System resource planning, enterprise resource planning (ERP)

In the digital era, enterprises not only face the pressure of fierce competition, but also to processing large volumes of data from many different parts. Management or the individual software is no longer enough to meet the operating needs of modern. System resource planning, enterprise resource planning (ERP) is the solution to help businesses integrate all core processes into a single platform, from finance, hr, manufacturing to supply chain and customer management.

Don't just stop in the digitization process, ERP is now also applied AI technology, to optimize operation, trend forecasting, enhance business performance. So ERP activities, like how? The benefits and challenges when implementing what is ERP? How to choose the right solution for your business? Let's Lac Viet Computing find out in the article below.

1. System resource planning, enterprise resource planning (ERP) what is?

1. Definition ERP system

System resource planning business (Enterprise Resource Planning – ERP) is a solution integrated software to help businesses manage the entire business operations in a single platform. ERP allows businesses to merge the data, optimize the working process of the departments such as finance, hr, production, sales, warehouse management and supply chain.

The role of ERP in business management:

• Data integration: ERP helps businesses merge all information in a single system helps to reduce errors, eliminate duplicate data.
• Process automation: activities such as accounting, order management, track inventory, production scheduling can be automated, reducing the time and handling.
• Improve decision-making capabilities: real-time Data from ERP to help managers make decisions fast more accurate.
• Optimal operating costs: ERP helps businesses control costs through data analysis, finance, forecasting market trends.

1.2 The difference between ERP and management software, discrete

Before ERP, many businesses use the software individually for each department like accounting, hr, inventory management, CRM manager (customer relationship). However, this approach leads to the fragmentation of data, lack of connection between the parts.

Thanks to the highly integrated, ERP helps businesses operate smoother, can sustainable development in the long term.

1.3. The historical development of ERP

The ERP system has a history long-term development, continuous improvement to meet the needs of modern management of the business.

Phase 1: System MRP (Material Requirements Planning) – The years 1960-1980

• Initially, ERP derived from system planning material requirements (MRP), mainly used in the manufacturing industry to manage raw materials, optimization of production.

Phase 2: MRP II (Manufacturing Resource Planning) – The years 1980-1990

• The system was expanded into MRP II, more integrated functions, financial management, production planning, inventory control.

Stage 3: The advent of ERP – The years 1990-2000

• The term ERP formal appearance, with solutions such as SAP R/3, Oracle ERP, Microsoft Dynamics.
• ERP not only for production but also to expand into retail, financial services, education, and health.

Stage 4: Transition to ERP cloud (Cloud ERP) – 2010 to present

• Trend ERP cloud (Cloud-based ERP) strong development to help businesses reduce the cost of infrastructure investment, easy scaling.
• The ERP software is the ability to integrate AI, Machine Learning, IoT to improve performance, predict business trends.

2. The main components of an ERP system

Planning system enterprise resource includes multiple modules, each module represents an important function in business to help optimize processes, reduce operating costs, improve work performance.

Below is the module core usually have in a modern ERP system:

2.1. Financial management (Financial Management)

Module financial management is one of the most important parts of the ERP helps businesses control cash flow, expense tracking, financial reporting correctly.

General accounting

• Recognition, sorting, processing financial transactions incurred in the business.
• The account automatically according to the system account accounting helps to reduce errors, save time.
• Management ledger, accounts receivable, accounts payable, balance sheet.

Budget management

• Business support, financial planning, determine the budget limit for each department.
• Monitor the situation to use the budget by real-time alert when the risk exceeds the limit.
• Integration with other departments to synchronize financial planning with business strategy.

Financial statements

• Provide the financial statements such as income statement, balance sheet, statements of cash flows according to the standard of international accounting (IFRS, GAAP).
• Support financial analysis, evaluate business performance in real time.
• Production report quickly, reducing the processing time window list, ensure compliance with legal regulations.

2.2. Personnel management (Human Resource Management – HRM)

Personnel management is one of the important factors determining the success of the business. Module HRM in ERP helps businesses manage the workforce effectively, from recruitment to training, payroll, performance reviews.

