What is ERP software? Benefits and effective ways to apply ERP

In the digital age, managing and optimizing business processes is more important than ever. ERP software is a comprehensive solution to help businesses achieve this. So what is ERP? What benefits does this system bring to businesses? Let's explore with 1C Vietnam through the article below.

1. What is ERP software?

ERP stands for Enterprise Resource Planning, which is an integrated software system for enterprise resource planning. ERP is composed of Enterprise - Resource - Planning, the meaning of each component is as follows:

• Enterprise: Enterprises use software systems to manage resources according to the best processes.
• Resource: Resources in the business, including existing assets or values created daily.
• Planning: The process of planning, managing implementation and interacting between departments to solve daily tasks.

2. What benefits does ERP software bring?

ERP software appears as a comprehensive solution, helping businesses integrate and manage all core activities from finance, production to supply chain and services. Let's explore the roles of ERP in businesses below.

2.1 Centralize and synchronize data

One of the most useful functions of ERP is to centralize and synchronize business data. Instead of maintaining many separate databases, ERP allows centralized data management, making it easy for employees to access and prepare timely and accurate reports. This overcomes delays in synthesizing data, especially important for large businesses with complex information systems. Furthermore, centralized data management facilitates multidimensional data analysis, supporting administrators in making more accurate and effective decisions.

2.2 Limit errors during data entry

Business processes often involve many departments, leading to a relatively high likelihood of data errors. For example, in the sales process, employee A creates an order with 20 boxes and the customer name is "Nguyen Van A". However, when the order is transferred to the warehouse department, errors may occur when entering data into 28 boxes. Similarly, when the order arrives at the accounting department, the customer's name may be entered incorrectly as "Tran Van A".

These errors are common in manual processes and have a major impact on business operations. When applying ERP, the system will synchronize data between departments, helping businesses limit information errors, save data entry time, and ensure a consistent and effective working process.

2.3 Management of accounting and financial information

The finance - accounting department in the enterprise is responsible for synthesizing and entering data from other departments and divisions. With a huge data system, manual operations can lead to errors.

ERP applications will help simplify this task. With an ERP system, numbers only need to be entered once and the system will automatically update when there are data changes from other departments, ensuring accuracy and consistency. Businesses can synthesize data daily without waiting until the end of the period, saving time and resources.

2.4 Improve working efficiency with ERP

In large businesses, work processes are often complex and multi-step, and information frequently moves through many departments. To process daily data effectively, it is necessary to ensure a coherent, timely and accurate information path, so businesses should use a professional support system. ERP applications help transfer records quickly and automatically, and synchronize data across the system, helping to increase productivity and efficiency for businesses.

2.5 Human resource management and operations in the enterprise

Companies applying ERP have the ability to internally control through the audit track feature, helping to quickly identify the source of data and the person performing the task. With this support, monitoring work stages becomes simpler, allowing administrators to monitor work productivity, number of sales, and daily revenue remotely. In addition, automatic data analysis helps provide information quickly to provide timely improvement solutions.

2.6 Build a business information network

The ERP system provides communication tools between departments and employees similar to a business's internal social network. Features such as chat, calling, and daily status updates ensure information is circulated promptly and increase cohesion between departments.

3. Simple ERP system diagram

The ERP system is made up of functional modules, designed to suit specific business areas such as manufacturing ERP, finance and accounting ERP system, manufacturing or ERP sales process. However, ERP systems often need to meet the following basic model:

4. The most basic ERP functions

The ERP system consists of many different modules (subsystems), each module has its own tasks and functions suitable for specific business activities. These modules connect to the core ERP system to share accurate data between departments, creating unity within the business. Popular modules include:

• Financial management: Automate important financial tasks such as bookkeeping, tracking accounts payable and receivable, generating financial reports, minimizing financial risk.
• Supply chain management: Automate the purchasing process, from request for quote to contract approval, helping to reduce errors and improve negotiations with suppliers.
• Sales management: Track customer information and purchase history, manage orders, payments and manage sales performance.
• Production management: Production planning, quality management and ensuring production in accordance with market demand.
• Service: Manage repairs, spare parts, service contracts and analyze customer needs to solve technical work.
• R&D and engineering: Provides tools for new product design, development, and product lifecycle management.
• Enterprise asset management: Plan operations and manage the operating environment to keep machines running at peak performance.

5. Classification of current ERP software

ERP software can be classified according to origin and characteristics, the most popular of which are foreign ERP software and domestic ERP software. Specifically:

• Foreign ERP software: Provided by foreign companies such as SAP, Oracle, with the advantage of applying advanced technology and highly standardized processes. Besides, when applying ERP abroad, businesses will receive support from leading experts with many years of experience in the field. However, this comes with high costs, poor flexibility in customization, as well as low compatibility with Vietnamese accounting standards.
• Domestic ERP software: Products of domestic technology companies, with the advantage of complying with Vietnamese accounting standards and lower costs. These systems are also highly customizable, tailored to individual business needs. However, domestic ERP often has lower standardization than foreign software and is difficult to accommodate highly complex systems.

