Advantages and Disadvantages of ERP

Advantages and Disadvantages of ERP

Advantages of ERPImage result for ERP System

There are many advantages of ERP system. The foremost advantage of an ERP system is bringing down the costs and saving the valuable time which would have otherwise been wasted in procedural manoeuvres and unwanted delays.
Other benefits are as follows:
ERP eliminates duplication of work and reduces paper documents by providing on-line formats for quickly entering and retrieving information.
Reduce overheads, lead type, cycle time and work in progress.
ERP provides greater accuracy of information with detailed content, better presentation, fully satisfactory for the auditors.
The company can track the orders and get detailed information on their customers. Further, it assists in improving customer delivery time.
Accounting application can integrate the cost, profit, and revenue information of sales that are made, and it can be presented in a granular way.
It maintains precisions in production, planning and scheduling and hence can protect a company against crimes such as embezzlement or industrial espionage.
It helps in tracking the 3-way match between Purchase orders (what was ordered), Inventory receipts (what arrived), and costing (what the vendor invoiced).
Helps to achieve competitive advantage by improving its business process.

Disadvantages of ERP

In spite of rendering marvellous services ERP is not free from its own limitations.
ERP calls for a voluminous and exorbitant investment of time and money. Customization of the ERP software is limited.
Systems can be difficult to use.
Systems are too restrictive and do not allow much flexibility in implementation and usage.
Some of the modern facilities like Electronic Data Interchange (EDI) though is a cost-effective solution, it is no more an efficient tool in view of requirements of the real-time online system.
The blurring of company boundaries can cause problems in accountability, lines of responsibility, and employee morale.
Re-engineering of business processes to fit the “industry standard” prescribed by the ERP system may lead to a loss of competitive advantage.