Also called erp is required

to answer let's examine this typical business scenario

A client approaches the sales Team to buy a particular product

The sales team approaches the inventory Department to Check the availability of the product

in this case the product is out of stock the sales team approaches the production planning Department to

manufacture the product

the production planning team checks with the inventory department for availability of raw material

If raw material is not available within the inventory the production planning team buys the raw material from the vendors

Then production planning forwards the raw materials to the shop floor execution for actual production

Once ready the [shop] floor team forwards the goods to the sales team who in turn deliver it to the client

the sales Team updates the finance Department with revenue generated [by] the sale of the product

The production planning team updates the finance department with payments to be made to different vendors for raw materials

All departments approach Hr. For any human resource related issue

That is the typical business process of any manufacturing company

some key inferences one could derive from the scenario would be a

Typical Enterprise has many departments or business units

These departments or business units continuously communicate and exchange data with each other

the success of any organization

lies in its effective communication and Data exchange

Within these departments as well as associated third parties such as vendors outsources and customers

Based on the Manners in Which communication and Data exchange is managed

Enterprise software systems can be broadly classified as

decentralized systems

Or centralized systems which are also called

[erp], let's look at decentralized systems first in a company with a decentralized system of Data Management data

Is maintained locally at the individual departments?

Departments do not have access to information or data of other departments

to identify the problems arising from

Decentralized Enterprise management systems let's look at the same business process again

the customer approaches the sales team for a product

But this time he needs the product on an urgent basis

The sales team do not have real-time information access to the products inventory

So they approach the inventory Department to check the availability [of] the product

This process takes time and the customer chooses another vendor

leading to loss of Revenue and customer dissatisfaction

Now suppose the product is out of stock and the sales team approaches the production planning team to manufacture the product for future use

The production planning team checks the availability of the raw materials required

Raw Material information is separately stored by production planning as well as the inventory department

Thus data maintenance cost goes up a particular raw material

Required to manufacture the product is available in the inventory

but according to the database of [the] production planning team the raw material is out of stock, so

They go ahead and buy the raw material

Thus material as well as inventory costs go up

Once the raw material is available the shop floor department suddenly realizes. They are short of workers

They approach the hr. Who in turn hire temporary employees and higher than market rates

thus labor cost increases

The production planning department fails to update the Finance Department on the materials they have purchased

the Finance Department

Defaults the payment deadline set by the vendor causing the company loss of its reputation and even inventing a possible legal action

These are just a few of the many problems with decentralized systems

Some major problems with the decentralized system are

Numerous disparate information systems that are developed individually over time and are difficult to maintain

Integrating the Data is time and money consuming

inconsistencies and duplication of data

lack of timely information leads to customer dissatisfaction loss of revenue and reputation

High inventory Material and human resource costs

These are just some of the major drawbacks [for] which we need a solution

Well the solution lies in

Centralized systems that is e rp in a company with a centralized system of information and Data Management data

Is maintained at a central location and is shared with various departments?

Departments have access to information or data of other departments

Let's look at the same business process again to understand

how a centralized enterprise system helps overcome problems posed by a

decentralized Enterprise system

In this case all departments update a central information system

When a customer approaches the sales team to buy a product on an urgent basis the sales team has real-time information

access to the products in inventory

Which is updated by the inventory department in the centralized system?

The sales team responds on time leading to increased revenue and customer delight

In case manufacturing is required the sales team updates the centralized database

Production planning Department is auto updated by the centralized database for requirements

The production planning team checks the availability of the raw materials required Via central database

Which is updated by the inventory department?

Thus data duplication is avoided and accurate Data is made available

The shop floor team updates their manpower status regularly in the central database which can be accessed by the Hr. Department

In case of a shortage of Workforce the Hr

Team starts recruitment process with considerable lead time to hire a suitable candidate at market price thus labor costs go down

Vendors can directly submit their invoices to the centralized Enterprise system

Which can be accessed by the finance department?

Thus payments are made on time and possible legal actions are avoided

The key benefits of the centralized system are it eliminates the duplication?

Discontinuity and Redundancy in Data it provides information across departments in real time it

Provides control over various business processes it increases productivity provides better inventory Management promotes quality

reduces material cost allows for effective human resources management and reduces overhead while boosting profits

better customer interaction increased throughput and

Improved customer service

Hence a centralized Enterprise management system is required

Si p is a centralized enterprise management system also known as Enterprise resource planning