what is erp system

An Enterprise Resource Planning (ERP) system is a type of software that organizations use to manage day-to-day business activities such as accounting, procurement, project management, risk management, compliance, and supply chain operations. ERP systems provide an integrated and continuously updated view of core business processes using common databases maintained by a database management system. ERP systems track business resources such as cash, raw materials, production capacity, and the status of business commitments such as orders, purchase orders, and payroll. The applications that make up the system share data across various departments such as manufacturing, purchasing, sales, accounting, and others that provide the data. ERP systems are complete, integrated platforms, either on-premises or in the cloud, managing all aspects of a production-based or distribution business. ERP systems support all aspects of financial management, human resources, supply chain management, and manufacturing with the core accounting function. ERP systems provide transparency into a companys complete business process by tracking all aspects of production, logistics, and financials. ERP systems are made up of integrated modules or business applications that talk to each other and share a common database. Each ERP module typically focuses on one business area, but they work together using the same data to meet the companys needs. Finance, accounting, human resources, sales, procurement, logistics, and supply chain are popular starting points. Companies can pick and choose the module they want and can add on and scale as needed. An ERP system is essential to efficiently run all day-to-day business operations and provides the automation, integration, and intelligence that is necessary to do so.