What is ERP? Explore a comprehensive business management system

1. What is an ERP system?

ERP (Enterprise Resource Planning) system is a comprehensive integrated technology solution that helps businesses optimize and standardize business processes from finance, human resources, procurement to distribution and many other departments. With ERP, all departments use the same integrated platform, where every data is shared through a single database.

Instead of using individual software such as accounting, HR management, or customer care software,..., ERP systems integrate all of these functions into a single application, allowing all departments in the business to work on the same system. This eliminates data redundancy and duplication, improves performance, and enhances management efficiency.

2. Main modules and components of an ERP system

ERP modules are modules in the ERP business management software system. Each module is specifically designed to support different departments in the business. The modules will be integrated into the software system to ensure that data is synchronized and easily retrieved.

2.1. Finance – Accounting

This is a key module, helping businesses manage all financial transactions, make detailed reports, and ensure that all financial activities of the business are carried out accurately and transparently. The system supports cost control, income management, and provides data for strategic decisions and financial forecasts.

2.2. Sales Manager

This module supports management from order creation, processing, delivery, debt collection to after-sales services, helping to optimize the sales process. As a result, businesses can improve the customer experience from the ordering stage to receiving the product.

2.3. Production Management 

The production management module focuses on production planning, progress tracking, and raw material inventory management, ensuring performance optimization and maintaining product quality. The system helps businesses monitor the entire production process and minimize costs effectively.

2.4. Human Resource Management

This module is responsible for managing information about personnel, from recruitment, training, salary and bonus policies to welfare regimes. These tools help businesses optimize HR resources, track work performance to achieve business goals.

2.5. Inventory Management

In charge of inventory management and control, this module helps businesses manage the process of importing and exporting goods, organizing and inventorying inventory. Thereby, businesses can minimize inventory or shortages, ensuring that the product supply process is effective.

2.6. Customer Relationship Management (CRM)

The CRM module supports managing customer information, recording interactions, building and maintaining relationships with customers. With quick tracking and response tools, businesses can improve the customer experience, responding quickly to their needs and requirements.

2.7. Quality Management (QA-QC)

This module monitors the entire product quality control process, from raw materials to finished products. ERP provides tools for quality testing and evaluation to ensure products meet strict industry standards.

2.8. Executive – Leadership

This is a module that supports leaders in strategic decision-making thanks to the ability to provide accurate and timely reports, data analysis, and market trends. This module helps leaders grasp the actual situation of the business, optimize strategies and respond promptly to market trends.

3. How are ERP systems classified?

ERP systems are usually divided into tiers based on the size and needs of the business that the ERP system is aimed at. The basic classes include:

3.1. ERP Class I

Suitable for large, global enterprises to help businesses manage complex requirements such as multi-currency, multi-language, accounting rules, postal codes, and many other factors related to the international market. There are 4 to 5 ERP class I systems.

3.2. ERP Class II

Towards large enterprises with multinational operations but not completely global. Layer II ERPs typically have internationalized features but are not as extensive as Tier I ERPs. There are between 25 and 45 vendors in the Tier II ERP segment, depending on the classification of each vendor.

3.3. ERP Class III

Responsive for medium-sized businesses, can handle several languages and currencies but usually only supports a single alphabet. Depending on the classification, the market has between 75 and 100 ERP solutions in this class.

3.4. ERP Level IV 

Designed specifically for small businesses, Layer IV ERP focuses primarily on accounting functionality and is not considered a full ERP.

4. Benefits of ERP systems for businesses

4.1. Improve internal performance

The application of ERP systems helps businesses optimize the time needed to implement almost all business processes.

4.2. Accurate and fast decision-making

ERP provides common data access, helping departments use the same source of information to analyze and make informed decisions. This minimizes controversy about the accuracy of the data, while facilitating departments to participate in the decision-making process on the basis of analysis.

4.3. Increased flexibility

Thanks to its ability to standardize and simplify processes, ERP gives businesses more flexibility in adapting and adapting quickly to changes.

4.4. Enhanced security

One of the key advantages of ERP is its high security thanks to centralized databases. Data is no longer distributed across multiple servers, but is managed in a single system, making it easy to set up security measures, control access, and protect business information.

Above is the basic information about the ERP system that businesses need to understand. With an important role in optimizing workflows, minimizing errors, and enhancing transparency, ERP systems are increasingly becoming an essential tool for modern businesses. The implementation of an ERP system not only helps businesses improve operational efficiency and save costs, but also creates a solid foundation for long-term sustainable development.