Management Ideology and core functions of ERP System

Source: Internet
Author: User

ERP is short for enterprise resource planning.

ERP system refers to a management platform that provides decision-making and operation means for enterprise decision-making and employees based on information technology and systematic management ideas. It is a new generation of integrated management information system developed from MRP (material demand plan). It extends the MRP function, and its core idea is supply chain management. It jumps out of the boundaries of traditional enterprises and optimizes the resources of enterprises from the supply chain. The ERP system integrates information technology with advanced management ideas and becomes the operating mode of modern enterprises, reflecting the requirements of the times for enterprises to rationally allocate resources and maximize social wealth, it has become the cornerstone of the survival and development of enterprises in the information age. It plays an obvious role in improving business processes and core competitiveness of enterprises.

Management Ideology of ERP System

The core purpose of ERP is to effectively manage the entire supply chain, mainly reflected in the following three aspects:

1. reflect the idea of managing the entire supply chain Resources

In the era of knowledge economy, it is impossible to effectively participate in market competition only by the resources of your own enterprises, in order to effectively arrange the production, supply and marketing activities of enterprises, it is also necessary to include relevant parties, such as suppliers, manufacturing plants, distribution networks, and customers, in the business process into a close supply chain, to meet the needs of enterprises to use all market resources of the whole society for rapid and efficient production and operation, in order to further improve efficiency and gain a competitive advantage in the market. In other words, modern enterprise competition is not the competition between a single enterprise and a single enterprise, but between one enterprise supply chain and another enterprise supply chain. The ERP system manages the entire enterprise's supply chain and adapts to the enterprise's market competition in the era of knowledge economy.

2. reflect the ideas of lean production, synchronous engineering and agile manufacturing

The ERP system supports the management of mixed production methods. Its management philosophy is manifested in two aspects: the first is the idea of "Lean Production LP (Lean Production, it is a business strategy system proposed by the Massachusetts Institute of Technology (MIT. That is, when enterprises organize production in mass production mode, they include customers, sales agents, suppliers, and cooperation units into the production system, and the relationship between enterprises and their sales agents, customers, and suppliers, it is no longer simply a business relationship, but a partnership that shares interests. This partnership forms an enterprise's supply chain, which is the core idea of lean production. The second is the idea of Agile Manufacturing. When the market changes and the enterprise has specific market and product requirements, the basic partner of the enterprise may not be able to meet the requirements of new product development and production, an enterprise organizes a short-term or one-time supply chain composed of specific suppliers and sales channels to form a "Virtual Factory", and regards supply and collaboration units as an integral part of an enterprise, use the "synchronization Engineering (SE)" to organize production, use the shortest time to bring new products into the market, and maintain the high quality, diversity and flexibility of products at all times, this is the core idea of Agile Manufacturing.

3. reflect the idea of advance planning and in-process control

The planning system in the ERP system mainly includes: main production plan, material demand plan, capability plan, procurement plan, Sales Execution Plan, profit plan, financial budget and human resources plan, these planning functions and value control functions have been fully integrated into the entire supply chain system.

On the other hand, the ERP system defines the accounting accounts and accounting methods related to transaction processing (transaction) to automatically generate accounting entries when transaction processing occurs, this ensures the consistency of the synchronization records and data between capital flows and logistics. In this way, based on the current status of financial funds, we can trace back the ins and outs of funds, further trace the related business activities, and change the status of capital information lagging behind material information, it facilitates in-process control and real-time decision-making.

In addition, the planning, transaction processing, control, and decision-making functions are all implemented in the business process of the entire supply chain, it is required that the potential and responsibility of each person be maximized during each process's business process. The spirit of cooperation between people is emphasized between processes, in order to give full play to each subjective initiative and potential in an organic organization. Enterprise Management is transformed from a "Towering" organizational structure to a "flat" organizational structure, improving the response speed of enterprises to dynamic market changes.

In short, with the rapid development and application of IT technology, ERP systems can turn many advanced management ideas into computer software systems that can be applied in reality.

Core functions of ERP

A preliminary understanding of the ERP principles is the basis for our understanding of ERP. Next, in order to give everyone a perceptual understanding of ERP products, we will further introduce its functions.

In the past, we always introduced the ERP system in the background of a product. However, because the product style and focus of each manufacturer are different, the module structure of the ERP product is also quite different. Readers who first understand ERP may sometimes wonder which is the real ERP system. So here, we will look at the actual products and briefly describe the functional structure of the ERP system from the perspective of the enterprise, that is, what ERP can do for the enterprise, what does its module function contain.


