked module keeps thorough records of every employee and supports files like offer letters, job descriptions, and performance reviews. Along with tracking hours worked, it also records paid time off (PTO), sick days, and information about benefits.
The HRM module eliminates a lot of duplicates or incorrect data that many organizations store in various spreadsheets because it stores a wealth of information on every employee across the organization.
5. Inventory Control
The inventory management module facilitates inventory control by monitoring item quantities and locations down to individual SKUs.
Integrating the procurement tool, this module provides a complete picture of current and incoming inventory. This piece of software aids businesses in managing inventory costs, ensuring they have enough stock without investing excessive amounts of money in inventory.
An inventory management tool can compare sales trends with product availability to help businesses make informed decisions that increase margins and accelerate inventory turnover.
Stockouts and delays can be avoided, which improves customer service.
Companies can use the inventory management application to manage sales orders, purchase orders, and shipping even if they do not have other supply chain management modules. An adaptation of this system that can monitor inventory at multiple locations will be necessary for larger organizations.
Leading commerce applications to include user-friendly tools that make it simple for staff members to add new items, update product content (descriptions, titles, specifications, images, etc.), and modify the website’s appearance. Businesses that want to sell online can use an e-commerce module provided by some ERP vendors. This module enables companies to quickly launch an eCommerce website for either business-to-business (B2B) or business-to-consumer (B2C) purposes.
The e-commerce module feeds all payment, order, and inventory data into the shared database when integrated with other ERP applications. This guarantees that all transactions are recorded in the ledger, out-of-stock goods are taken down from the website, and orders are shipped promptly.
Selecting the Best ERP Modules for Your Company
Most organizations use the few modules required to run their business operations. However, the ERP modules a company should invest in will vary depending on the business model, industry, current challenges, and other factors. Every business requires a finance and accounting module to run, keep track of its finances, and guarantee that its bills are paid. Running a business is only possible with software that provides financial data and carries out fundamental accounting tasks.
Almost every business, regardless of industry or whether it is product- or services-based, depends on some customer. CRM is another module that would be advantageous to most businesses even though it is less crucial than finance and accounting. Similarly, most businesses with fewer employees will find the workforce management or HRM module a worthwhile investment. Employers require a central location to manage their employees’ information and career development, and employees must be paid on time.