Recruitment & Training

• Manage candidate profiles, registration information, recruitment, tracking the interview process.
• Plan staff training, track training results and roadmap for career development.
• Connect to the system management performance to assess training needs.

Payroll management

• Automatically calculate salary, personal income tax, social insurance based on the data actually worked.
• Supported many models pay (fixed salary, hourly wage, salary, according to the product).
• Integrated with the accounting system to track personnel costs, budget planning salary.

Performance evaluation

• Building systems, KPI, personnel evaluation according to the objectives, the work results.
• Provide feedback in real time, help employees improve work performance.
• Create analytical reports on employee performance according to each departments.

2.3. Supply chain management (Supply Chain Management – SCM)

SCM module help business strictly control purchases, warehouse management, shipping management, supplier, ensure the supply chain effective functioning constantly.

Control inventory

• Track inventory in real time, controlling amount of input – output – inventory accuracy.
• Support the methods of inventory management such as FIFO (first in – first out), LIFO (income after – before).
• Automatically re-order when the inventory drops below the minimum level.

Manage orders

• Integrated with the sales department for order processing automatically, reduce the waiting time of customers.
• Shipping management, optimize delivery routes.
• Track order status from time of order to delivery successfully.

Supplier management

• Evaluate supplier performance based on quality products, on-time delivery.
• Contract management, purchasing, tracking transaction history.
• Support to negotiate better prices through the analysis of purchase data.

2.4. Production manager (Manufacturing Management)

Module production management help business planning, production process optimization, and enhanced product quality.

Production planning

• Forecast market demand, to plan production according to the cycle.
• Optimized production schedule to ensure maximum productivity.

Manage the production process

• Track each stage of production, from raw material input to finished product.
• Ensure product quality, reduce errors in production.

Maintenance management machinery

• Schedule equipment maintenance periodically in order to avoid interrupting production operations.
• Performance monitoring device, warning when there is risk of damage.

2.5. Customer management (Customer Relationship Management – CRM)

CRM module in the system, resource planning, business help business management, effective customer from the stage of approach to take care of after-sales growth, revenue, enhance customer experience.

Managing customer data

• Stored customer profiles, track transaction history.
• Classification of customers according to the group of potential customers.

Sales support

• Management, sales process, track pipeline and contract.
• Integration with email marketing to automatically send alerts, and promotions.

Marketing automation

• Build advertising campaigns automatically based on customer behavior.
• Track the campaign results, adjust content marketing according to the actual data.

3. The type of system resource planning business popular today

Businesses can choose from many types of ERP systems depending on demand, the scale of operations, financial capabilities. Each type of ERP has the characteristics, benefits and drawbacks own, so understanding each type will help the business decision to deploy accordingly.

3.1. ERP On-Premise enterprise resource planning (ERP installed on – site- ERP traditional)

ERP On-Premise is the ERP system is installed directly on the server, the IT infrastructure of your business. Whole data, operating procedures of the system are internal management, not dependent on the Tuesday.

Advantages of ERP On-Premise

• Control data absolute: Enterprise rights management and data protection, internal without fear of unauthorized access from outside.
• High performance stability: Because the system is operating on the internal server should the processing speed, the performance is often more stable, not affected by the internet connection.
• Custom flexible: Businesses can customize the ERP system according to the process, own business, in accordance with the specific needs of the organization.

Disadvantages of ERP On-Premise

• Cost of large initial investment: Businesses have to invest in hardware, servers, IT infrastructure, cost of software installation, that cost of initial deployment is high.
• Require a team of IT specialist: operating system maintenance ERP On-Premise requires the business to have an IT team, rich experience, to ensure system operation stability.
• Difficulty scale: When the business grows, the expansion of the ERP system On-Premise can take more time and cost due to upgrading hardware.

Suitable with any business?

ERP On-Premise in accordance with the business activities in the industries requiring high level of security, such as finance, banking, manufacturing or other business process peculiarities custom requests high.

3.2. Cloud ERP (ERP on cloud platform)

Cloud ERP is a planning system enterprise resource are stored, operated on the cloud platform of the service provider. Businesses do not need to install the software on an internal server that can access the system via the internet.