ERP is a management information system that integrates and manages all the resources of an enterprise. Simply put, it manages the three major flows of an enterprise: Logistics, capital flow, and information flow. Its functional modules are different from previous MRP or MRPII modules. They can be used not only for management of production enterprises, but also in many other types of enterprises such as non-production, public welfare enterprises can also import ERP systems for resource planning and management.

ERP systems have the following features:

• Business application systems required for internal enterprise management mainly refer to core modules such as finance, logistics, and human resources.

• The logistics management system adopts the MRP management philosophy of the manufacturing industry. FMIS effectively implements modern basic financial management methods such as budget management, business evaluation, management accounting, and ABC cost collection; the human resource management system also integrates advanced concepts in organization design, job management, compensation system, and human resource development.

• The ERP system is a highly integrated system applied throughout the company. Data is highly shared among various business systems. All source data only needs to be input once in a system, ensuring data consistency.

• Optimize the company's internal business processes and management processes, and automate the main business processes.

• Adopts the latest mainstream computer technology and architecture: B/S, Internet architecture, and Windows interface. You can easily access the system wherever you can communicate.

• Integration, advancement, uniformity, integrity, and openness.

Functional standards

Gartner Group, a well-known U.S. computer technology consulting and evaluation group, proposed four functional standards for ERP:

1. integration functions beyond the range of MRP II

Including quality management, laboratory management, process operation management, formula management, product data management, maintenance management, control report and warehouse management.

2. Support Hybrid Manufacturing Environments

This includes a manufacturing environment that supports both discrete and flows; the ability to combine business processes according to object-oriented business models and international applications.

3. Support active monitoring capabilities to improve business performance

Including the adoption of control and engineering methods throughout the enterprise; simulation functions; Decision Support and graphical capabilities for production and analysis.

4. supports open Client/Server Computing Environments

Including the client/server architecture, graphical user interface (GUI), computer-aided design engineering (CASE), object-oriented technology, and query relational databases using SQL; internal Integration of engineering systems, business systems, data collection and external integration (EDI ).

ERP is beyond mrpⅱ. In essence, ERP is still based on mrpⅱ, but its functions and technologies surpass the traditional mrpⅱ, it is a customer-driven, time-based, enterprise resource plan oriented to the entire supply chain management.

Further, we can define it at three levels: management philosophy, software products, and management systems:

1. it is a complete set of enterprise management system standards proposed by garter group. Its essence is in mrp ii (Manufacturing Resources Planning, "Manufacturing Resource Planning ") on the basis of the further development of the supply chain (Supply Chain) management philosophy;

2. it is a comprehensive application of the client/server system, relational database structure, object-oriented technology, graphical user interface, the fourth generation language (4gl), network communication and other information industry achievements, software products with ERP management as the soul;

3. It is an enterprise resource management system integrating enterprise management concepts, business processes, basic data, human and material resources, computer hardware and software.

It is a new generation of integrated management information system developed from MRP (material resource planning). It extends the MRP function. Its core idea is supply chain management, which jumps out of the boundaries of traditional enterprises, optimizing enterprise resources from the supply chain is a new generation of information system based on the network economy era. It plays an obvious role in improving business processes and core competitiveness of enterprises. ERP began to appear in early 1980s. Since 1990s, the internationally renowned ERP products represented by SAP and Oracle have entered China and expanded rapidly. Then, some early ERP products, such as kms ERP, Lima ERP, Hejia ERP and brocade ERP, emerged in China.

Core Content

In an enterprise, general management mainly includes three aspects: Production Control (planning, manufacturing), logistics management (distribution, procurement, inventory management) and financial management (Accounting and Financial Management ). These three systems are the integration bodies. They have corresponding interfaces to each other and can be well integrated for enterprise management. In addition, with the increasing emphasis on human resource management, more and more ERP vendors have incorporated human resource management into an important part of the ERP system, we will also give a brief introduction to this feature. Here we will continue to introduce the functional modules of ERP using typical production enterprises as an example. According to the annual report of well-known headhunting, the ERP talents are in the talent shortage stage and have a good job prospect.

I. Financial Management Module

Clear and clear financial management is extremely important in enterprises. Therefore, it is an indispensable part of the entire ERP solution. The financial module in ERP is different from the general financial software. As a part of the ERP system, it has corresponding interfaces with other modules of the system and can be integrated with each other. For example: it can automatically include information input from production activities and procurement activities into the financial module to generate a general ledger and accounting report. It eliminates the cumbersome process of inputting creden。 and almost completely replaces the traditional manual operations. The financial part of general ERP software is divided into two major parts: accounting and financial management.

