In this Article
A company’s success largely stems from how well the different departments can exchange data with each other. Learn the difference between decentralized and centralized software systems, along with how a centralized ERP system is vital to achieving success.
Manufacturing Process Scenario
With the salesperson’s inquiry, the production team or production planners check with the inventory department to find out the availability of the raw material needed to manufacture the product. If the raw material is not in stock, the production team or production planners buy the raw material from their vendors – and ships these materials to the shop floor for production.
Once the product is manufactured, the inventory department forwards the final product to the warehouse for the sales team to order delivery to the customer. Then, the sales team updates the finance department about the sale of the product to the customer. In addition, the production planning team also updates finance about the payments that need to be made to the different vendors for the raw materials.
Decentralized Software Systems
In the scenario above, the salesperson approaches each department individually. Therefore, the scenario is an example of a decentralized software system. A decentralized software system is when data is maintained locally in the individual departments. In this environment, each department has no access to data from other departments.
Decentralized Systems and the Manufacturing Process
>> See also: Solutions for Manufacturing in SAP
Centralized Software Systems
A major factor in the success of a company largely stems from how well the different departments can continuously communicate and exchange data easily between each other. Therefore, a centralized software system is the key to success because companies that maintain their data in a central location can share information easily with various departments.
Why Centralized Software Systems – Like ERP – Are the Key to Success
Enterprise Resource Planning (ERP) is the name for the business process management software. It is a suite of applications to manage vital functions of a business (sales, inventory, production planning, etc.) With the integration of all a company’s departments data, information can easily flow across the enterprise, and the process becomes reliable and streamlined.
For example, if we return to the manufacturing scenario, let’s say that the same salesperson tried to find out if the product was in stock using the company’s centralized software system: ERP. With the company’s ERP system, the salesperson can check the current inventory of the product within the system. Now, any wait time for the customer is eliminated because the salesperson is able to check the inventory right away.
Additional Benefits of ERP Systems
- Eliminate data duplication, discontinuity, and redundancy
- Share real-time information across departments
- Control various business processes
- Increase productivity
- Manage inventory
- Reduce material cost
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