Advantages of Cloud ERP

• Low investment costs: Businesses don't need to buy a home or construction of IT infrastructure, only need to pay the subscription fee by month or year.
• Easy to expand: the System can be deployed quickly, easily expanded, according to the development needs of the business.
• Flexible access: Employees can work remotely access the system from anywhere there is an internet connection.
• Automatic updates: service provider Cloud ERP will be responsible for the maintenance, software updates, help businesses always use the latest version without the need for manual intervention.

Disadvantages of ERP Cloud

• Depends on the internet connection: If the internet connection is unstable, the access system operation may be affected.
• Issue of data security: data is stored on the cloud platform of the Tuesday, enterprises need to select the supplier has privacy policy strict to ensure the safety information.
• Limited ability to customize: although the ERP solution Cloud modern can customize, but still have limitations compared to ERP On-Premise.

Suitable with any business?

ERP Cloud matching and medium businesses small business that needs rapid deployment, low cost, need high flexibility in the scale. In addition, this model is also suitable with the business has a team of working remotely or need to manage multiple branches.

3.3. ERP Hybrid (ERP mix)

ERP Hybrid is the combination of ERP On-Premise and Cloud ERP, in which a portion of the data, the process operation is internal storage, while the other features to be deployed on the cloud.

Advantages of ERP Hybrid

• Ensure high security: Businesses can store the important data on the system internal (On-Premise), leveraging Cloud ERP for the process less sensitive.
• Flexible scalability: Businesses can expand the system by integrating more services in the Cloud as needed, without having to upgrade the entire system On-Premise.
• Optimal cost: ERP Hybrid to help businesses leverage the benefits of both models, reducing hardware costs while still maintaining control over important data.

Disadvantages of ERP Hybrid

• Complexity in deployment management: The synchronization of data between On-Premise and Cloud can meet the challenge requires a business must deployment strategy closely.
• The average cost higher ERP Cloud: Even save more than ERP On-Premise, but businesses still have to invest in infrastructure, internal maintenance of the system.

Suitable with any business?

ERP Hybrid is the ideal option for businesses, medium scale and large, especially those businesses that need to maintain important data in the internal system but still want to leverage the scalability of Cloud ERP.

4. Benefits of ERP system for business

System resource planning, enterprise resource planning (ERP) is not only a management tool which is also an important factor to help businesses enhance the ability to operate, optimize resources, enhance competitiveness. Here are the core benefits that ERP brings to the business in the process of management development.

4.1. Optimize business processes, enhance work performance

One of the biggest benefits of ERP is the ability to integrate the automation of business processes, help business smooth operation more efficient.

Automate work processes to minimize error crafts

• ERP eliminates the manual data entry between the parts, reduce errors caused by humans.
• For example, when orders are entered into the sales system, automatic data updates to inventory management, finance, production, without the need to re-enter.

The link between the departments to help improve performance

• The department such as accounting, human resources, logistics, production, sales can access common data in real time, avoid the situation of each division operates under a separate system.
• Thanks to the connection throughout the process to approve contracts, orders, personnel recruitment, or inventory management becomes quickly more efficient.

4.2. Improve your ability to make decisions based on accurate data

Planning system enterprise resource provides accurate data in real time, helps managers make decisions quickly right based on data rather than guessing.

System, financial statements, business in real time

• ERP allows businesses to monitor the situation finance, inventory, sales performance, the index of business through the intuitive control panel.
• Reports can be automatically generated, reducing the time synthetic data.

Data analysis, trend forecasting, business

• ERP use technology, data analysis, artificial intelligence to forecast market demand, assessing financial performance, given strategic recommendations.
• For example, if a product is consumed in a certain area, the system may suggest increased production or adjust inventory to the optimal revenue.

4.3. Reduce operating costs and enhance financial control

Controlling costs is one of the major challenges of the business. ERP helps businesses manage financial rigorously reduce waste.

Reduce financial losses due process less effective

• ERP system helps to monitor all the spending activity of the business, from shopping, payment to salary employees.
• ERP helps to detect the unreasonable costs or waste that businesses can cut.

Budget control more effective

• Business can set the threshold spending, set the approval process for automatic investments or purchases, to help curb the excess of the budget.
• Financial data is stored analysis correctly, help business plan budget consistent with business practice.