6. Which businesses is the ERP process suitable for?

ERP can be applied in most businesses, but there are specific industries that are especially suitable for this system. Some types of businesses should use ERP such as: Manufacturing, management and warehousing businesses; Retail businesses manage sales and warehouses; Service management service enterprise; Multinational enterprises manage global operations.

Businesses in some fields such as Construction - Real Estate, Transportation - Logistic, Pharmaceuticals, should also consider implementing ERP after carefully considering scale, industry and financial capacity. Successful ERP implementation brings great benefits but also potential risks if not done properly.

7. Distinguish between ERP and CRM systems

CRM and ERP software play an important role in business information systems. Deciding which software to deploy depends on each company's needs and strategic goals. Usually, businesses approach CRM first because it is simpler and easier to apply, suitable for small-scale organizations, and has a simple data system. Meanwhile, large businesses aiming for comprehensive digital transformation prioritize ERP systems.

Although ERP requires a lot of time, resources, and finance to invest, its effectiveness is far superior to other technology products. ERP and CRM both have their own advantages, businesses need to consider carefully based on actual needs to choose the appropriate software system.

8. Example of successful implementation of Vinamilk's ERP system

Vinamilk, Vietnam's leading dairy brand and always leading the market. With its huge scale and extensive distribution system, what helps Vinamilk organize and manage resources effectively? The answer lies in Vinamilk's ERP system - a system that manages business processes accurately and optimally.

Vinamilk began implementing the ERP system in 2007. This system creates a platform for continuous work management between departments and divisions within the company. After only 8 months of use, Vinamilk has seen many positive changes. The production and business process goes smoothly, helping businesses improve their competitive advantage. By 2019, Vinamilk successfully entered the list of 200 companies with the highest revenue in Asia-Pacific.

9. How to deploy and apply ERP effectively

Before implementing an ERP system, businesses need to carefully plan costs, resources, and time to ensure success.

9.1. Plan before implementing the ERP process

According to the ERP Report from Panorama, the cost of implementing an ERP in a mid-sized business ranges from $150,000 to $750,000, depending on company size, type of software, and additional resources. Implementation time can last from 2-5 years, for many reasons such as the need for testing, improvements, network infrastructure preparation and time for staff to adapt. Therefore, planning before implementing the ERP process is extremely necessary.

9.2. Be careful with the risks of ERP systems

Using ERP brings accuracy and workflow optimization, but also comes with technical risks to be aware of. A problem arising in one step can lead to blockages and delays in the entire process. The ERP system integrates many modules such as financial accounting, production management, purchasing management, sales and distribution, and project management, so a small change can spread widely and cause interface errors. wide in the system.

9.3. Choose modern, advanced ERP software

Before implementing the system, businesses need to plan for future improvement and upgrade measures. ERP is considered a "quasi-permanent" system, so post-implementation changes or upgrades should be limited as much as possible, as changes to ERP after launch can be as costly as implementation of a new system. Even if a business lacks thorough research, it can lead to conflicts and errors in the structure of the ERP system, disrupting the overall working process.

To limit software errors or upgrade activities, businesses can consider quality software with open source code from the beginning. 1C Vietnam introduces to you the 1C:ERP solution with the following strengths:

• Openness and flexibility: 1C:ERP is designed with high openness and flexibility, allowing businesses to have autonomy in technology and software solutions. This helps minimize supplier dependence and increase the ability to adapt to changing business needs.
• Quick customization: The 1C:ERP system possesses both the strengths of foreign and domestic ERP software, especially allowing for quick customization to meet the specific requirements of the business. Businesses can easily integrate with other specialized solutions in 1C's ecosystem and from third parties.
• Accounting standards: 1C:ERP is an international standard ERP solution that has been thoroughly Vietnameseized and fine-tuned to meet Vietnamese accounting standards. With a system developed on a low-code technology platform, 1C:Enterprise meets the complex operating needs and expansion and development needs of businesses. 1C:ERP readily supports international accounting standards such as IFRS (International Financial Reporting Standards) and Vietnamese accounting standards (VAS). This is extremely useful for businesses operating on a large scale, needing to prepare consolidated financial statements and meet the strict requirements of auditing organizations.
• Multi-platform compatibility: 1C:ERP can be compatible with most popular database management software, operating systems, and browsers with the ability to take advantage of the business's existing platform.
• Full functionality for different operating models: 1C:ERP offers a wide range of features and modules for different operating models such as commerce, service and manufacturing, sales and purchasing management , logistics management, human resource management, financial management and accounting, project management,... help businesses organize and operate activities in the most effective way.

However, in some cases, businesses still need to change and upgrade the system to meet actual needs. In this situation, using current ERP and supporting software in parallel is considered a safer and more time- and cost-saving option for businesses.

The ERP system is a comprehensive management solution, bringing many benefits to businesses. This includes increasing automation, improving management, and creating consistency across business operations. To effectively apply ERP, businesses need to clearly understand their needs, plan detailed implementation, and refer to reputable management systems such as 1C:ERP. If you have any questions about the 1C:ERP system, please contact 1C Vietnam immediately for support.