(1) Accounting

Accounting mainly records, calculates, reflects and analyzes the change process and results of funds in the enterprise's economic activities. It consists of the general ledger, receivables, payables, cash, fixed assets, multi-currency system and other parts.

1. general ledger module

Its function is to process the entry and registration of Accounting creden。, output the journals, general ledger and general ledger, and prepare major accounting reports. It is the core of the entire accounting, and various modules such as receivables, payable accounts, fixed asset accounting, cash management, wage accounting, and multi-currency system all use them as their centers to transmit information to each other.

2. accounting module

It refers to the normal customer account payable due to credit of the product. It includes invoice management, customer management, payment management, aging analysis, and other functions.

It is associated with the customer's order and invoice processing business, and automatically generates accounting creden。 for various events and imports them into the general ledger.

3. Pay-as-you-go Module

The payable account in the accounting refers to the enterprise's payment payable for purchase, which includes invoice management, supplier management, check management, and aging analysis. It can be fully integrated with the procurement module and inventory module to replace tedious manual operations in the past.

4. Cash Management Module

It mainly controls the inflow and outflow of cash flows and accounts for petty cash and bank deposits. It manages coins, currency notes, cheques, currency orders, and bank deposits. It provides cash-related functions in ERP, such as ticket maintenance, ticket printing, payment maintenance, bank list printing, payment query, bank query, and check query.

In addition, it is integrated with the modules such as receivables, payables, and general ledger to automatically generate creden。 and overwrite the general ledger.

5. Fixed assets accounting module

That is, the accounting for the increase and decrease of fixed assets and the depreciation-related fund accrual and allocation is completed. It helps managers understand the current status of fixed assets, manage assets through various methods provided by this module, and perform corresponding accounting.

Its specific functions include logging on to fixed asset cards and bills, calculating depreciation, preparing reports, and automatically preparing transfer creden。 and transferring them to the general ledger. It is integrated with the pay-as-you-go, cost, and general ledger modules.

6. multi-currency Module

This is to adapt to the international operation of enterprises, and the demand for foreign currency settlement business increases. The multi-currency system represents and settles the functions of the entire financial system in various currency systems, and the customer orders, inventory management and procurement management can also use the multi-currency system for transaction management.

Multi-currency and receivables, payable accounts, general ledger, customer orders, procurement and other modules all have interfaces to automatically generate the required data.

7. Payroll module

Employees of an enterprise are automatically settled, allocated, calculated, and accrued. It can log on to the payroll, print the payroll list and various summary reports, calculate and accrued various wage-related fees, automatically generate creden。, and import them to the general ledger. This module is integrated with the general ledger and cost module.

8. Cost Module

It calculates various costs of the product based on the product structure, work center, process, procurement, and other information for cost analysis and planning. Standard Cost or average cost method can also be used to maintain the cost by location.

(2) Financial management

The function of financial management is to analyze the data based on accounting, so as to make predictions, manage and control activities accordingly. It focuses on financial planning, control, analysis and prediction:

Financial plan: Prepare the financial plan and budget for the next period based on the preliminary financial analysis.

Financial analysis: provides a query function and graphical display of user-defined differential data for financial performance evaluation and account analysis.

Financial decision-making: the core part of financial management. The central content is to make decisions on funds, including fund raising, investment and fund management.

Ii. Production Control Management Module

This part is the core of the ERP system. It organically integrates the entire production process of the enterprise, so that the enterprise can effectively reduce inventory and improve efficiency. At the same time, the automatic connection of various originally scattered production processes also enables the production process to be carried out in a coherent manner without production disconnections and delay the production delivery time.

Production Control Management is a plan-oriented advanced production and management method. First, the company determines a total production plan, and then goes through the system layer-by-layer subdivision to achieve the implementation of each department. That is, the production department uses this production method, and the procurement department uses this method for procurement.

1. Main production plan

It schedules the types and quantities of products provided in each future cycle based on the production plan, forecast, and customer order input, and converts the production plan into the product plan, after balancing the needs of materials and capabilities, the detailed schedule is precise to the time and quantity. It is the arrangement of the company's total activities in a period of time. It is a stable plan, which is generated by the production plan, actual orders, and predictions obtained from the historical sales analysis.

2. material demand plan

After the main production plan determines the number of final products to be produced, the number of products to be produced by the entire enterprise is changed to the quantity of parts to be produced according to the material list, and the inventory is compared with the existing quantity, you can obtain the final quantity of processed data and purchased data. This is the plan that the entire department really follows.

3. Capability Requirement Plan

It is a detailed work plan generated after a preliminary material demand plan balances the total workload of all work centers with the capacity of the Work Center, used to determine whether the generated material demand plan is a feasible demand plan for the enterprise's production capacity. The Capability Requirement Plan is a short-term and practical plan.

