Question

Describe the core and extended components of an enterprise resources planning (ERP) system, and discuss the potential benefits of using an ERP system.

Answer 1

ERP also termed as Enterprise Resource Planning is a tool for managing information, which is used for Storage, collection & use of the info. for the advantage of the organization.
ERP uses the same database by combining all database for different department into a single database, making the data available for all the employees.

Core Components of an ERP:
1) ERP Component for Finance & Accounting: It helps in maintaining the accounting data by collecting it from various other department and by generating the financial reports, balance sheets etc.
2) ERP Component for Production Management: it can be useful for an organization in demand forecasting, quality control and accounting of job cost.
3) ERP Component for HR: It helps in maintaining the complete employee database like: monitoring employees performance, payroll, attendance, promotion etc.

Extended Components of ERP:
1) ERP Component for Supply Chain: helps in managing the data from the purchase of raw material to the finishing goods.
2) ERP Component for Business Intelligence: it helps in applying the analytical tools and in taking decision by collecting the info that are used in whole organization.
3) ERP Components for E Business: it not only helps an organization to increase their reach on the internet by buying and selling, but also helps in serving customers & business collaboration.
4) ERP Components for Customer Relationship Management: it help in storing & providing the complete info of the customer & managing various aspects of customer relationship with the organization in order to increase the loyalty of the customer and also the retention of the customer as well.

Potential Benefits of using ERP System:
It help in reducing the Lead Time
ERP helps in improving the Business Performance.
It increased the productivity.
Provides real time data within the organization.
It also improve the internal communication with in the organization.
Cost Effective: Reduce the operating cost of the Business.
It also helps in improving the customer service.