The value of an enterprise resource planning system (also known as an ERP system) can be summed up in one well-known cliche: the whole is greater than the sum of its parts. An ERP by itself won’t change your business. Rather, it’s the integration of various processes that makes it a robust software solution.
As Finances Online describes, “[Additional] modules are sold separately [from the main ERP system] or bundled as a plan.” In other words, they don’t come standard as a part of an ERP package, but they can be added on easily during your ERP implementation. ERP modules focus on a variety of crucial business processes. Each module focuses on its own unique process, so businesses that don’t need help in one area aren’t forced to add on a module with redundant functionality.
If you have an ERP system, or are thinking of adopting one, it’s important to know what ERP modules are available. And even more relevant: what the most common ERP modules are. These are the modules that most businesses find useful, and the ones that provide the most value. So here they are: the top five most common ERP modules:
ERP Wisdom believes that an ERP solution’s financial management module is its most important. They make a good point too; money is used in every department (obviously), and therefore financial data from every department ends up in the module. A good financial management module comes equipped with a plethora of features, so that you can manage most — if not all — of your finances in your ERP system.
For starters, as we mentioned, it should collect financial data from your various departments. You should be able to view the entirety of your business’ finances in the module, from your HR department to your marketing department. This includes features like a general ledger, accounts receivable, accounts payable, and other related financial features.
Reporting should also be included in the financial management module. Reports are crucial to managing your finances, so any ERP modules without them aren’t worth your time. Among other things, financial reports help you budget, make changes on the fly and keep your executives informed of your financial situation.
Other functionality commonly included in financial management modules are security features, a multi-currency system for global transactions and notifications for when finances fall below a certain threshold.
Supply Chain Management
Optimizing the supply chain is one of those business processes that everyone knows has to be done, but isn’t always done well. That’s why a supply chain management module is one of the most common ERP modules. ERP vendors know that it’s a complicated process, and the best provide powerful modules to help you out.
Similar to stand-alone supply chain management software, real-time data is a key feature of supply chain management ERP modules. As we discussed in our article about cloud-based SCM, the ability to make real-time decisions based on real-time data is a huge advantage to those that have it: “[Real-time data] gives companies an unparalleled ability to precisely track each part of the supply chain, making it easy to make on-the-spot adjustments… The advanced analytics potential can also help businesses take their demand planning to a whole new level by giving access to an unprecedented amount of usable data.”
In addition to demand planning, demand forecasting is another key component of a SCM module. Using predictive analytics, your ERP solution’s SCM module should be able to predict future demand of your products and/or services. You can then use this information to create a production plan; one that meets demand but doesn’t exceed it, reducing costs due to excess inventory.
SCM modules also often provide purchase order/document management and quality assurance features.
Working in tandem with SCM are inventory management modules. You always need to know how much stock you have, not only for order fulfillment, but also so you know how much space you have left for incoming inventory.
Panorama Consulting Solutions describes how crucial an inventory management module is to an ERP solution: “The inventory control module interacts with virtually every other module or functional area. From the original quote and sales order entry through purchasing and receiving to shipping and ultimately invoicing, strong inventory management software functionality is necessary to provide high order fill-rates, contain operational costs, and maintain profit margins.”
Because of how far-reaching inventory management modules are, you can tell how strong an ERP package is based on the amount of inventory control functionality. Panorama goes on to explain that some of the functionality to look for in a strong inventory management ERP module include multi-level serial number tracking, revision level tracking and multiple units of measure per product ID or SKU.
These features are all complex in nature, which is why they’re typically only found in the best inventory management modules. But many businesses find that the benefits gained from these features give them a sizable advantage over their competition.
Customer Relationship Management
Customers are important. We know, it’s nothing new or mind-blowing, but it’s always good to reiterate just how fundamental customer relationships are. In order to help you maintain those relationships, ERP vendors offer CRM modules.
As you’d expect from a CRM, these ERP modules help you manage customers, leads, and sales processes in general. Therefore, it should provide your CRM basics: contact lists, interaction histories and basic analytics. But if you’re looking for a more powerful CRM module, there are a few features to look out for.
For starters, a good contact manager can do wonders for a business. According to Toolbox.com, the “heart” of a CRM is your list of customers, leads and prospects. This is some of your most valuable information for marketing and sales, but not necessarily the most valuable information. More robust CRM modules come with a contact manager that collects more than just names and email addresses.
These contact managers feature the ability to record and track the interaction histories of your customers, leads and prospects. This helps your sales and marketing departments do their jobs, as they have context for what you’ve already discussed and/or sent to each person.
Segmentation features also help you do more with your customer data. Instead of simply viewing where your customers are located, what if you were able to target them by region? With segmentation functionality, you can identify which customers you should send region-specific marketing collateral to. This is more likely to convert than your generic, all-encompassing collateral.
You could also find out who your top customers are, and target them for potential cross-selling opportunities. Segmentation also helps with this. It helps you find extra sales opportunities where you previously may have thought there weren’t any.
Dashboards and reports round out your more advanced CRM module features. Similar to financial management modules, you can use dashboards for at-a-glance analysis to assess how your marketing and sales efforts are performing. Reporting features help you find trends and go more in-depth on your data, so you can make necessary changes to improve your marketing and sales.
No ERP implementation is complete without the inclusion of a good human resources module. HR is another module that deals with every department, for the simple reason that it deals with all of your employees. With such valuable information and processes involved, it should be integrated with your ERP system for peak efficiency and accuracy.
Since HR collects data on every employee, it’s constantly collecting data from every department. Said another way, it gathers data from multiple locations simultaneously — from your employees’ vacation days to their in/out times. TechAdvisory.org points out that with this massive influx of data, duplicate or inaccurate data can occur. A HR module eliminates this inaccurate data, as it can sort and analyze your data for accuracy.
One of the biggest advantages of ERP modules is the easy collaboration it creates. When systems are kept separate, data has to be shared manually. So if you need to share data from a HR system, you need to save it yourself in a format than can be used by the other system.
For example, if your sales reps get bonuses based on the number of leads they convert, your HR system would need CRM data to know whether or not to administer those bonuses. Sure, you could manually count each rep’s converted leads yourself, but who has time for that? Instead, when you add a HR module to your ERP, your CRM data automatically gets shared with the HR module, automatically administering those bonuses when/if they’re earned.
Your management, executives and other higher-ups can also use a HR module to get a higher-level overview of your employees. You can use this overview to make policy changes if need be, whether that’s by loosening policies or by making them more strict. TechAdvisory.org gives the example of finding a department that logs way more overtime hours than others. Your HR module can help identify this occurrence, so you can act accordingly to fix the problem.
Keep an Eye on Integration
Although these are five of the most common ERP modules, these are by no means the extent of them. There are plenty of other modules that you can add on to an ERP system. Project management modules aren’t as common as these five, but they’re still very useful. Material management modules also provide value, as do warehouse management modules, order management modules and field service management modules.
Keep an eye out for new modules that could help your business. You probably won’t need every one that’s available, but as you can see, there’s no shortage of ERP modules. And the right combination could make the difference between becoming an industry leader and remaining as another part of the pack.