4. Workshop Control

This is a dynamic job plan that changes over time. Jobs are assigned to specific workshops for job sorting, Job Management, and job monitoring.

5. manufacturing standards

A lot of basic production information is required in the preparation of the Plan, which is the manufacturing standard, including the parts, product structure, process and work center, with uniqueCodeRecognize in a computer.

A. part code: manages material resources and identifies unique codes for each item.

B. A bill of materials, which defines the technical documents of the product structure for preparing various plans.

C. Process: Describes the processing steps and the Operation Sequence of manufacturing and assembling products. It contains the processing sequence, indicating the processing equipment of each process and the required rated working hours and wage levels.

D. Work Center, consisting of equipment and labor forces in the same or similar processes, is the basic unit engaged in production schedule, accounting capability, and computing costs.

Iii. Logistics Management

(1) Distribution Management

Sales management refers to the management and statistics of various information about products, sales regions, and sales customers starting from the product sales plan, in addition, you can make a comprehensive analysis of the sales volume, amount, profit, performance, and customer service. In this way, the distribution management module has three major functions.

1. Management and Service of customer information

It can create a customer information file, classify and manage it, and then provide targeted customer services to achieve the highest efficiency of retaining old customers and winning new customers. Here, we should particularly mention the recent emergence of CRM software, namely, Customer Relationship Management. The combination of ERP and it will greatly increase the efficiency of enterprises.

2. manage sales orders

Sales Orders are the entry point of ERP, and all production plans are arranged and scheduled based on them. The management of sales orders is the whole process of product production. It includes:

A. customer credit review and query (customer credit rating to review order transactions ).

B. product inventory query (determines whether to delay delivery, batch delivery, or delivery with substitutes ).

C. Product Quotation (quotation for different products for the customer ).

D. Order input, change and tracking (correction of changes after order input, and tracking and analysis of orders ).

E. Confirm and handle the delivery date (determine the delivery date and shipping arrangement ).

3. sales statistics and analysis

At this time, the system makes statistics based on various indicators based on the completion of sales orders, such as customer classification statistics and sales agent classification statistics, and then evaluates the actual sales results of the Enterprise Based on these statistical results:

A. sales statistics (based on the sales form, product, agent, region, sales personnel, amount, and quantity ).

B. sales analysis (including Comparison Target, comparison during the same period, and order delivery analysis to analyze the quantity, amount, profit, and performance ).

C. Customer Service (customer complaint record, Cause Analysis ).

(2) Inventory Control

It is used to control the quantity of storage materials to ensure stable logistics Supports normal production, but the minimum capital occupation. It is a related, dynamic, and real inventory control system. It can meet the needs of relevant departments, dynamically adjust inventory as time changes, and accurately reflect the inventory status. The functions of this system involve:

A. Establish inventory for all materials, determine when to order for procurement, and serve as the basis for delivery to the procurement and production departments for production planning.

B. After receiving the purchased materials and receiving the materials through quality inspection, the products produced must also be inspected and stored in the database.

C. daily business processing for sending and receiving materials.

(3) Procurement Management

Determine reasonable order volume, excellent suppliers, and maintain the best security reserve. Provide ordering and acceptance information at any time, track and urge external purchases or outsourced materials, and ensure timely delivery of goods. Create a supplier profile and use the latest cost information to adjust inventory costs. Specifically:

A. supplier information query (query the supplier's capability and reputation ).

B. Push the goods (push the materials purchased externally or processed externally ).

C. Procurement and outsourcing Processing Statistics (statistics, archives establishment, and cost calculation ).

D. Price Analysis (raw material price analysis and inventory cost adjustment ).

Iv. Human Resource Management Module

In the past, ERP systems were basically centered on the manufacturing and sales processes (Supply Chains. Therefore, manufacturing resources have been used as the core resources of enterprises for a long time. However, in recent years, human resources within an enterprise have become increasingly concerned by enterprises and are regarded as the foundation of their resources. In this case, human resource management, as an independent module, is added to the ERP system, and the finance and production systems in ERP constitute an efficient and highly integrated enterprise resource system. It is fundamentally different from the traditional personnel management.

(1) auxiliary decision-making for Human Resource Planning

Simulation, comparison, and Operation Analysis of various solutions for enterprise personnel and organizational structure compilation are carried out, supplemented by visual assessment, to help managers make final decisions.

Develop a job model, including job requirements, promotion paths, and training plans. Based on the qualifications and conditions of the employees who hold the job, the system will provide a series of Training Suggestions for the employees, once the organization is reorganized or the position changes, the system will propose a series of job changes or promotions.