4.4. Enhance competitiveness in the market

In the context of market competition, the system resource planning ERP business helps business improve the operational capacity, thereby creating competitive advantage firmly.

Business operate more efficiently, more flexible

• ERP helps businesses respond quickly to the changes of the market, from the adjusted sales price, change of plan production to optimal marketing strategy.
• Thanks to ERP, businesses can optimize delivery time, improve customer service, improve user experience, increase loyalty of customers.

Support scaling the business in a sustainable way

• When business development, ERP system helps to ensure the operation process is still maintain efficiency, even when scaling.
• With cloud ERP, the business can expand its operations into many branches, different markets without barriers of data management.

5. Process ERP implementation success for business

System deployment, resource planning, enterprise resource planning (ERP) is a complex process that requires thorough preparation, clear strategy to ensure the system works effectively bring the real value for the business. Here are the key steps to help business ERP implementation success.

Step 1. Needs assessment selected ERP solution suitable

Before investing in ERP, enterprises need to perform needs assessment to ensure that the system selected will fit with your business goals.

Identify business needs

• Reviews the problems in the current operation that ERP can solve, such as the inventory does not control, accounting procedures, crafts, lack the ability to analyze data.
• Determine the parts that need ERP support (finance, hr, production, logistics, sales, customer).
• Identify the core features business needs from ERP, such as integrated multi-branch, scalability, support remote work.

Compare and choose ERP solution suitable

Businesses can choose between the ERP solutions which include ERP On-Premise, Cloud ERP and ERP Hybrid. When evaluating solutions, businesses need to consider:

• Features & capabilities: custom software can fully meet the requirements of the business?
• Cost deployment & maintenance: Budget of the business have enough to invest long-term, no?
• The level of support of the suppliers: suppliers can provide support services, maintenance after deployment not?
• The ability to integrate with existing systems: ERP are easily connected with accounting software, CRM, warehouse management software not?

Examples of ERP solutions downloads

• SAP ERP: business Suit, big multi-national.
• Oracle ERP: integrate well with the system of financial accounting.
• Microsoft Dynamics 365: Flexible, easy-to-customize fit with medium and large business.
• Odoo ERP: ERP, open source, fit small and medium enterprises.

Step 2. Planning to deploy ERP

Once you've selected system resource planning, business suit, business need to build a deployment plan in detail, including the main stage following:

Phase 1: Preparation & define range deployment

• Determine the specific objectives of the ERP implementation.
• Make a list of the departments, processes need to apply ERP.
• Established deployment team, including IT professionals, project managers, representatives from the relevant department.

Phase 2: set system configuration

• Custom ERP according to the model of activities of the business.
• Check the compatibility of the ERP with the existing software.
• Build new workflow based on ERP system.

Stage 3: test Run – reviews

• System test on real data for error detection, correction.
• Assess the extent compatible with the workflow of the business.
• Get feedback from staff in order to optimize user experience.

Stage 4: formal deployment and monitoring

• ERP implementation at each stage (pilot rollout) or deployed simultaneously (big bang).
• Monitor system performance and take out adjusting when necessary.

Set KPIs to measure the effectiveness

A number of important indicators to evaluate the effectiveness of ERP implementation:

• Speed order processing: ERP can help shorten the processing time of my order?
• Effective financial management: ERP can help improve the accuracy in the financial statements do not?
• Reduce operating costs: ERP can help your business save costs?

Step 3. Integrated ERP system with existing

One of the biggest challenges when deploying the system resource planning business is to integrate the new system with the existing software that businesses are using.

The system should integrate with ERP

• Accounting software: To ensure financial data exactly in sync.
• CRM Manager (customer relationship): Help link customer data with the sales process.
• SCM (supply chain Management): Ensure accuracy in inventory management, order.

How to ensure the integrated system efficiency

• Building data strategy to determine how data is transformed and synchronized.
• Check possibility of integration of ERP with open API, the connection technology.
• Run tests on a set of data samples before official implementation.

Step 4. Training staff ensure the smooth transition

System deployment, resource planning, business will not succeed if employees are not fully trained.

