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What is ERP and How does it work?

ERP – or enterprise resource planning – sounds like something that only the largest, most sophisticated companies have. Maybe you’re not necessarily even comfortable defining ERP, though most business owners and operators have an intuitive idea of what it means for a business. SMe Software is here to tell you that ERP is not only for the largest companies anymore.

ERP in its simplest form is described as an integrated suite of software modules that automates your business processes for total business management. To help you understand what types of things ERP can manage for your business, we’ve expanded on these areas.


In manufacturing turning raw material into finished goods takes some human intuition, but for everything else, there’s ERP.

For engineering, using ERP Bill of Materials (BOM) reduces shop floor errors, tracks engineering change history and it’s easy to use, with functions like drag-n-drop to build the BOM tree. Automated business processes are integrated into the inventory, purchasing, and production and scheduling, minimizing data entry because you only enter the data one time.

Production managers need access to specific data on a daily basis. ERP is designed to save time by delivering the data automatically and can increase customer satisfaction because you’ll know the order requirements and if the order will ship on time at the beginning of the process. Because all of this critical data is available in one module, on one screen, more time is spent manufacturing the order and increasing on time deliveries.



Advanced planning and scheduling (APS) works hand-in-hand with your ERP and MRP because they are integrated and that’s what makes it so effective. Managers can monitor and control the production process minimizing a variety of issues that affect production,

Changes? Fluctuating inventory, outside service lead/lag times, resource limitations or overutilization of machines and tools are not a problem. APS handles all of these changes, automatically reschedules the job, and minimizes the cost and increases efficiency. ERP users have reported a 200% increase in sales



Using current and historical data, ERP systems can form trends and assess what types of items, in what quantity you will need to maintain and optimize your inventory. Your ERP will monitor and maintain your inventory by applying simple control settings to warehouses, locations, bins and lots.

Where’s your WIP? ERP software can even help you track, trace and manage your WIP improving your manufacturing operations management (MOM) and reducing inventory levels.



ERP financial and accounting systems allow you to manage your business profitably whether it’s a sprawling, multi-site facility or a single-site, enterprise. You face day-to-day tactical and long-range strategic challenges that can only be overcome with a powerful, easy-to-use integrated ERP accounting system.

Automating and simplifying your financial processes for accounts receivable, accounts payable reduces overhead and improves cash management. When your ERP has integrated accounting you have enterprise-wide visibility in tracking and tracing financial transactions. It’s like having an automated financial audit, now that’s smarter.

Improved security with ERP features allows you to answer who, when, where and what of each transaction. Who created the transaction, when was the transaction created, where it was created, and for what purpose. Validating financial data before it is posted to your general ledger enhances reliability and accuracy.



Fulfilling and managing customer orders of finished goods requires accurate, real-time information and an ERP system provides that. Smart ERP provides customer order history, current stock levels, available part substitutions, delivery times and production time if the item needs to be manufactured without making the customer wait. Automated fulfillment of required parts and material, along with scheduled deliveries, will make your business more efficient and timely.

Ready to learn more about how you can automate the management of your business, resources and financials through the use of an enterprise resource planning program? Contact SMe Software today by visiting www.SMARTerManager.com or calling (877) 762-7766.