ERP (Enterprise Resource Planning) software is one of the most widely adopted solutions by businesses of all sizes to simplify and automate business processes. According to the Fortune Business Insights research report, the worldwide ERP software industry is predicted to reach USD 93.34 billion by 2028, with a CAGR of 9.2%. Businesses are increasingly realizing the need for operational efficiency and transparency in their operations that ERP software can provide. As per research reports, 95% of organizations that use ERP see an improvement in their processes. While early ERP systems focused on large enterprises only, with the move toward Cloud ERPs and more economical ERP solutions, smaller businesses are also increasingly adopting ERP systems. The difference in ERP systems for larger and smaller businesses lies in the modules they need to support their business functions and the complexity of the modules. In this blog, we discuss the essential modules of ERP software. ERP systems are essentially integrated suites of business software, also known as ERP modules, that offer features for various business processes and help in enhancing business performance, minimizing costs, and maximize ROI (Return on Investment).
ERP Modules – What are They? An ERP module is a software component or part of the ERP program that takes care of a particular operational process or department. Each ERP system has a set of modules and features that can help you automate your business processes. However, there are numerous variations between various ERP systems.
There are several modules in ERP software, each of which represents a different business function in a company, such as finance & accounting, inventory management, sales and purchasing, marketing, human resources, customer relationship management, and so on. Most Cloud ERP software providers generally offer all these features and modules. However, depending on the size and demands of the enterprises, certain ERP modules will be either business critical or completely unnecessary. What might be an excellent solution for one company may not be an ideal option for another business!
To reduce complexity, an organization should consider purchasing only those modules that are required for their business activities and can handle their unique challenges. New modules may be added to the existing ERP solution, or customizations can be made as needed. Various ERP vendors provide industry-specific business modules separately as well. So, before you purchase an ERP for your company, you must know which essential modules are provided by the vendor, as well as what are the most important ERP features for your company or industry.
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7 Essential ERP Modules in an ERP Software
Here’s a list of the most essential and widely used ERP software modules, along with their capabilities:
1. Finance & Accounting
The Finance and accounting module, according to a survey by SelectHub, is one of the most critical functions for businesses when they purchase an ERP. This module handles all aspects of a business’s accounting and financial operations. Expense management, general ledger, accounts payable, and receivable, balance sheets, budgeting, bank statements, reporting and tax management are some of the primary functions managed by the finance module. Real-time financial tracking enhances forecasting and agility, providing companies with a competitive advantage.
2. Inventory Management
Even if you don’t work in the manufacturing or logistics industry, you’ll still need to evaluate your inventory on hand, not just to fulfil orders but also to determine how much room you have for inventory items. Thus, knowing how much inventory a company has always is quite important. The inventory management module integrates seamlessly with the SCM module and assists organizations in gaining control over inventories and tracking them down to specific stock-keeping units (SKUs). It provides various features such as stock utilization reports, real-time receipts, master units, inventory audits, JIT (Just-in-time) inventory, multi-location functionality, item analysis & forecasting, and so on.
3. Supply Chain Management
Supply chain management modules are largely used by manufacturers, logistics companies, and suppliers & distributors to schedule, regulate, and implement the necessary production or distribution of final products in order to maximize cost savings throughout the process (starting from the vendor to the customer).
Other than demand planning and real-time data visibility, demand forecasting is yet another important feature of SCM modules. Through predictive analytics, these modules can forecast future requirements for a company’s products and services.
4. Sales Management
The sales module is responsible for analysing sales inquiries, creating quotations and sales invoices, tracking and accepting sales orders, and handling the dispatch of materials and services.
5. Purchase Management
The purchase management module includes features such as vendor listing, supplier and product linking, sending and receiving of quotes, planning and tracking out purchase orders, and generating GRNs (Good Receipt Notes).
6. Customer Relationship Management
CRM (Customer Relationship Management) is perhaps one of the most used modules in ERP software with around 68% of businesses using it. The main objective of this module is to improve sales effectiveness by offering clients the much-required customer support and quality experience. By analyzing customer interactions and providing insights on relevant clients to target for promotions and cross-sell possibilities, this module assists businesses in managing qualified leads and prospects. For higher customer satisfaction, some advanced CRM solutions provide segmentation and reporting capabilities as well.
7. Human Resource Management
Processing employee data and answering queries takes up more than half of a human resources department’s time. Putting in place an efficient human resources management system saves a lot of the mundane paperwork that comes with HR management. It assists in employee on boarding processes and the management of employee data, as well as record keeping of employee data such as performance evaluations, certifications, job roles, skill matrices, and timesheet tracking. It may also include a payroll management system that helps with salary management, payroll reporting, and other tasks.
Analytics & Reporting
The analytics & reporting module in ERP provides real-time access to data and allows businesses to analyze data such as financial data, sales data, customer data, supplier data, etc at the primary or dashboard levels to get visibility to business processes and enable decision-making. Most ERPs allow the creation of custom reports.
Industry-Specific ERP Modules
The “one-size-fits-all” approach is quite common in generic ERP software. But is this strategy applicable to every business or industry?
According to a recent research report, 67% of ERP users would like more industry-specific capabilities. Such requirements have resulted in the development of industry-specific ERP software that is specifically tailored to the relevant industrial sectors. Other than providing essential features like accounting, HR, sales & purchases, CRM, etc, the industry-specific ERPs go beyond the fundamental elements of a generic ERP by adding functionalities that are tailored to a specific industry’s business requirements.
For example, ERP for the manufacturing industry may have more advanced features for production planning & management, advanced scheduling, BOM management, Make-to-order, Make-to-stock etc. The depth of features in the modules may vary depending on the industry. Process manufacturing ERPs might have specific features to manage the recipe-based manufacturing processes, manage the composition of ingredients, manage co-products and by-products, etc. For project-based businesses like those in industries such as Engineering, Procurement & Construction (EPC), Interior Design, etc. They might need more in-depth features for WBS management, workforce management, contract management, etc. For such industries with specific needs, an ERP with tailored features will help minimize customizations and implementation time resulting in huge cost savings and a faster ROI.
Conclusion – ERP Modules
The ERP modules that a company invests in depend on business needs, industry, current and anticipated challenges, and other factors. As discussed in this blog there are a few general modules that are essential for most organizations to perform their business activities, such as financial management, HR, supply management, CRM, etc. They automate business processes, allowing your employees to focus on more strategic tasks that need human intelligence and innovation.
However, while choosing your ERP, make sure the provider also has the required depth of functionalities for the modules that your business demands. For example, for businesses in the manufacturing and distribution industries, integrated inventory and supply chain modules will be important. Whereas if you are a service provider, then a CRM might play a critical role in your business success.
Moreover, as your business grows, your ERP needs might also change. The ERP you choose should be scalable enough to accommodate your growing needs and allow you to add modules as and when needed. If you are in an industry that demands complex requirements, you should consider using an industry-specific ERP system to handle your everyday operations. Make sure to choose the ones that are right for you!
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