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How Does ERP (Enterprise Resource Planning) System Work?

Maybe you install an ERP system but are not aware of - how does it work and what features are added in it? Well, we come up with a full guide where you will definitely find the answers to your questions.

Modern systems ensure the performance of all the main functions of an enterprise, regardless of the scope and scale. ERP systems are used both in commercial and non-commercial structures. ERP (Enterprise Resource Planning) serves to integrate all data and processes of the organization into a unified system. To do this, a typical ERP system uses many different software and hardware components. The key component of most of these systems is a single database that stores data from various system modules. 

ERP provides functionality that is typically performed by two or more systems. Implementing an ERP system to replace two or more independent applications eliminates the need for external interfaces between the system and provides additional benefits, from standardizing business processes and cheaper maintenance to simplifying and improving reporting, since all data is stored in a single database. For example, the Sage software in Singapore is featured with such demanding systems that can help the organizations to build a better solution.

Well! In this guide, we will learn in detail about the ERP system and how it works.
So, let’s have a look at the following.

Table of Content

1. What is an ERP System?
2. How Does ERP System Work?
3. Why is the Implementation of ERP Necessary?
4. What Features Are Included in ERP Software?

  • Financial Management
  • Human Resource Management
  • Supply Chain Management
  • Customer Relationship Management
  • Product Lifecycle Management


1. What is an ERP System?

ERP stands for enterprise resource planning. The main purpose of the ERP system is automation. The technology includes different blocks like organization work planning, budget control, logistics, accounting control, management of activities and employees, and customer management. All this makes modern ERP systems an indispensable element of the organization’s daily activities. 

Well, ERP are automated or modular programs that are based on the management, structuring of an organization's information storage. Thanks to modern solutions and equipment, each enterprise can move to a new level of functioning. ERP systems are actively used in the business environment. A unique software product designed to manage the resources and work processes of the company.

They are indispensable for organizing the work of such enterprises, whose activities are associated with complex production, the release of a large assortment of products, a large volume of warehouse operations, and a branched structure of business processes.

2. How Does ERP System Work?

As a fact, every organization is well aware of the different types of software for managing day-to-day operations. Many companies are using the ERP systems, which allow them to handle every step of their process through one single solution. While adopting such technology for your organization, you must consider whether the product is customizable or configurable. Keeping in mind the actual difference between these two will help in selecting the right ERP system for managing the whole process of any organization. 

A customizable software solution can be improved using code with specific capabilities and features. This is considered as a more labor-intensive process as compared to configurable solutions. The configurable system fulfils requirements without using code. It uses the tools already available in the application. This means the choice of a configurable and customizable solution depends on the IT and development resources. 

The failure of ERP integration can happen due to a lack of planning and various factors like customization, incorrect budget setting and absence of an IT resource allocation strategy. The chance of a successful integration can be improved by creating goals and using foresight when analyzing solution options. 

3. Why is the Implementation of ERP Necessary?

ERP systems facilitate the solution of monitoring and planning tasks. In addition, they speed up the work of each department and specific employees. The use of a software package developed on the basis of an ERP strategy helps to combine a variety of work tasks, including accounting and control of financial flow, tracking the movement of money, forming the cost of manufactured products, assessing labor productivity. Thanks to the introduction of modern information databases, all business processes acquire maximum transparency. 

Managers at any time can get access to important information that concerns all aspects of the company. This ensures timely control and management decisions. A comprehensive analysis of activities increases the efficiency of work processes, the quality of products, and competitiveness in the market.

4. What Features Are Included in ERP Software?

Usually, ERP systems consist of various modules that fulfil the needs of organizations in process automation. Each of the modules is focused on a specific area of ​​activity or business process. According to the composition of the modules used, the structure of the Sage 300 ERP consultant can be divided into various elements. Let's have a look at the following.

- Financial Management

This element of the ERP system allows you to maintain the general ledger, manage settlements with debtors and creditors, carry out accounting of fixed assets, manage cash resources, plan financial activities, maintain financial reporting and accounting, etc.

- Human Resource Management

It allows you to carry out personnel records, perform payroll calculations, keep track of working hours, work schedules, plan to staff, manage staff motivation.

- Supply Chain Management

This element is one of the keys in the ERP system. It allows you to forecast demand, plan and manage logistics both inside and outside of the enterprise and outside it, manage purchases and suppliers.

- Customer Relationship Management

This element of the ERP system performs the same functions as individual CRM systems. Their functionality largely depends on the manufacturer, but the main activities include sales management, accounting of customer interactions, marketing management.

- Product Lifecycle Management

It allows you to manage the life cycle of a product from its development to disposal. ERP system modules make it possible to manage product data, control design, manage equipment life cycle, and manage customer needs.


The use of an ERP system allows you to use one integrated program instead of several disparate ones. A single system can manage the processing, logistics, distribution, inventory, shipping, invoicing and accounting. So, choose an ERP software like sage 300 that will help build a profitable production concept, offer customers high-quality and demanded products and increase the result of the management decisions taken.

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