Personnel cost analysis can analyze and predict past, present and future personnel costs, and provide a basis for enterprise cost analysis through the ERP integrated environment.

(2) Recruitment Management

Talent is the most important resource of an enterprise. Only excellent talents can ensure the sustainable competitiveness of enterprises. The recruitment system generally provides support in the following aspects:

A. Manage the recruitment process, optimize the recruitment process, and reduce the business workload;

B. Scientifically manage recruitment costs to reduce recruitment costs;

C. Provide auxiliary information for the positions of personnel to be hired, and effectively help enterprises mine talent resources.

(3) payroll

A can formulate appropriate salary accounting methods based on the company's different salary structures and handling processes across regions, departments, and types of work.

B is directly integrated with time management, and can be updated in a timely manner to dynamically calculate employees' salaries.

C. Through integration with other modules, the salary structure and data are automatically adjusted as required.

(4) man-hours management

A. Arrange the company's operation time and labor schedule based on the calendar of the country or the local area.

B uses the remote attendance system to record the actual attendance of employees to the primary system, and import the time data related to employees' salaries and bonuses into the salary system and cost accounting.

(5) travel accounting

The system can automatically control the entire process from travel application, travel approval to travel reimbursement. And import the accounting data into the financial cost accounting module through the integrated environment.

ERP instance

Let's take a practical example to illustrate what ERP is.

At noon one day, my husband called at home: "dear wife, can I bring some colleagues home for dinner at night? "(Order intention)

Wife: "Of course. How many people are there? What kind of food do you want to eat ?"

Husband: "six people, we will be back around to prepare some wine, roast duck, tomato scrambled eggs, cold dishes, and egg soup ....... Can you see it ?" (Business Communication)

Wife: "No problem. I will prepare it ." (Order confirmation)

The wife records the menus (MPS Plan) to be prepared: Duck, wine, tomato, eggs, spices ...... (BOM material list): 1 duck egg, 5 bottles of wine, 4 eggs ...... (BOM expansion). It requires 6 eggs for scrambled eggs and 4 eggs for egg soup (shared materials ).

Open the refrigerator and check (warehouse). There are only 2 eggs left (out of stock ).

When I came to the free market, my wife said, "How can I sell eggs ?" (Procurement inquiry)

Hawker: "1 yuan, 5 yuan for half a dozen, 9 yuan for one dozen. 5 yuan ."

Wife: "I only need eight, but this time I bought one dozen ." (Economical batch procurement)

Wife: "This is a bad one, for another ." (Acceptance, return and feed)

Back home, prepare for washing, cutting, and cooking ...... (Process line), the kitchen has a gas stove, microwave oven, rice cooker ...... (Work Center ). My wife found that it was the most time-consuming (bottleneck process and key process routes) to use a microwave oven to cook roast duck by herself (insufficient production capacity ), so I bought a ready-made restaurant (out-of-service) in the restaurant downstairs ).

At four o'clock P.M., the phone rang again: "Mom, I want to come to dinner at night. Please help me prepare ." (Urgent order)

"Okay, what do you want to eat? Dad has guests at night. Would you like to eat with them ?"

"You can do it, but you must have tomato scrambled eggs. We will not eat it with adults. We will return around ." (Cannot be handled separately)

"Okay, you must be satisfied ." (Order confirmation)

The eggs are not enough. Call the hawker to send them. (Urgent procurement)

At, everything was ready, but the roast duck had not been delivered yet. He hurriedly called and asked, "I am Li Tai. Why didn't I order the roast duck ?" (Procurement outsourcing ticket Reminder)

"Sorry, the shipping person has already left. It may be a traffic jam. It will arrive immediately ."

The doorbell rings. "Mrs Li, this is your roast duck. Sign one word on the ticket ." (Acceptance, warehouse receiving, transfer to accounts payable)

At, my daughter called: "Mom, can I bring some friends home for dinner now ?" (Oh, it's an urgent order intention, and the spot is required)

"No, daughter. Today, Mom needs to prepare two meals. It is too late. I am really sorry. I will say it later and I will be ready for you ." (Haha, This is the limitation of ERP usage. A stable external environment is required, and a minimum advance stage is required)

After all the guests were sent away, the tired wife sat on the sofa and said to her husband, "dear, we have a very high frequency of buying kitchen supplies (equipment purchase ), it is best to hire another nanny (even the HR system has interfaces )."

Husband: "You are the master at home. You can do whatever you need ." (Approved)

Wife: "also, my family has spent too much money recently. I will use your private room money to subsidize it, OK ?" (Finally, the reminder for receivables)

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