Gone are the days when companies used to manage their data on spreadsheets. Today, businesses use Enterprise Resource Planning (ERP) systems to manage and organize their financial and operational data.
ERPs function as an integrated database that gathers and stores data across the company to enhance the efficiency and scalability of business processes.
ERPs are growing in popularity so much so that it is estimated that by 2025, the ERP market is expected to rise to more than $49.5 Billion.
So, what makes ERPs so popular in business?
It is their capability to handle all processes of an organization that make them so popular. ERPs help organizations navigate complex operations by providing accurate, real-time data and automating business processes.
They pull data from different modules which are built to support different departments in an organization. From accounting and supply chain management to human resource management, they perform all functions.
What Are ERP System Modules?
In a nutshell, ERP modules are components of an ERP system. They are designed to perform specific operations as part of the ERP program, providing data and supporting employees to do their job efficiently. An ERP system has every module plugged into it, so it becomes a single source of error-free data.
Do ERP Modules Help Businesses?
Yes, ERP modules do help businesses by automating critical processes and working in harmony to create a single database that stores all essential information of business operations. With the right ERP modules in place, a business can make its tasks efficient to improve employees’ productivity and give them real-time visibility into the performance of operations.
How Do ERP Vendors Charge for Each Module?
Charges for an ERP system vary, depending on which modules a vendor invoices extra for. They often include key financial functions in the basic package, and for other features like human resource management and CRM, they may charge extra.
While software as a service (SaaS) vendors may apply charges per user/month or year, on-premise ERP vendors charge an upfront cost on per-user license basis. So, the costs for different packages differ from one vendor to another.
Explaining 13 ERP Modules and Their Features
Finance and Accounting
The finance and accounting module in the ERP is a key module for businesses because it helps them understand their present-time financial state and provides its future outlook. This module comes with important features such as managing general ledger and tracking accounts payable and accounts receivable.
It also supports the creation and storing of financial documents, including balance sheets, tax statements, and payment receipts.
Furthermore, this module automates billing-related tasks, account reconciliation, and vendor payments, supporting the finance department to close the books promptly and conform to revenue recognition principles.
By facilitating financial planning and analyzing data, the module also helps employees prepare essential reports such as profit and loss statements, board reports as well as run business scenario plans.
An order management module is responsible for tracking tasks from order receipt to delivery. This part of the ERP system relays all orders to the warehouses, distribution centers, or retail stores as customers place them and tracks their status throughout preparation, fulfillment, and shipment processes.
The order management module keeps the orders from being lost and enhances the on-time delivery rate to retain customer loyalty.
With advanced applications of this module, businesses can determine the most cost-effective fulfillment option based on the availability of the inventory and a buyer’s location.
The procurement module in ERPs helps businesses obtain the materials or items they require to manufacture and sell goods.
Using this module, businesses can create a file of approved vendors and link those suppliers to specific products. It can automatically receive requests for quotes and track and analyze them as they come in.
After a company has accepted a quote, the module helps its purchasing department take and relay orders to other departments.
The module also helps with tracking that purchase order when a seller changes it into a sales order and delivers it. Once the order is shipped, it automatically updates the inventory.
This module gives control over inventory to track their quantities and locate them down to the individual stock-keeping units (SKUs). This tool integrates with the procurement module to get complete data of existing and incoming inventory for multiple locations.
It helps businesses control inventory costs ensuring that they have adequate stock so that they do not have to tie up too much money in inventory. Moreover, the businesses that do not take the supply chain module can use inventory management to track purchase and sales orders and dispatch.
Warehouse management is a vital module for manufacturing organizations that need to manage a high volume of inventory and warehouse operations.
It is a module that facilitates the management of warehouse operations and guides the employees throughout the process, from storing, picking, packing, and shipping the inventory.
Warehouse management accelerates turns of inventory, saves time, and reduces overhead costs. With this module in the ERP, employees can track the location of goods and the movement of inventory to ensure timely delivery of orders to customers.
Manufacturing is a crucial module associated with an ERP system. Manufacturers use this module to plan production and ensure the machinery capacity and availability of materials they need for planned production.
It enables manufacturers to keep track of goods-in-progress in the manufacturing process. This helps businesses compare their progress against anticipated production.
To do this comparison, the manufacturing module obtains real-time information on in-progress items and finished products by capturing the view of the shop floor.
Furthermore, on average, it can predict the time for the production of an item to compare the supply of goods with prognostic demand and plan ample production to deliver orders in time.
Supply Chain Management
The supply chain management module keeps track of all steps of supplies and inventory movement that involves sub-suppliers, suppliers, manufacturers, distributors, retailers, and consumers.
It also manages the orders that come for refund and replacement. This part of ERPs incorporates other modules such as procurement, manufacturing, warehouse management, inventory management, and order management.
Professional Services Automation
This module in ERPs supports businesses by helping them to plan and manage projects. The Professional Services Automation module is often used by service-based businesses.
The module includes features for tracking project status, managing human resources and capital resources, allowing project managers to accept expenses and timesheets.
It creates collaboration between the entire team to manage documents on a shared platform. It also automatically prepares and sends bills to the clients, following the rules of a billing cycle.
Customer Relationship Management
The Customer Relationship Management module stores comprehensive information about customers and prospects, including a company’s communication history- the date, time, and emails- with an individual and his/her purchase history.
With the help of information from CRM, employees can improve customer service by accessing the information while dealing with a customer.
This module can help businesses manage leads and sales opportunities by tracking communications with customers and giving insights on the right customers to be targeted for marketing and cross-sell opportunities.
Some of the advanced CRM modules also have segmentation and reporting tools for better customer support.
The Workforce Management module is identical to the human resources management module, however, the former is more focused on hourly salaried employees. This module monitors the attendance of workers, working hours, and other factors like productivity and work absenteeism.
Payroll may also be tied with it as a sub-module for automatically distributing paychecks to workers on scheduled time, deducting appropriate taxes as well as managing reimbursement expenses.
The sub-module can also create reports on overtime hours, payroll expenses, and other KPIs related to employees in an organization.
Human Resources Management
Typically, the human resource management module incorporates all features of a workforce management module with some additional capabilities. Just as a CRM is for customers, an HRM stores detailed information about employees.
It also stores documents such as job descriptions, offer letters, and performance reviews. Furthermore, it has other features to track the hours an employee has worked, paid time off, and information on benefits for them.
Since HRM stores explicit information on all employees in an organization, it reduces the possibility of inaccuracies and duplicate data that many enterprises deal with while using spreadsheets.
With an E-commerce module integrated with an ERP system, organizations can develop a feature-rich platform for B2B and B2C businesses.
The Ecommerce module includes features that allow the addition of new products, update the information on site, and change site layout and feel for the users.
When the E-commerce module is linked to other ERP modules, it feeds all information about payment, orders, and inventory into a single database.
Moreover, it ensures that all orders are put into the ledger, out-of-stock products are eliminated, and orders are shipped in time.
With E-commerce, some vendors also provide marketing automation as a module in the ERP to run and monitor marketing campaigns across various digital channels like social media, web, email, and SMS.
The marketing automation module automatically sends emails and text messages to customers. With its advanced segmentation feature, the module helps to send only customized and relevant messages to customers.
Being a part of an ERP, the module does explicit reporting on the performance of the campaigns and generates ideas for future marketing campaigns and plans. It brings more marketing leads and increases customer loyalty as well as sales.
ERP systems with integrated modules make handling business processes easy and efficient. An ERP is a single platform that incorporates multiple advanced modules to handle all functions and run business operations on the go.
Not all modules are designed for all companies, so you can get specific ones that fit into your business needs.