What is ERP?

The term ERP is probably very foreign to most of our ears, from our 20 years of experience in the ERP world. Until now there are still many who have never even heard of the term ERP, some have heard and considered ERP part of the technical work of the IT team (Information Technology) department. This is because the term ERP is used to describe an information system to support company operations, more easily sometimes considered a “computer program” / software.

So do not be surprised if the term ERP still sounds familiar even though it has been used for 20 years, maybe the reason is more because of the general perception of ERP as “Computer Application” / Software. The term ERP itself was introduced by the Gartner Group in 1990 which is an extension of Enterprise Resource Planning. This term arises because of the many business applications on the market at the time, so it was felt necessary to classify these various types of applications.

Discussion of the history before ERP, ERP, to what applications after ERP, we will try to discuss in a separate section.

Definition of ERP can generally be regarded as a system for integrated companies that connects the processes that exist in each department / division.

A system can be categorized as an ERP system, if.
1. Integrated, this allows faster interaction between departments, because it eliminates additional work. example: the Purchasing section makes a Purchase Order document, the next process the Warehouse section when receiving goods can see the documents made by the Purchasing section. Thus it can avoid mistakes in goods receipt and speed up the process of receiving goods.

2. Centralized Database. an integrated system must have a centralized database (common), which means that every division in the organization uses the same database. Thus this can avoid data redundancy which often results in confusion about the validation of data that must be used, such as the Warehouse section having stock data and the Accounting section also having data with different values.

Generally an ERP system consists of applications that cover almost all departments in the organization. as:

  • Accountancy: Ledgers, Fixed Assets
  • Finance: Cash / Bank Cash Transaction and Banking Transactions
  • Inventory: a system for monitoring inventory, including moving goods transactions.
  • Sales – Account Receiveable: sales system to monitor the condition of the company’s debt.
  • Purchase – Account Payable: the purchasing system to monitor the condition of the company’s debt. The sales system is to monitor the condition of the company’s debt.
  • Production, which includes starting from the registration formula (bill of materials / BOM), Production Planning, Monitor production activities to become finished goods.