Establishment plan staff training

• Provide instructions for use ERP for each department.
• Organization of the practical training for staff to become familiar with the system.
• Document provides detailed instructions for staff to easily lookup when needed.

Minimize risk when switching system

• Deploy each stage instead of changing the entire system at the same time.
• Set up support systems to handle the problems that arise when employees start to use ERP.
• Collect feedback from employees to improve the interface, workflow on ERP.

Step 5. Evaluate the performance after deployment optimization system

Once deployed, enterprises need to evaluate the effectiveness of the ERP to ensure the system works optimally.

The criteria for performance evaluation of ERP

• The degree of improvement in work performance: ERP can help reduce the processing time of orders, the financial statements do not?
• The level of employee satisfaction: Employees have trouble using the system?
• Impact on operating costs: ERP can help your business save costs in the finance department, logistics, production?

Optimized ERP system after deployment

• Adjust the workflow to make maximum use of the capabilities of ERP.
• Feature upgrade based on the actual needs of the business.
• Expand the system when the business grows, add the new module as AI, automation process.

5. Trends in the development of ERP in the future

The latest trends in ERP not only help businesses optimize operation but also enhance the ability to analyze, forecast, automation, create competitive advantage superior. Here are the key trends are shaping the future of ERP.

5.1. App AI in data analysis, financial forecasting business trends

Artificial intelligence (AI) and machine learning (Machine Learning – ML) is becoming indispensable element in the system resource planning business and modern. This combination helps businesses automate processes, optimize data, enhance predictability, change the way to operate the tradition of ERP.

• WHO help analyze financial data in real time, detecting patterns, unusual to alert the financial risks.
• Machine Learning can learn from past data to predict cash flow, budget management, cost optimization activities.

In the context of business increasingly depends on data to make decisions, strategy, Finance AI Agent of Lac Viet is a tool that integrates powerful AI into ERP systems help businesses optimize financial management, trend forecasting, business correctly.

Finance AI Agent supports not only automatically collect processing financial data in real time, but also applied Machine Learning to analyze spending patterns, cash flow, profit to help businesses identify financial risks before they happen. Thanks to the ability to forecast revenues, expenses, cash flow, Finance AI Agent help business plan financial flexibility, optimised budget, quick decisions based on accurate data.

Highlights of Finance AI Agent is the ability to integrate directly with ERP systems such as LV-DX Accounting, LV-DX Dynamic Workflow, help businesses not only financial control more closely but also enhances flexibility in operation. With Finance AI Agent, the business can reduce the time to analyze data up to 60% and improve accuracy in financial forecasting, help optimize cash flow and increase business performance.

5.2. How ERP smart helps automate the decision-making process

• AI can automatically propose the decision based on business data, such as adjusted sales price based on the market demand or optimized production schedule.
• The chatbot AI is integrated into ERP can support staff to handle tasks such as data entry, creating reports, manage customer requirements.

For example: A manufacturing company uses AI to track performance equipment in the production line, the forecast when maintenance is needed to avoid disruption of operation.

AI not only helps ERP becomes faster, more accurate, but also reduce the load of manual work, enhance decision-making capabilities strategy for the business.

5.3. ERP combines IoT (Internet of Things)

Internet things (IoT) is changing the way businesses operate by connecting the smart device to the ERP system helps to collect data in real time, process optimization, manufacturing, logistics, logistics.

Applications of ERP in supply chains and smart manufacturing

• Monitoring the supply chain in real time: IoT helps track inventory, transportation, distribution of goods correctly.
• Automation production process: sensor, IoT is integrated with ERP to help track performance machinery, product quality, and adjust the production line automatically.
• Maintenance management intelligence: IoT can predict when equipment needs maintenance to minimize machine downtime, increase production performance.

IoT helps the ERP system closely connected with the real environment, help businesses reduce operating costs, enhance the ability to control, improve labor productivity.

Deployment system resource planning business not just a technology decision that is the long-term development strategy to help businesses operate efficiently, control costs, optimize resources, increase profits. In particular, with the integration of artificial intelligence (AI) and data analysis, finance, ERP not only help businesses react quickly to market volatility, but also actively trend forecasting, take strategic decisions based on data.