ERP, or Enterprise Resource Planning, is a concept for managing all the resources an organisation has for maximum efficiency.

What serves as the tool that lets an organisation actually apply the ERP concept to its management is the ERP system — an information system developed from the ERP concept into a form specific to each organisation, which is then used to manage the organisation.

The 4 core pillars of an ERP system used to manage an organisation’s resources are:

Centralized Database
Reduce redundancy
Traceability and accountability
Real Time data display

1. Centralized database

An ERP system uses centralized data management — that is, the organisation’s entire database is stored and managed on the same server, which makes it easy to manage or forward data to the users who access the system.

Managing all the data, whether improving or changing it, must proceed according to data-access permissions and with data security as the priority.

Access by many users at the same time is possible, but at times it may cause system lag. So an ERP system grants access only to the data each user genuinely needs, so users’ data access happens in an orderly way, helping reduce system lag and giving users access only to the data they are responsible for.

The ERP system can also link data across each part of the organisation so that managing the organisation flows smoothly.

2. Reduce redundancy

Redundant work in an organisation can arise from many causes, for example:

– The organisation lacks good management principles

– Data in the organisation is scattered, with data recorded repeatedly back and forth, and cannot be audited

– There is a lack of coordination between units in the organisation

Using an ERP system to help manage the organisation requires analysing the organisation’s management structure and various operational paths, then clearing them up into simple paths that link each part of the organisation together, to work out automated workflow steps so there is no need to repeat unnecessary work over and over.

3. Traceability and accountability

An ERP system holds to the principle of being able to audit the various pieces of evidence in the work — where the data that arose came from, when it arose, how it changed, when it was deleted, who carried out the work, and so on. The system records the time and the person who accessed that data.

This is an approach that leads to accurate auditing if an error occurs in the work and you need to know which person is responsible.

This responsible person is accountable when there is approval, data updates, and the management of various resources in the organisation.

In an ERP system, besides helping audit and find who is responsible at various operational steps, it can also help audit the accuracy and changes in the status of various data in the organisation’s work processes.

4. Real Time data display

For an ERP system to display data in real time, data must be gathered from the ERP system’s various sources within the organisation — for example, ordering data, warehouse, production, and sales. This data is accumulated and continuously updated in the database so it is ready to use in the present moment, without waiting for an update or a set time cycle.

An ERP system displays data on quantities increasing or decreasing, alerts on changes in various data, and the various statuses of data at the present time.

Data in an organisation needs to be displayed in real time so the organisation can check it promptly, preventing emergencies that might arise — such as warehouse stock being insufficient to sell.

In summary, the 4 core pillars of an ERP system are centralized data management, helping reduce redundant work in the organisation so its resources are used to maximum benefit, the ability to audit and identify who is responsible at every operational step, and a real-time data display that lets users see current data promptly.