What is ERP?
Enterprise Resource Planning
A system that manages the entire company's affairs in one place, such as orders, purchases, inventory, and money.
What it means
ERP is a system that determines and records where and how much a company will spend what it has (people, money, materials, time). Orders received by sales, orders placed by purchasing, warehouse inventory, and accounting book inventory are all connected to each other within one system.
From a factory perspective, ERP determines “what to do, how many to do, and by when.” We receive orders from customers, calculate and purchase the necessary materials, and promise delivery.
At the pen factory
In a ballpoint pen factory, an office PC does this work. This includes registering an order of 100 pens from Hanbit Stationery and ordering the remaining black refill from Daehan Refills.
Why it matters
If each department uses separate Excel, the order quantity known by sales will be different from the quantity known by purchasing. By keeping them all in one system, you can immediately see the impact on materials and delivery times when an order changes.
How this differs from MES
ERP is a system that “determines” in the office, and MES is a system that “writes down what was actually done” on the shop floor. MES receives and executes the plan made by ERP and returns the results to ERP. However, which system is in charge varies from company to company.
Related terms
- MESA system that instructs and records what is made and how it is made on the factory shop floor.
- Sales orderA promise made by the customer to ask for what, how much, and by when.
- Purchase orderAn order that asks a supplier to send something, how much, and by when.
- InventoryHow many items are in the warehouse right now?