What is SAP And Why do we need ERP

Typical Bussiness Scenarios in any Manufacturing company-

1. The client approaches a Sales team to Buy a Particular Products.

2. Sales Team approaches the inventory department to check the availability of the Products, and in this case, the Product is out of stock.

3. Sales team approaches the Production Planning Department to manufacture the Product.

4.The production planning team checks with the inventory department for the availability of the Raw Materials.

5. If Raw Materials are not available with the Inventory, the Production Planning team Buys the Raw Material from the Vendors.

6. Then Production Planning teams forward the Raw Material to the Shop Floor Execution for Actual Production.

7. Once Ready the Shop Floor forwards the Finished good to the Sales team who in turn deliver Product to the Client.

8. The sales team Updates the Finance Department with Revenue generated by the Sale of the Products.

9. The Production Planning Team Updates the Finance Department with payments to be made to Vendors for Raw materials.

10. All the department approach HR for any issues related to Human Resource.

The above steps are Typical Bussiness Process for any Manufacturing Companies.

Key Objectives of Typical Bussiness Process

a. A typical Enterprise has many departments/Bussiness Units(BU).

b. These departments/BU continuously communicate and exchange data with each other.

c. The Success of any Organisation lie's in effective communication and data exchange within the department/BU as well as associated Third Party such as Vendors, Outsources, and Customers.

Based on the manner in Communication and the  data exchange is managed Enterprise Software System can be classified into two Types:

1.Decentralized system

2. Centralized System(which is also known as ERP).

In a company with Decentralized System of Data management.

i) Data is maintained locally at the individual departments.

ii) Department does not have access to data of other Departments/BU.

Major Problems with Decentralized Systems:

a. Integrating the data becomes time and money Consuming.

b.Inconsistencies and Duplication of Data.

c.Lack of timely information leads to customer dissatisfaction, loss of revenue and repute.

d. High Inventory, material, and Human resource cost.

The above Points are some of the major drawbacks of the Decentralization System, and the Solution lies in Centralization Systems-ERP.

Advantages of Centralized Enterprise.

All department Updates information at Centralized System-ERP,

-> when the customer approaches a Sales team to Buy a product on an urgent Basics, the Sales team has real-time information for products in the Inventory which is updated by Inventory Department in the Centralized System-ERP.

-> The Sales Team Response to a customer in time leading to Increased Revenue and Customer Delight.

-> In Case of manufacturing is required, the Sales teams updates the Centralized DataBase-ERP, Production Planning department is auto updated by the centralized database for Requirements.

->The Production Planning teams check the availability of the Raw -Materials required at the Centralized DataBase-ERP which is updated by the Inventory.

-> Data Duplication is Avoided and accurate data is made available.

-> The Shop Floor teams Updates their main power Status regularly in the  Centralized DataBase-ERP which can be accessed by the HR departments in case of the shortage of workforce, the HR team starts Recruitment Process with considerable time, thus Labour cost Decreases.

-> Vendors can directly send invoices to Centralized DataBase-ERP which can be accessed by the finance department thus Payments are made On time and no Possible legal action is avoided.

Hence, a Centralized Enterprise Management System is Required. SAP is a centralized Enterprise Mangement System also known as Enterprise Resource Planning(ERP).