What is ERP (Part One)

With an Enterprise Resource Planning (ERP) system like SAP Business One, all of a company's core functions, such as accounting and finance, reporting, purchasing and food, inventory and distribution, sales and customer relationship management, and human resources management, are fully integrated into one system in modules that communicate dynamically with each other.

Still confused? Let’s look at a simple, practical example of how an Electronics Retail Business uses SAP Business One. It should be noted, however, that this is just an example of a specific industry; SAP Business One can be customized to any industry your company operates in, whether it’s manufacturing, wholesale, financial services, media, or even shipping.

On the first Monday of the month at 8:00 AM, the owner of the Electronics Retail Business runs one of the many reports in SAP Business One to see which inventory items have not been sold since last month so that he can assign his sales associate to sell those items by the end of the work week. When the sales associate comes in at 9:00 AM, she sees that she has been assigned to sell at least 3 of the 5 washing machines, in addition to her normal duties, by the end of the week.

The sales associate cleverly decides to take advantage of the Customer Relationship Management (CRM) feature in SAP Business One. Using the Campaign Generation Wizard in the CRM function, she creates a target group that she thinks will buy the washing machines and within a few minutes she sends them mass emails.

The next day she receives a response from 4 companies that show interest in the product, which turns them into leads. They ask for quotes, which she creates and sends directly via SAP Business One. Once the quotes are approved and the companies place their purchase orders, the leads are converted into customers.

The live inventory management function of SAP Business One is based on one main formula: Available quantity = In stock - Assigned + Ordered. When she then creates the sales orders by simply copying the sales quotes, an automatic inventory update takes place; 5 washing machines are in the 'In stock' quantity, 4 washing machines are in the 'Assigned' quantity and 1 washing machine is in the 'Available' quantity. Once the items are delivered, a delivery document is created by copying into the sales order, updating the inventory of the washing machine to show 1 available, 1 in stock, and 0 recorded. An A/R invoice is then created by copying into the delivery document, and the incoming payment is received based on the agreed date.

Stay tuned for part two, continuing with the purchasing process in SAP Business One.