ERP stands for enterprise resource planning, and is an integral part of any business organization. An ERP system provides a company with full visibility of its entire ecosystem through various modules covering functions like manufacturing, logistics management, financial management, human resource management, etc.
A good ERP system has the potential to reduce costs of production by improving operational efficiencies while also improving overall customer satisfaction through greater transparency.
The following is a list of common types of ERP systems:
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1. Manufacturing-Oriented
The manufacturing-oriented ERP system focuses on optimizing processes in the manufacturing sector, from raw material procurement to finished product distribution. This has been developed to help companies produce higher volumes at lower costs by minimizing waste and eliminating bottlenecks.
These systems work well for companies that have a high volume of production, as they can integrate customer orders into their processes much more easily.
2. Distribution-Oriented
The distribution-oriented ERP focuses on end-to-end distribution functions, which includes planning, execution and optimization of logistics activities like inter-departmental transfers, transportation of finished products to warehouses and distribution centers etc. They do not cover the manufacturing aspect but instead deal with warehousing and inventory management after production has taken place.
These systems can be used by retailers or wholesalers who have storage infrastructure in place, as they do not require updates about the progress of goods at every stage of production.
3. Manufacturing-Distribution Hybrid
The manufacturing-distribution hybrid ERP offers both manufacturings as well as distribution functionalities, such as those used by businesses that manufacture their products in-house and then distribute them to different parts of the country/world. They provide companies with the ability to respond to changes in demand with quick turnaround times.
4. Vertical-Oriented
The vertical-oriented ERP system focuses on functions that are specific to a particular industry, such as the automotive industry or the retail sector. They cover everything from accounting and inventory management to workforce planning and supplier tracking and can be customized as per the specific needs of an organization.
These systems work best for companies where a majority of employees have a background in the industry that the company is involved in.
5. Horizontal-Oriented
The horizontal-oriented ERP is also referred to as business suite or best fit, because they cover all aspects of business management and span multiple industries like retail, banking, etc.
They offer advanced features such as analytics and collaboration tools for businesses. Companies with a diversified product portfolio and business operations can benefit from this type of ERP system.
6. Managed Service Provider Based
This type of ERP system is hosted on the cloud and managed by a third party, making it easy for businesses to access their data anywhere at anytime. Since these systems are not installed on local servers, they can be upgraded or modified remotely without interrupting core business functions.
7. On-Premise Hosted
The on-premise hosted ERP systems are hosted on a company’s servers and provide all the benefits of a managed service provider-based ERP system, but with added flexibility as data is not stored in a third-party data center. In addition to this, these types of ERP systems allow companies to integrate customized modules into their system.
8. Industry-Specific ERP Systems
This type of ERP system has been developed specifically for a particular industry and can be used to automate business processes across multiple departments in the company. They offer the ability to digitize all operational workflows and provide real-time visibility into production and inventory levels, which helps in better decision making.
9. Cloud-Based ERP Systems
As the name suggests, these types of ERP systems are hosted on cloud servers and can be accessed from anywhere using a mobile device or a laptop. They provide businesses with the ability to collaborate more effectively and efficiently due to their collaborative nature and help companies reduce costs.
This type of ERP system has been developed specifically for a particular industry and can be used to automate business processes across multiple departments in the company.
For example, software for food manufacturing from Inecta is an ERP designed just for the food manufacturing industry. They offer the ability to digitize all operational workflows and provide real-time visibility into production and inventory levels, which helps in better decision making.
10. ERP Systems for Small Businesses
Small businesses can choose from any of the aforementioned types of ERP systems, depending on their requirements. Not all types of ERP systems are suited for smaller businesses because some require robust infrastructure and specialized software to run efficiently.
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